Thursday, April 26, 2007
Big Retail gives many the HR jitters
Economic Times - 26th April, 2007
NEW DELHI: For a clutch of fast-food chains, the threat of big organised retail looms larger than life. It’s the fear of losing key people across hierarchies that’s ruffling many a feather. As the Wal-Marts, Starbucks and Reliances take hiring centrestage promising fat salaries, the pressure on brands like Pizza Hut, Barista, Domino’s, Cafe Coffee Day and others is beginning to be felt.
Little wonder then, the cafe-hamburger frat has set out on a mission to retain talent innovatively. As attrition begins to bite, cafe-runner Barista is looking at its assessment centre to foster growth. With a high 5%-per-month attrition across 900 people, the under Rs 100-crore company is busy creating distinct career plans for its staff.
The brand has recently been acquired by international coffeemaker Lavazza, and sending a select group of people to Italy is also being seen as a carrot to retain people. “We won’t call it stemming attrition, rather fostering growth,” says Partha Dattagupta, CEO, Barista Coffee Company.
The churn bug has even bitten one of the best employers in the industry. Proud of the fact that it’s ranked 16th in the Hewitt-Economic Times study of top 25 employers in India this year, Domino’s still has an attrition rate of about 50% in the case of its front-end sales staff, while it is about 10-15% in the managerial staff.
“The threat from organised retail is clearly there, and we are constantly thinking of ways to retain talent, whether it is improving the work environment or empowering employees to grow further,” says Ajay Kaul, CEO (Indian subcontinent), Domino’s. “To make the compensation package more attractive, we have been increasing the variable component in order to bring about a greater link between performance and package.”
Analysts, however, have little hope here. They claim that smaller fast-food retail chains will increasingly become hot poaching ground for big daddies of retail. “Right now, big retailers are not going overboard in the middle and junior level, but it’s a bloodbath at the top,” points out Shiv Agrawal, CEO, ABC Consultants. According to him, on an average, the smaller chains have to be prepared for a 25% attrition year-on-year.
Most analysts believe that people will join big retailers for three reasons — more money, size of the opportunity and greenfield projects throwing up new and challenging assignments. Take the case of Yum! Restaurant’s Pizza Hut. Annual churn among team leaders at some of the Pizza Hut stores has already breached 80% mark. That leaves Dr VP Singh, HR head, Devyani International, a Pizza Hut franchisee, a very worried man.
“We’ve not branded any HR exercise for retention, but we now regularly handhold our staff. We make it a point to have monthly one-on-one meetings with the staff. Moreover, at the shift manager level, we recruit only internally, which is a further incentive to plan one’s career in Pizza Hut,” says Mr Singh. He adds how the company was forced to give 60-day sabbaticals to team leaders who’re taking exams.
There are, however, some like coffee retailer Cafe Coffee Day (CCD) which don’t seem too perturbed by the average attrition rate of 40% at entry-level positions. “While top grocery retailers offer 50-75% higher salaries to poach talent, we have a strong training mechanism and a faster growth platform that these retailers can’t match,” says Shyamala Deshpande, senior GM-HR and training, CCD.
Little wonder then, the cafe-hamburger frat has set out on a mission to retain talent innovatively. As attrition begins to bite, cafe-runner Barista is looking at its assessment centre to foster growth. With a high 5%-per-month attrition across 900 people, the under Rs 100-crore company is busy creating distinct career plans for its staff.
The brand has recently been acquired by international coffeemaker Lavazza, and sending a select group of people to Italy is also being seen as a carrot to retain people. “We won’t call it stemming attrition, rather fostering growth,” says Partha Dattagupta, CEO, Barista Coffee Company.
The churn bug has even bitten one of the best employers in the industry. Proud of the fact that it’s ranked 16th in the Hewitt-Economic Times study of top 25 employers in India this year, Domino’s still has an attrition rate of about 50% in the case of its front-end sales staff, while it is about 10-15% in the managerial staff.
“The threat from organised retail is clearly there, and we are constantly thinking of ways to retain talent, whether it is improving the work environment or empowering employees to grow further,” says Ajay Kaul, CEO (Indian subcontinent), Domino’s. “To make the compensation package more attractive, we have been increasing the variable component in order to bring about a greater link between performance and package.”
Analysts, however, have little hope here. They claim that smaller fast-food retail chains will increasingly become hot poaching ground for big daddies of retail. “Right now, big retailers are not going overboard in the middle and junior level, but it’s a bloodbath at the top,” points out Shiv Agrawal, CEO, ABC Consultants. According to him, on an average, the smaller chains have to be prepared for a 25% attrition year-on-year.
Most analysts believe that people will join big retailers for three reasons — more money, size of the opportunity and greenfield projects throwing up new and challenging assignments. Take the case of Yum! Restaurant’s Pizza Hut. Annual churn among team leaders at some of the Pizza Hut stores has already breached 80% mark. That leaves Dr VP Singh, HR head, Devyani International, a Pizza Hut franchisee, a very worried man.
“We’ve not branded any HR exercise for retention, but we now regularly handhold our staff. We make it a point to have monthly one-on-one meetings with the staff. Moreover, at the shift manager level, we recruit only internally, which is a further incentive to plan one’s career in Pizza Hut,” says Mr Singh. He adds how the company was forced to give 60-day sabbaticals to team leaders who’re taking exams.
There are, however, some like coffee retailer Cafe Coffee Day (CCD) which don’t seem too perturbed by the average attrition rate of 40% at entry-level positions. “While top grocery retailers offer 50-75% higher salaries to poach talent, we have a strong training mechanism and a faster growth platform that these retailers can’t match,” says Shyamala Deshpande, senior GM-HR and training, CCD.
Tuesday, April 24, 2007
Hospitality boom: Are you being served?
