Embracing the Future of Strategic Workforce Planning
Introduction
The organization selected for this report is Coles Supermarket. Coles Supermarket is a major retail and consumer products chain, based in Australia and headquartered in Melbourne. It is owned by Coles group, which also owns chains dealing in the liquor trade, however, the Coles Supermarket is by far its most important subsidiary. In the last few years, the retail and consumer services industry has seen profound changes and perhaps, no industry has seen a more drastic change in its way of working due to Covid-19, than this industry. It would not be wrong to say that rather than causing, Covid-19 has accelerated the changes that were in the pipeline (Vader & Martin 2020). As supermarkets replaced small brick and mortar stores, through economies of scale, ease of use, and faster service, physical supermarkets are being replaced by online supermarkets now, due to the very same reasons. Coles supermarket also operates an online store called Coles Online.
The retail industry in Australia is comparatively resilient, as the total sales volume in the sector fell only by 3.4% in the third quarter of 2020, as compared to total household spending volume, which fell by 12.1%. While, as compared to last year this time, retail volumes increased by 5.4% (Slides 2020). Coles’ 2019 financial report 2019, also shows an increase in sales volume by 3.1% from 2018 (Coles Group 2019). This is largely in part due to the increasing online sales. It would not be wrong to state that the change in the way supermarkets works, is neither temporary nor slowing down, thus, it would be wrong to make labor market estimations without treating the recent changes as long-lasting.
Coles was founded in 1914 and today, it employs around 112,000 people, making it one of the major employers in Australia. The nature of the industry it works in, makes it a labor-absorbing organization, especially when it comes to semi-skilled and unskilled labor. It operates more than 807 branches, which increase to 1502 if the Coles branded petrol stations it operates are also included (Coles Group 2020). Coles has consistently focused on building a workforce for the long-term future, even when that does not seem to be beneficial in the short run. An example of this was when recently, in March 2020, it announced the hiring of 5,000 causal team members, during the Covid-19 pandemic, because it believed that it will help the community and the organization in the long run (Santoreneos 2020).
Changes in the Retail Industry
To devise a strategic Human Resource plan for the organization, it is important to look at the profound changes that the industry is facing at the moment and how these changes are affecting the relevant labor market. One of the most evident changes in the industry has been the increase in the importance of convenience and the corresponding decrease in thinking of grocery shopping as an ‘experience.’ This change is more visible in how the shift towards online grocery shopping has taken place rapidly in the recent years, with Covid-19 further accelerating the process (Deloitte 2020). This has led to the development of a delivery system as well. The delivery system has provided many unskilled workers with jobs, with supermarkets either directly hiring them or outsourcing the job to a specialist company.
The change in the retail industry has also been facilitated by the entry of technology companies in the sector. Amazon entered the retail sector and acquired Whole Foods Market, an American supermarket chain (LaVito 2020). Amazon introduced a touchless shopping experience in one if its brick and mortar stores, using various sensors and machine learning algorithms to keep track of what the customers was picking up and putting in their trolleys, with the total charges being deducted from the Amazon account associated with the customer. Apart from Amazon, Walmart is also revolutionizing its infrastructure to compete with the retail stores of the future (Simon 2020).
[hbupro_banner id=”6299″]Labor Market Analysis
Labor Demand Analysis
These developments will profoundly affect the labor demand in the retail sector. The increase in the demand of skilled labor, especially skilled labor with technological skills, is going to be the most immediate effect. This would also lead to a decrease in the demand of traditionally employed semi-skilled and unskilled workers in the retail sector. However, this would be coupled with an increase in the demand for other forms of semi-skilled laborers such as those doing delivery work. Thus, Coles will have to model its needs for labor in a different manner.
