© 2023 by Nick Gausling & Romy Group LLC (CC BY-SA 4.0)
The Company’s e-commerce team (human-assisted digital sales and operations) had historically not been a high priority in a very legacy retail environment, but circumstances had suddenly pushed it into the spotlight. The organizational structure was muddled with confusing reporting lines, unclear responsibilities, and discontented high-level performers not being used to their best.
Nick built the groundwork for the reorganization of the team through extensive research and due diligence, interviewing and compiling insights from the people who had lived through the changes and were experiencing the problems. After delivering his findings to the senior executive in charge and other relevant HR partners, the department was subsequently reorganized.
Following the changes, the department experienced an incredible eight-figure year-over-year improvement to both revenue and EBITDA. Key personnel were much happier with the new, leaner arrangement and the team was also able to provide a major boost to customer experience.
The head of the Division had a hunch that his stores were closing too early relative to competitors and missing a substantial amount of sales. Anecdotal pushback from the sales team was that customers simply came back the next day or at a time that the store was open, but the Division head believed that many of these sales were being lost. Even worse, missed sales opportunities in this industry often meant losing that potential customer for years.
In coordination with corporate partners, Nick designed a test & learn approach to examine the Division head’s hypothesis. Some stores were marked as control and kept to the old system while the others tried extending their hours. The data was then analyzed after a statistically-significant period.
The research confirmed the Division head’s hypothesis and found that the extended hours would result in an estimated eight-figure increase in annualized incremental sales. The data was further analyzed to find specifically which hourly changes were most responsible so that only necessary changes were made permanent. Showing this data to the sales team and its subsequent impact on their commissions also helped earn their buy-in.
The Division had the highest labor cost of any in the Company. A substantial driver of that cost was sales associate and local leader bonuses based on revenue targets. The targets were mostly being set according to a default formula from the corporate Finance department without any consideration for driving down labor cost through strategic and targeted allocations. As a result, many teams were collecting easy bonuses for hitting targets they barely impacted, while others with higher skill and performance were being penalized for things largely outside their control.
Nick worked with the Finance department to revise this process for the Division, taking a very strategic, targeted approach based on data to shift pressure from the better performers who were struggling to hit their unreasonably high targets and instead put pressure on the lower-performing teams that were getting a free pass. He then worked alongside the local operating leaders to help them identify and performance manage specific sales associates who were contributing to the problem.
The changes resulted in a seven-figure reduction to annualized labor expense by driving down the unjustified bonus payouts and making targeted personnel improvements. It also gave realistic targets to the more talented sales personnel who previously had been missing their payouts, giving them greater motivation to perform.
© 2023 by Nick Gausling & Romy Group LLC (CC BY-SA 4.0)