The Times of India - 24th April, 2007
Data exists and reams are available (though not the rooms, just yet!) on the number of hotels and properties being added between now and the Commonwealth Games of 2010. The names too, fly thick and fast. Existing players in the hospitality business are planning aggressive expansion and newer names are being added to the marquee.
Underlying the reality of this is the implication of the ‘boom’ on the service provider to the sector – Human Resources. HR is grappling with many issues over this sectoral boom. Primary, amongst the challenges is the available talent pool both at the staff and executive levels.
Hospitality, notably the Indian giants like the EIH (The Oberoi Hotels & Resorts) and the Taj have significantly changed the demographic and the profile of the staffer. Its not far from the ITeS profile - young, bachelor’s degree or equivalent, enrolled for a bachelor’s degree, good communication and self presentation including grooming.
EIH, in particular, grapples with the availability of the employable and the sector itself gets fierce competition from aviation, retail, telecom and ITeS for the available talent. Gen Y needs to be persuaded to get into F&B service and Housekeeping. Most opt for the Front Office, mistakenly believing it to be less strenuous and more glamorous. Though the traditional monies have been less than those of others in the service sector, every player has had to revise this upward.
Compensation at entry levels, both at the staff and executive levels, is the next HR stressor and will continue to frustrate the sector.
The cost of new talent is significantly higher. The ‘old timer’ began out on lower compensation. The annual hikes have also been incremental on a lower base. Managing the difference is and will remain a HR challenge.
The solution lies in ‘pay for performance’ incentives and higher compensation for existing staffers. The differentials have to be maintained positively in favour of existing staff and executives rather than for new talent. This will need to be combined with an aggressive engagement and retention strategy.
The reason for this aggressive retention is the unique need of hospitality - guest recall. This is the term for recall of guests, individuals, their preferences and the sheer magic of service from someone who remembers the guest from their previous meal at the restaurant, from their previous visit, from their previous stay. Rigorous training is not always key to guest recall though it can impact guest connect and service deliveries.
Underlying the reality of this is the implication of the ‘boom’ on the service provider to the sector – Human Resources. HR is grappling with many issues over this sectoral boom. Primary, amongst the challenges is the available talent pool both at the staff and executive levels.
Hospitality, notably the Indian giants like the EIH (The Oberoi Hotels & Resorts) and the Taj have significantly changed the demographic and the profile of the staffer. Its not far from the ITeS profile - young, bachelor’s degree or equivalent, enrolled for a bachelor’s degree, good communication and self presentation including grooming.
EIH, in particular, grapples with the availability of the employable and the sector itself gets fierce competition from aviation, retail, telecom and ITeS for the available talent. Gen Y needs to be persuaded to get into F&B service and Housekeeping. Most opt for the Front Office, mistakenly believing it to be less strenuous and more glamorous. Though the traditional monies have been less than those of others in the service sector, every player has had to revise this upward.
Compensation at entry levels, both at the staff and executive levels, is the next HR stressor and will continue to frustrate the sector.
The cost of new talent is significantly higher. The ‘old timer’ began out on lower compensation. The annual hikes have also been incremental on a lower base. Managing the difference is and will remain a HR challenge.
The solution lies in ‘pay for performance’ incentives and higher compensation for existing staffers. The differentials have to be maintained positively in favour of existing staff and executives rather than for new talent. This will need to be combined with an aggressive engagement and retention strategy.
The reason for this aggressive retention is the unique need of hospitality - guest recall. This is the term for recall of guests, individuals, their preferences and the sheer magic of service from someone who remembers the guest from their previous meal at the restaurant, from their previous visit, from their previous stay. Rigorous training is not always key to guest recall though it can impact guest connect and service deliveries.
This brings us to the next HR challenge of talent retention. Retention, as a key HR issue, cuts across industries. Industry averages of employee turnover are embarrassingly high. But the need for guest recall in order to maintain service levels and guest engagement makes this a key challenge in hospitality.
Of course, this is more true of upper segment business and luxury hotels. Guest recall is not a function of budget stays or budget meal or McDonald’s outlet. Guest recall and guest connect are necessary to service levels in a luxury setting. Frequent changes of staff and executives, forced by attrition, mean that there is no guest recall and guest connect has to be built from scratch.
Retention will draw upon development and higher education as its main thrust area for hospitality and several others in the service sector.
A key reason for attrition is the burnout of the staff. Where lean staffing is the norm, attrition is usually higher. Physical burnout in this labour-intensive sector puts unequal pressure on existing resources. Given the peaks in the season, this can trigger attrition when its least managed.
The key lies in the correct manning and perhaps in just about over manning during the peak season. Taj has maintained a higher staff-executive ratio to service traditionally.
If the HR challenge is not successfully met and supported by top management, then the boom in hospitality may well go bust as the service levels drop and attrition soars.
Of course, this is more true of upper segment business and luxury hotels. Guest recall is not a function of budget stays or budget meal or McDonald’s outlet. Guest recall and guest connect are necessary to service levels in a luxury setting. Frequent changes of staff and executives, forced by attrition, mean that there is no guest recall and guest connect has to be built from scratch.
Retention will draw upon development and higher education as its main thrust area for hospitality and several others in the service sector.
A key reason for attrition is the burnout of the staff. Where lean staffing is the norm, attrition is usually higher. Physical burnout in this labour-intensive sector puts unequal pressure on existing resources. Given the peaks in the season, this can trigger attrition when its least managed.
The key lies in the correct manning and perhaps in just about over manning during the peak season. Taj has maintained a higher staff-executive ratio to service traditionally.
If the HR challenge is not successfully met and supported by top management, then the boom in hospitality may well go bust as the service levels drop and attrition soars.
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