Staff Incentives to Improve Retail Service

STAFF INCENTIVES TO BUILD SERVICE Page 1 of 12
TITLE PAGE – to remain with entry for
judging purposes


Joe Berry Australian Retail Industry
Executive Awards
2015


TOPIC 4
How can Australian retailers implement a staff incentive
scheme to improve service? What incentive is used
overseas? How should Australian retailers manage the high
base-pay rate in this country? What should be the key
performance indicators (KPI) for staff?
Word Count: 2,220 words

TABLE OF CONTENTS
Executive Summary........................................................................................................................... 3
Introduction ......................................................................................................................................... 3
Any business with customers is in the "people" business. ....................................................... 3
How can Australian Retailers implement a staff incentive scheme to improve service?.......... 4
General overview of staff incentives in Australia’s economy ................................................... 4
What other countries are doing?.................................................................................................. 5
What can we do?............................................................................................................................ 6
Intrinsic Motivators as Incentives ................................................................................................. 7
Managing the high base pay rate and what intrinsic incentives can do for you......................... 8
KPIs for staff ....................................................................................................................................... 9
Examples of KPI’s in relation to Organisational Goals............................................................ 10
Riding the Digital Wave................................................................................................................... 11
Conclusion ........................................................................................................................................ 12

Executive Summary
The purpose of this essay is to examine how best we can utilise staff incentive
schemes to build, and improve service in Australia’s retail sector. It explores staff
incentives schemes used in main hypermarkets in industrialised nations and how
best we can mix and match these in Australia. The research draws a lot of attention
to ‘intrinsic motivators’ and how it is a cost effective way to not only improve
productivity, but that is also a mechanism to manage the high base pay rate, without
straining business capital. KPIs are also taken into account in managing employee’s
performance and what factors make a ‘SMART’ KPI target.
With the increased in technological advancements, we see many retailers on-
boarding the digital wave to increase their profit potential. Face to face human
interaction still remains in the equation for businesses to succeed as the physical
store is usually the last point of purchase for a customer.
Introduction
Any business with customers is in the "people" business.
With the increased complexities of retail and customers shopping experience,
in conjunction with the rapid rise in technology, some retailers are forgetting that
great in store customer service is pivotal to business success. 78% of consumers
have bailed on a transaction or not made an intended purchase because of a poor
service experience1
. Employers need to be customer conscious and offer the right
incentives to motivate and engage employees at work. This will complement the
shopping channels customers have, and support their retailing experience.
1
http://www.helpscout.net/75-customer-service-facts-quotes-statistics/

How can Australian Retailers implement a staff
incentive scheme to improve service?
General overview of staff incentives in Australia’s economy
 47% of employees in the retail trade industry received other goods or services
benefits (retail discounts are a major component of this general category)2
.
o See NRA survey 2014 below of most popular incentive schemes in
Australian retail3
.
 Retail trade is one of the lowest net expenditure on structured training4
.
o The main constraint to no training was that existing employees were
already adequately trained.
 Retail trade is an industry with5
:
o The lowest median weekly earnings -$600.
o 4th
largest proportion of employees without leave entitlements.
o Highest proportions of 15-19 year old workers.
2
http://www.abs.gov.au/AUSSTATS/abs@.nsf/2f762f95845417aeca25706c00834efa/11e64f692a38c973ca257
0ec0073e908!OpenDocument
3
http://www.nra.net.au/images/NRA---ACCI---2014-Productivity-Survey-Report-Final.pdf
4
http://www.abs.gov.au/AUSSTATS/abs@.nsf/MF/6362.0
5
http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6310.0
Analysis of the
survey results
revealed a number
of industry
benchmarks and
trends for retail
and fast food
businesses in
Australia. 155
businesses were
surveyed.