While the change in professions is visible, it is important to be more specific and look at the different type of skills that will be required by the workforce, in near future. According to a report by McKinsey Global Institute, almost 50% of the work in the retail sector can be automated (Simon, Tufft & Zampella 2020). If anything, it’s the slow evolution in the skills of the workers that’s keeping the pace of change and automation slow and not technological hindrance, consumer demand, or investment limitations. By 2030, the time spent on doing manual tasks will decrease by 25%, from 24% to 18%. Similarly, the time spent on tasks requiring basic cognitive skills will also decrease, while time spent on tasks requiring interpersonal skills and technological skills will increase drastically (Manyika 2017). Extrapolating this data and applying it on Coles, tells us that almost 6,700 employees doing manual tasks will either have to laid-off or retrained to perform interpersonal and technological tasks in the next 10 years (Manyika 2017; Coles 2019). This means that the organizational strategy adopted by Coles should be about adopting innovative strategies to tackle external competition entering the Australian market, and the domestic competition it already faces. This organizational strategy, centered around innovation, will require updating the hiring and training strategies, to make the employees ready for change.
Labor Supply Analysis
Labor demand, however, is only one part of the equation, labor supply is the other component. To gauge the labor supply market for Coles, it is important to look at the national level statistics for Australia. The labor participation rate in Australia has been constantly increasing and now stands at 64.8%, while the unemployment rate stands at 6.8%, an increase of around 1.6 points over the last year. However, in recent years it has stayed near the 5% mark (Australian Bureau of Statistics 2020). The data also shows that almost 15% of the workers in the retail sector, left the industry and started working in another industry between February 202, and May 2020, however, almost 13% who left (or were forced out of) the industry did not find employment in another industry. The transition from retail to other industries is comparatively difficult than transitioning from wholesale trade and manufacturing, showing the relatively more specialized skills required in retail trade (Australian Bureau of Statistics 2020). It is important to remember that these statistics are heavily influenced by the Covid-19 induced lockdown. The effect of Covid-19 has been so huge that the Australian Bureau of Statistics, has temporarily suspended the exercise of estimating trends; it would not be wrong to conclude that uncertainty is the defining feature of the current time, and thus, we should be cautious when arriving at conclusions.
The recent rise in unemployment, difficulty in transitioning to other industries from retail trade, and growth in the retail trade, suggest that the quantity of labor supply will not be a major problem for retailers and Coles, in the coming years. However, apart from the number of workers available, the quality of skills that the workers are equipped with is also vital. As mentioned before in the report, the pace of evolution in the retail sectors has been slowed down by the unavailability of the right skills in employees. For Coles, it is important to assess what roles derive more value, will be beneficial in the long run and how the employees could be (re)trained for these roles? According to research in the retail sector, some of the frontline roles that command more value include sales associates, team leaders, and service providers who disseminate the knowledge of products, around the retail store (McKinsey 2020). These roles require high interpersonal skills which, as mentioned before, are constantly increasing in importance. Another role that drives value and will drive value in the future, is the role of IT or technology expert. These two roles are dramatically different and will require different strategies to fill.
[hbupro_banner id=”6296″]Balancing Demand and Supply
Buying approach
To balance demand and supply, and to meet the staffing needs, Coles can look into various options for hiring and managing its staff. An evident manner in which the demand for job can be met is through hiring workers. The main instrument for attracting workers, with interpersonal skills, is by providing them with job security. As an organization, with more than 100 years of history and a considerable footprint on the Australian retail industry, Coles can provide its employees with job security even amidst a crisis. Permanent employment or long-term contracts accompanied by a competitive wage structure can attract the required talent. Furthermore, through internal data management and research, Coles can look at 112,000 of its employees and look at the qualities of the high-performing workers (Coles Group 2019). The new hires could be done keeping in mind the qualities and characteristics of those bringing higher value to the organization.
Building approach
Besides the ‘buying’ approach, which uses hiring new people as the predominant way of satisfying demand, there are methods of meeting labor demand. An important method is ‘building’ internal human resources, through (re)training of employees (McKinsey 2020). Skills development programs can be used for equipping staff working in Information Technology department with new skills. Similarly, frontline staff could be equipped with interpersonal skills through skill development programs. The monitoring of the effects such programs have is also important. This monitoring could be done by using HRM metrics.
HRM metrics have three kinds of data, which can be analyzed for insights: people data, program data, and performance data. The people data can be used to analyze the skills employees have, while program data is concerned with looking at attendance and participation in HRM programs, and performance data contains performance review information (Mckinsey 2020).
