Staff motivation is notoriously difficult to capture. This article shows how to combine Footfall Utilisation Index with Staffing Index to truly measure staff motivation.
Retail organisations have treated store staff as simple recipients of orders for years and incapacitated their sales teams in the process. But more and more brick & mortar retailers are beginning to understand the importance of motivated, committed sales teams who like what they are doing and feel appreciated by management and the organisation.
The retail industry is currently discussing how to improve customer-centricity. Retailers are discovering staff motivation, knowledge, appearance, behaviour and empathy skills of their sales teams as key differentiating factors and contributors to excellent customer satisfaction and high customer loyalty. However, staff motivation is as difficult to capture as a shy deer, multifactorial and hard to measure.
Companies use a range of different techniques to evaluate staff motivation. And while they all contribute to measuring motivation, they also come with limitations.
Staff Turnover and Exit Interviews
A high staff turnover is an indication for low staff motivation and loyalty. And exit interviews can help to understand what the reasons for leaving are. But very often retail staff are changing jobs simply because they were offered a better paying job. And unfortunately, this applies especially to best and good performers.
Retailers work with questionnaires, 360 degree evaluations, feedback and evaluation meetings in order to better understand how motivated their store teams are. But we know from experience that truly anonymous surveys are hardly possible, especially in smaller retail organisations with smaller store teams. And surface level questionnaires that allow for true anonymity are less effective as they do not lead to a comprehensive understanding of the situation without the context of length of service and hierarchy level.
Open Communication Platforms
Appreciating feedback in any form and handling it in an appreciative manner clearly is a good basis to encourage staff to openly share feedback and suggestions. And this clearly helps to understand motivational levels of your store teams. But this is easier said than done and requires high efforts and a deep understanding of its importance on all management levels.
Store Staff Performance
Yes, an excellent sales staff performance is an indication for high staff motivation. But high footfall, sufficient staffing, optimal replenishment, efficient store operations and excellent staff education equally contribute to a good sales and staff performance. All of these indicators help to evaluate staff motivation in a store team but none of them actually measures it.
The usual suspects are conversion rate (CR), unit per transaction (UPT), average ticket value (ATV) or sales per hour (SpH). All useful but none suitable to objectively evaluate and measure staff performance and staff motivation without adding footfall utilisation index (FUI), service factor (SF), manning factor (MF) and the staffing index (SI) into the equation.
I’ve introduced FUI, MF and SF as key indicators that help measure and evaluate staff performance in an earlier article. In order to measure staff motivation, however, let’s add the FUI and the SI to the mix.
The Footfall Utilisation Index (FUI)
The FUI tells you how well each store team made use of the existing traffic development. This is one of the most objective KPIs, as it compares each store with itself, measuring whether its turnover development was better or worse than its traffic development in any given period of time. Some companies call it FUI, while others refer to it as variance or staff performance indicator (SPI). Regardless of naming, this is how to calculate it:
If the FUI scores above 1.0, retail staff managed to get more out of the actual footfall. If it scores below 1.0, staff did not convert higher footfall into at least the same turnover growth, or to at least keep turnover drops on the same level as footfall drops.
Footfall (its absolute number and the share of relevant footfall of total footfall) is one of the main performance drivers of brick & mortar stores. The FUI provides an opportunity to take footfall into account when evaluating store and staff performance and staff motivation. However, for a fair and objective measurement of staff motivation, one additional KPI, the staffing index (SI), is required.
Staffing Index (SI)
The SI shows whether you spent more or fewer staff hours per store compared to the previous year. If, for instance, you spent 10% more staff hours the SI totals 1.1, and if you spent 10% fewer staff hours it would score 0.9.
When evaluating staff motivation we usually use the following two graphs to illustrate staff motivation and to compare it across a store portfolio.
How to read this? All stores experienced footfall drops, but with exception of store 3, 5, 9, 11 and 12 all stores managed to achieve an FUI > 1. They counterbalanced reduced traffic numbers by increasing conversion rate and average ticket value. It looks like stores 6, 7, 8 and 13 achieved the best results in compensating for footfall declines achieving an FUI > 1.05. It looks like these four stores might have the most motivated sales teams in this region.
Adding the staffing index into the equation results in a quite different and more refined evaluation of staff motivation.
Lets have a look at the top FUI-performers: stores 7 and 8.
Although store 8 reaches a slightly higher FUI, store 7 obviously benefits from a highly motivated store staff. They almost managed to outbalance a 14 % traffic decline and realised 98.5 % of last years turnover, hence only lost and achieved an FUI of almost 1.13 with 7.5% fewer staff hours compared to last year. A store with truly high staff motivation. Store 8, on the other hand, had to handle a 24 % traffic decline and also managed to outbalance a big chunk of it, achieving a decline of no more than 13% in turnover and thus a respectable FUI of 1.13. But they spent 9% more staff hours to achieve this result.
Measuring and evaluating the ratio between FUI and SI we group stores into 4 cluster, each of which requires a different level of management attention and entails different actions and measurements in order to improve staff motivation and store performance.
We experimented in different projects with a staff motivation index, another KPI that combines the FUI and SI metrics, but realised that people struggled to fully grasp it. Store and retail management seem to do better at identifying the necessary actions by looking at a set of KPIs rather than one combined metric. Therefore, we decided to use this two-step evaluation to measure staff motivation.
Staff motivation is a complex, multi-dimensional success factor. And one way or another all our recent projects focused on improving staff motivation, enhancing empathy, commitment and dedication of sales staff. Introducing the KPIs described in this article helped retailers to identify top priority stores needing management attention, and helped develop and structure an action plan to improve staff motivation and performance. Which actions worked and which ones showed low to no effect, however, is a story for another article.
About the Author:
Heike Blank has worked for big organisations such as VF Europe and s.Oliver but also for niche brands such as Ecko Unltd. and Zoo York in top executive positions. Her extensive experience with opening and managing own retail, partner stores, concessions and shop-in-shops in 23 countries in Europe, the Middle East and Asia make her an expert in expansion. Read more of her work here and connect with her on LinkedIn.