Blinds to Go: Staffing a Retail Expansion

HRM ASSIGNMENT –GROUP 6

BLINDS TO GO: STAFFING A RETAIL EXPANSION

Q1.  Why Is Btg Having Difficulty In Attracting And Retaining Retail Staff?

BLINDS TO GO is a retailer and producer of window dressing which has dedicated itself to providing the finest quality blinds and shades at the lowest, factory-direct prices – delivered fast and custom made to our customers' specifications. It became a huge success in its field due to its Unique Business Model of delivery within 48 hours and a Dedicated Workforce driven by the Collective motive of taking BTG towards an unparalleled growth. To motivate sales, they used a commission-based system. This new retail concept received a positive customer response and by year 2000, the business has expanded to 120 corporate-owned stores across North America & and is expected to add an average of 50 new stores per year for the next five years.

PROBLEMS FACED BY BTG:

The obvious problems that exist in BTC include Staffing and Decline in Sales. Staffing has become a strenuous issue in the company, since there are many locations that have physical store buildings built but are sitting Unstaffed. This problem not only involves in having a high labor demand, but extends to hiring the right employees that meet their standards – which increases the difficulty to meet the labor supply. In addition to that, the company has a high turnover rate due to the constant change in compensation, which consequently results in sales decline in the organization. Both the times when BTG changed its compensation system, it faced Attrition in its Sales Force. Currently BTG is hiring through several recruiting channels- Employee Referrals, Internet Sourcing, Professional Recruiters, Newspaper Advertising and Store-Generated Leads.

The Turnover came mostly from the First Four Months of an employee’s Stay at BTG because:

• PARADOXICAL PAYING PROBLEM:

If Commission based Pay System was used, the Quality of the Sales Personnel was excellent but Turnover was higher as people left when they thought they were not as good as their peers in terms of Growth and hikes. As new employee is less trained and experienced it may be very difficult to perform outstanding and increasing sales for more commissions for new employees and because of underperformance there is turnover of new employees within their first 4 months. Salary Based Wage system didn’t motivate the employees to work as hard to target the sales for a scope to earn higher on performing better.

• HEIRARCHICAL SYSTEM OF PROMOTION:

On the other hand in BTG, promotion opportunities are very low for new employees. Generally a very good Sales associate is promoted to selling supervisor 6 to 9 months after hiring date and to become a store manager, 6 to 18 months. Sales associates who were not progressing as fast as their peers would be dissatisfied and leaving for other jobs as they are not performing well and would not get any promotion. Hence the promotion practice in BTG is not effective to gain more motivated and high performers.

To summarize, the Critical Issues with BTC are the following:

• High Labor demand- Due to Unparalleled Expansion in Number of Stores Per Year
• Low Labor (that meets the standard) supply – Lack of Good Quality Staff as Quality of staff was the prime determinant of Sales at BTG.
• High turnover rate (Attrition) - Frequent changes in Compensation System & New Recruits felt pressurized on not being able to perform as good as their peers and felt lack of growth opportunity.
• Sales decline – Because of Quality of staff getting Deteriorated Due to Mass Hiring under Salary Based Wage System. Due to high turnover sales declined 10% to 30% & and fresh talent was not attracted to the BTG for their careers so high turnover induces situation of lack of attraction to new members

Q2.  What Recommendations Would You Give To BTG To Improve Their HR Practices?

A) Retaining Top 20% Managers:

As evident from Exhibit 1, the Current Pay for Top Managers is $67500/year which is $7500 less than the pay in the Original Pay system. Thus the Variable Component should be increased from 1.5-2.5% of Store Sales to 1.5-3% in order to retain the Top Quality Staff.

B) Retaining the New Recruits: Initiating Training Programs For Better Performance