About the Client Organization
Leading Ecommerce player with distribution networks across the country. Currently losing ~$10 million (USD = 65 INR approx.) annually to product shrink.
The Brew’s Approach
- Empirically link employee data (behavioral data including personality inventory, engagement etc) to meaningful business outcomes (e.g., shrink)
- Identify ‘invisible levers’ in employee attitudes, skills and behaviors that will drive outcomes
- Leverage existing data to create the strategic framework
- Prioritize employee-focused interventions to drive improvements in performance on business outcomes
- Provide customized solutions to target strategic priorities and drive bottom line performance
Data Collection
Human Capital Data Points
- Competency Ratings
- Performance Ratings
- Employee Opinion Surveys
- LMS Training completion data
Business Outcome Data
- Human Capital Turnover
- Customer Satisfaction
- Store Level Shrink
- Store Level Costs
Data Dimensions
Employee Survey Dimensions
- Engagement, Enablement, Job – Person Match
- Regard for Employees, Policies, Hours Worked
- Manager Effectiveness, Work Environment, Customer Focus
- Career Development, Benefits, Recognition & Performance Management
Employee Competencies
- Employee Development
- Leadership
- Strategic Decision Making
- Organizational Collaboration & Teamwork
- Execution Excellence
- Result Orientation & Achievement
Identify drivers of critical business outcomes
Prioritizing drivers of the shrink
The drivers of shrink can be further prioritized based on the magnitude of their relationship with shrink
- Achieving Extraordinary Results (behaviors)
- Ethics Course (knowledge)
- Shrink Course (knowledge)
- Dishonesty Terminations (behaviors)
- Job-Person Match (skill + behaviors)
The Brew’s Solution – Interventions & Costs
- Training: Enhance & Update Ethics & Shrink Courses – make both mandatory; Budget: $ 10k
- Recognition & Reward: Nothing Planned (Shrink Reduction cannot be incentivized as it sets a wrong precedent of motivation, rather than behavioral reinforcement)
- Selection: Improve Selection process of front line employees – Background checks & Integrity testing, Budget: $20k
- OD & Leadership Development: Develop Shrink Management routines, Shrink Partnering program; Budget: $30k
The Brew’s Impact & ROI
| Intervention | Impact Level (Beta Values) | Potential Shrink Impact (Indicative) | Investment Level |
|---|---|---|---|
| Manager Competency | 0.14 | 1.4 M | Under Investment |
| Ethics Course | 0.1 | 1 M | Under Investment |
| Shrink Course | 0.09 | 0.9 M | Under Investment |
| Dishonesty Terminations | -0.08 | - 0.8 M | Under Investment |
| Engagement | 0.04 | 0.4 M | Appropriate |
| Rewards & Recognition | - | - | Over Investment |
| Customer Satisfaction | - | - | Over Investment |
- Currently losing ~$10 million in annualized shrink
- Example: Average Manager Competency score of 3.92. Improving the average score by 0.30 could result in additional savings of $ 550k
- Approximate cost of $ 150,000 (build, employee time), Expected ROI: 366%
Conclusion
- Linking core talent management processes (e.g., performance management, employee surveys, succession planning, etc.) to critical business outcomes is the key.
- Calculating the ROI for talent management processes gives the right perspective along with raising the credibility of Human Capital Team.
- To transform Human Capital in a Profit Center, it is a must to build a compelling business case for investing in talent management initiatives.
Leave a Reply