What other countries are doing?
The table below is an abstract of what some retailers in industrialised nations
are doing. There seems to be a balance of both intrinsic and extrinsic rewards used,
ranging from job security to performance bonuses respectively.
Incentive Schemes used in major retailers overseas
COUNTRY RETAILER STAFF INCENTIVES USED TO IMPROVE SERVICE
AMERICA
Wal-mart
Ranked first on the
2014 Fortune 500
list of the world’s
largest companies
by revenue
6
.
 Stock Purchase Plan
7
.
 Associate Discount Card
10
.
 Low-level workers typically start near minimum wage, and have
the potential to earn raises of 20 to 40 cents an hour through
incremental promotions. Flawless performance merits a 60 cent
raise per year under the policy
8
.
 Hourly employees are eligible for quarterly bonuses if their store
exceeds profitability expectations
3
.
CHINA
Carrefour China
5
th
hypermarket in
China
9
 Offers binding contracts 3-5 years.
 Opportunity to be promoted as Store Manager within 6 years.
 One additional payment of their monthly wages every year.
 Two medical examinations a year.
 Yearly vacation trip organised by the company.
 Rewards such as extra store credit for outstanding employees.
 Carrefour China Institute (CGI) offers training programs – acquire
knowledge and sense of community.
INDIA
Big Bazaar
Big Bazaar is the
largest hypermarket
chain in India
10
.
 Good wages.
 Promotion and growth in the organisation
11
.
 Annual bonus
 Employee discount cards
 Medical treatment in recognisable hospitals12
UK
Argos
Largest general-
goods retailer in the
UK
13
.
 Performance bonuses
 Staff Discounts and life assurance cover
14
.
 Competitions and teambuilding exercises to bring employees
together and encourage interaction
15
.
 Minimum 22 days holiday.
6
http://news.walmart.com/walmart-facts/corporate-financial-fact-sheet
7
http://careers.walmart.com/about-us/working-here/benefits/
8
http://www.huffingtonpost.com/2012/11/16/walmarts-internal-compensation-plan_n_2145086.html
9
http://www.academia.edu/5232082/Stutter_and_Stagger_How_Carrefour_China_may_compensate_for_its_
shortcomings
10
http://www.customerexperience.com.au/blog/375-creating-chaos-for-a-better-customer-experience.html
11
http://www.scribd.com/doc/20163749/Big-Bazaar#scribd
12
http://www.slideshare.net/nikihlpalan/big-bazaar-10630173
13
http://www.ranker.com/review/argos/2965565
14
https://www.argoscareers.com/jobs_argos2014/careers/your-benefits.aspx
15
http://www.businessrevieweurope.eu/marketing/349/Argos-for-Business-Weighs-Up-Staff-
Incentives-and-Rewards-at-Christmas

What can we do?
Companies in general predominantly offer extrinsic rewards to motivate
employees to work. These rewards are often offered to compensate for repetitive
tasks, or tasks that aren’t really motivating. Various research has shown that while
money can work as an incentive in the short-term, once employees reach a specific
comfort level, it will impair actual performance16
.
People perform better when they feel an emotional or personal connection to work
and when their values align with the company. This can increase their motivation far
more than money. In Australia, and overseas, one of the main incentive schemes is
staff discounts and performance bonuses, what we should move towards is an
incentive scheme designed around team work, personal development, engagement,
and trust, as this will increase productivity from employees own will.
Intrinsic Motivation
17
16
http://books.google.com.au/books?id=rE7ct0p58wQC&printsec=frontcover#v=onepage&q&f=false
17
https://books.google.com.au/books?hl=en&lr=&id=ScTvqTbKB7IC&oi=fnd&pg=PR5&dq=incentives+based+o
n+motivation&ots=FNdlRkXiNi&sig=QhRXu4iivgCOuwlKhEcALC_WLCI#v=onepage&q=incentives%20based%20
on%20motivation&f=false
Intrinsic - Motivation comes from within the individual.
Extrinsic - Engaging in an activity to obtain an outcome that is separable from the
activity itself16
.