Borrowing approach
Another approach that can be used to meet the demand of highly skilled labor (especially in the technological segment) is the ‘borrowing’ approach. The borrowing approach involves outsourcing a specific function to another organization, which specializes in it. Coles already has such partnerships including a partnership with Uber for delivering goods and a partnership with SKUvantage for product design and solutions (Powell 2017). Considering the limited amount of expertise that Coles has in handling technological challenges, it would be beneficial for it to outsource the technology function. Outsourcing often requires redefining geographical boundaries, as jobs are outsourced to companies in the Global South, which helps in cutting costs. Redefining geographical boundaries has also become much easier and convenient in the aftermath of Covid-19, as around 83% of employees in the retail sector are willing to work remotely now as compared to 37% prior to Coivd-19 (McKinsey 2020).
Conclusion
This report surveys the retail industry and the changes taking place around the world and comes to the conclusion that technological changes and the increasing importance of convenience are going to force Coles to change their business model and hiring practices. In the light of labor demand and supply data, this report arrives at the conclusion that through the use of HRM metrics, training programs and outsourcing, Coles can tackle the challenge of hiring and managing a workforce, that is equipped with technological and interpersonal skills.
References
‘Annual Report’ 2019, Coles Group, viewed 22 September 2020, <https://www.colesgroup.com.au/FormBuilder/_Resource/_module/ir5sKeTxxEOndzdh00hWJw/file/Coles_Annual_Report_2019.pdf>.
‘Consumer organization and operating models’ 2020, McKinsey & Co., viewed 22 September 2020, <https://theglobalsearchcompany.com/mckinsey-co-consumer-organization-and-operating-models-bold-moves-for-the-next-normal/>.
‘Insights into industry and occupation’ 2020, Australian Bureau of Statistics, viewed 22 September 2020, <https://www.abs.gov.au/articles/insights-industry-and-occupation>.
‘Labour Force, Australia, August 2020, Australian Bureau of Statistics, viewed 22 September 2020, <https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release>.
Manyika, J 2017, ‘Technology, jobs, and the future of work’, McKinsey & Co., viewed 22 September 2020, <https://www.mckinsey.com/featured-insights/employment-and-growth/technology-jobs-and-the-future-of-work>.
Powell, D 2020, ‘Coles partners with Uber for home delivery trial: Is this the beginning of Australia’s “delivery wars”?’ SmartCompany, viewed 22 September 2020, <https://www.smartcompany.com.au/industries/retail/coles-partners-uber-home-delivery-trial-beginning-australias-delivery-wars/>.
‘Retail Forecasts: divergence – September’ 2020, Deloitte Australia | Deloitte Access Economics, viewed 22 September 2020, <https://www2.deloitte.com/au/en/pages/media-releases/articles/retail-forecasts.html>.
Santoreneos, A 2020, ‘Coles to hire 5,000 staff to deal with surge in customers’, Yahoo Finance, viewed 22 September, 2020, <https://au.finance.yahoo.com/news/coles-to-hire-5000-staff-to-deal-with-surge-in-customers-233756433.html>.
Simon, P, Tufft, C & Zampella, P 2020, ‘Closing the skills gap in retail with people analytics’, McKinsey & Co., viewed 22 September, 2020, <https://www.mckinsey.com/industries/retail/our-insights/closing-the-skills-gap-in-retail-with-people-analytics>.
Slides, R 2020, ‘2020 Retail Industry Trends’, Deloitte, viewed 22 September, 2020, <https://www2.deloitte.com/us/en/pages/consumer-business/articles/retail-distribution-industry-outlook.html#>.
‘The History of Coles – 100+ years partnership with Australia’ 2020, Coles Group, viewed 22 September, 2020, <https://www.coles.com.au/about-coles/our-history>.
Vader, R & Martin, P 2020, ‘Global retail trends 2020’, KPMG, viewed 22 September, 2020, <https://home.kpmg/xx/en/home/insights/2020/05/global-retail-trends-2020-preparing-for-new-reality.html>.
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