The incentives below are simple and cost efficient schemes in building on
employee’s motivation in the workplace, something we can move towards in
Australia.
Intrinsic Motivators as Incentives
QUICKWINS
Competitions
- Competitions between teams to
achieve a goal, e.g. achieving
departmental sales for the week,
department with the least pallets on
shop floor, department with the lowest
shrinkage etc.
- Rewards given such as gift cards.
movie tickets, public recognition,
lunch
Public Recognition
- e.g. Employee of the month, via
mediums such as poster board,
team meetings/huddle, Appreciation
Certificate.
Internal vacancies advertised in
noticeboard
- Gives employees the option to
consider different roles available
within the company, which
encourages them to work harder
and improve on themselves..
Team Building activities
- Monthly lunches
- Christmas Party
- Monthly team building activities
such as Bowling night.
- Participation in team meetings
LONG TERM
STRATEGIES
Offering recognisable qualifications
- e.g. Traineeships, Apprenticeships, Retail
Certificates
- Makes employees feel that there role is
not just a casual job but a career they can
build upon.
- Businesses also gets financial incentives
from government.
Talent Development
Structured training, theoretical and on job
training/work rotations
- Creates a pool of talent when promotion
/other roles is needed, this in turn also
encourages staff to feel engage at work
and meet targets.
- Employees also gets a sense of 'why'
they do things.
-Employess multi-skilling in different areas
builds on their knowledge and growth and
stimulates their sense of work.
Flexbility to work in different stores
- Exposes employees to different
environment and customers.
- Increases their skills to adapt to
different customers.
- Flexibility for employees to work closer
to home, uni, school or a store they are
interested in exploring.

Managing the high base pay rate and what intrinsic
incentives can do for you
Intrinsic incentives offer less financial burden to companies compared with extrinsic
such as bonus payments, commission, and pay rises, which can be higher costs to
implement and can result in diminishing returns. Research has also found that there is no
correlation with money and job satisfaction. In fact, financial incentives can be seen to de-
motivate employees in working as it can lead to stress and the crowding out effect.
According to Mercer Human Resource Consulting 2004 survey, Australian firms offering
non-cash recognitions rose from 55% in 2002 to 76% in 2004. This illustrates that this type
of incentives is on the rise predominantly because it’s a useful way to manage costs,
engage employees and reward top performers18
.
Employees who are self motivated, need less guidance and managerial assistance. This
can result in managers focusing on their key activities which, may mean fewer managers,
reducing labour costs19
.
Nevertheless, with Australia’s high base pay rate, it would be a stretch financially to offer
more financial incentives to improve on service and productivity in general. Especially,
when there’s a rise of organisational restructure and cost-cutting in many workplaces.
Australian retailers can now move towards non-cash recognition and have in place KPIs to
monitor, maintain and performance manage staff to make sure their values are aligned
with organisational goals. Note that when an intrinsic reward is offered e.g. Employee of
the month award, the incentive is the KPI itself as the employee feels a sense of
recognition and treats this as the reward.
18
https://books.google.com.au/books?id=U4944JHEGaIC&pg=PA234&dq=retailers++managing+high+base+pay+rate&
hl=en&sa=X&ei=gcXnVJidO4PCmAXCpoKoCQ&ved=0CDwQ6AEwAw#v=onepage&q=retailers%20%20managing%20hig
h%20base%20pay%20rate&f=false
19
http://smallbusiness.chron.com/advantages-intrinsic-extrinsic-motivation-11246.html

KPIs for staff
KPIs are an effective way to coincide the values of the employee to that of the
employer. KPIs provide a benchmark to measure employees and enable employees to
track their compliance with organisational strategies.
To first develop KPIs, an organisation needs to understand what are their strategic goals
and strategies. This can then be transposed at an employee level as what they need to
achieve. Effective KPIs are one that follows the SMART principle.
According to Kaplan and Norton, KPI’s should also include the following20
:
 financial and non-financial measures
 short-term and long-term indicators
 performance drivers (future-oriented) and outcomes (past-oriented)
 quantitative and qualitative measures
 'lead' and 'lag' indicators
SMART Principle
21
20
http://www.partnercorp.com.au/component/content/article/1-financial/15-setting-effective-
kpis.html?directory=29
21
https://www.google.com.au/search?q=smart+kpis&rlz=1C1CHMO_en-
gbAU555AU556&espv=2&biw=1280&bih=655&source=lnms&tbm=isch&sa=X&ei=Ak7oVI7cLpSD8gWPqYLYAQ&ved=0
CAYQ_AUoAQ#imgdii=_&imgrc=GzkWlZB6dB7oyM%253A%3BF_o61DdYt_OshM%3Bhttp%253A%252F%252Fprakovic.

The table below illustrates examples that can be used once an organisational goal is
defined - Note that the type of strategies/goals is different for different businesses,
industries and environments.
Examples of KPI’s in relation to Organisational Goals
wikispaces.com%252Ffile%252Fview%252Fsmart1.jpg%3Bhttp%253A%252F%252Fsplit-
test.weebly.com%252Fblog%252Fmarketing-goals%3B719%3B334
Retailer’s Organisational Goals
KPI’s
at employee level
to achieve strategic goal
To provide superior customer service
 Customer Service compliments
from customers.
 Reduction in customer complaints
by 10%.
 Suggesting continuous
improvement initiatives in the past
month.
Engagement of employees
 Absentee rates.
 Ability to work well with others.
 Participation in team meetings.
 Suggesting continuous
improvement initiatives in the past
month.
To develop future leadership
capabilities
 Competency in their role.
 Errors made e.g. checkout errors
in the past month.
 Time required completing a task.
 Ability to acquire extra
responsibilities voluntarily in the
past month.

Riding the Digital Wave
We live in a world fuelled
by interconnectedness due to
the rapid growth in social media
and technological
advancements. Retailers are
taking on this digital wave and
using it to leverage
convenience, efficiency and
applying it to the omni-channel
strategy. Self checkouts were
once something retailers and
customers were in awe about.
Now advancements has improved so much we see things such as Tesco’s virtual store in
South Korea where customers can QR scan an image on a train station, and have it
delivered right before they arrive home. Or even better, the upcoming momentum of self
scanners where customers can scan as they shop and pay at the pay station once finished.
These advancements aim to offer customers convenience and a much more enjoyable
shopping experience.
So what does this mean for
the human face of retail?
Like how bricks and
mortar plays an integral part of
omni-channel retailing, the
human face of retailing is still
as important with the rise of
innovative technologies.
Nothing really beats the
emotional connection when receiving great customer service - in fact, according to the

Genesys Global Survey, customers expect better human service22
and it is the customer
service that truly differentiates a business. There will always be a need for face to face
interaction and it should be seen as a supporting channel for the digital revolution in
building and creating an in-store brand and shopping experience. This is supported by
Forrester survey in which shoppers indicated that while they use multiple channels to shop,
at the end of the day, physical store and experience is primacy for closing a sale23
.
Retailers should balance out technological advancements with training and development
for their staff. Both are not mutually exclusive to one another, as even with the best and
brightest technology, if human interaction with customers is not satisfactory, not only will
customers not come back, the reputation of the business is ruined through word-of-mouth.
Money spent on investing and implementing the new technology initiative will also bring no
return.
Moreover, incentive schemes are also built around the in-store face-to-face interaction.
Incentives won’t work if a retailer’s focus is more around technology than customer service.
There wouldn’t be much incentive for staff to work, as everything can be taken care of
technologically.
Conclusion
The retail landscape is changing dramatically, from changing lifestyles which impact
the way consumers shop, to the increase of technological advancements and innovative
ways to create a better shopping experience. It is at this time, very important to focus on
better in-store customer service which results essentially from front level staff. Intrinsic
incentives are the key to engage and motivate employees in a cost effective manner in
conjunction with the right KPI targets to manage performance. It is only then will a retailer
differentiate themselves between from the competition.
Although your customers won’t love you if you give bad service, your competitors
will.” - Kate Zabriskie
22
http://www.helpscout.net/75-customer-service-facts-quotes-statistics/
23
https://www.linkedin.com/pulse/20140429120853-1993563-how-technology-is-affecting-the-retail-industry

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