Retail needs to take the lead on pay - there are too many followers and cost-cutters

In light of a story that has appeared in the news today about wealth, I'm looking at leadership on the issue of pay.

Oxfam report that the richest 1% now has as much wealth as the other 99% combined. This is a moral issue that affects every business, and I believe that it is a leadership issue. Every business has the moral obligation to look after the people that work for them. It's not just pay (which a lot of companies need to go much further on) but working conditions, time off, work-life balance and benefits.

At this moment in time, the UK economy is hugely skewed towards business - particularly big business. Media stories regularly show big business not paying their fair share of tax. The minimum wage has served it's purpose and needs to be replaced by the living wage. The taxpayer is subsidising people with a family to work for these companies through working tax credit.

It's time to take a lead.

Unfortunately many retailers are culprits when it comes to poor pay. The minimum wage seems to be the standard wage for national and multinational retailers. It really isn't good enough. Employees are being squeezed and customers are being squeezed in search of extra profits. Billion pound plus profits for shareholders and company owners while paying frontline employees the barest of minimum wage will be counterproductive in the long run. Having demotivated employees that don't give the same service as customers experienced in the past will lead to declining sales. The bottom line is about far more than just cutting costs.

If you are an independent retailer then look at what you pay end how you incentivise your team. If you work for a larger retailer then it's part of your commitment to your colleagues that you raise the issue if low pay in the correct forums.

Retailers have a duty of care for their employees. See why it's more important in results season

It's the time of the year where retailers announce their results that cover the busy Christmas period. It's good to keep abreast of these, particularly those that operate in the same sector as you. Two that have been announced today are Morrisons who reported better than expected sales and Debenhams who report their sales as "strong."

This has got me thinking about sales figures and how they affect your team. When I worked for BP it was always a horrible couple of days with customers angry at petrol prices when the company was reporting multi-billion pound profits. I suspect that Starbucks employees had similar issues when their tax affairs were made public.

My readers are generally split into two main camps - independent retailers and those who work for larger retail operations. The difference in these two is enormous and only widened by the public reporting that is required of publicly -listed companies. There are lessons to be learnt whichever camp you are in and today's blog will look at this.

Larger chain retailers
And this especially applies to those that have regular reporting of their figures, because this is where you can get examples such as the BP and Starbucks ones above. It is important for those earning massive salaries to protect their workers that are on the front line. It is difficult for customers to differentiate but the comments, ill-feeling and sometimes abuse that a BP worker gets is completely disproportionate to their role in the process.I have always spoken to those customers that voice discontent at the prices of the retailers I work with about my lack of role in the process that dictates prices. If I am working in a store, for example, then my ability to affect the price that the company sells their products at zero.

But not every employee is this insightful or confident with what they do. As a large organisation the people at the top and (more productively) the marketing, media or communications department needs to ensure that they soften the blow for the lower level employee. BP used to produce a press release for us to hand out to discuss with the customers. It explained the difference between BP Retail and BP Oil and how it isn't legal to cross-subsidise one with the other. It separated the customers who were interested in the affairs of the company from those that just wanted to have a moan. Large organisations have a moral obligation to pay their workers better, pay their way in taxes and to look after their front line workers - and this includes provisions for when publicity affects their work.

Independent retailers
I think that there is mileage here in having some sort of published results for your own independent retail business. This is an especially good idea if you can compare and contrast this with the competition from larger chains.Firstly you can share an edited version of the results with your team. Perhaps breaking it down into percentages rather than actual cash will protect your personal data. For example-

• 45% of our costs are for staffing
• We paid 25% of our income in tax, whereas our multinational rival paid only 6%
• Our profit margin after all costs and taxes have been taken out is 9%

These figures will highlight to your team what a difference a small pay rise makes or the benefit of selling one extra item per customer or whatever you want to highlight. and this is where joined up business wins out every time. If you understand your results, understand what you want to make better then you can help your team to understand what differences they can make. For example, if you want to increase the sales by 10% to give your team a 5% pay rise then use the annual figures to explain this.

The second point is for those that are a little bolder with what they do. It's best explained by way of example and I'll use a coffee shop for example. It's about comparing and contrasting your operation with a multinational rival and using this as marketing ammunition. Imagine this press release, or something similar, appearing in your local newspaper-

"Use your local coffee shop as it benefits the community

Local coffee shop Coffee For Me has just published it's annual results and it makes startling reading. In contrast to the American-owned coffee chain XYZ Seattle, who only paid tax of 4% on  their UK earnings, Coffee For Me paid 20% of their earning sin tax. They also employ 5 people from out town, all of whom then spend their ages in our town. The owners, Mr and Mrs Jones, have lived here for over 20 years and they shop locally with other locally-owned businesses.

If you want to ensure that you support local people and people who pay their fair share of UK taxes, make sure that the next time you go out for  coffee it's at Coffee For Me, and nor one of these chains that are taking money away fro the town, the region and the UK."

It is for those with a little more aggressive marketing approach but the impact for me would be a huge one. It's all about making your customers think about their purchases and to make a decision on the greater good.

All in all, retailers have a duty of care over their colleagues. Whether it's to protect them from negative media coverage, to help them understand the business or to prompt their customers to shop locally.

Do organisations have an obligation to people other than their shareholders?

I ask this question because, as I grow older, read more about the world and experience life with more and more organisations I see things that perhaps I hadn't seen before.

I've recently read the autobiography of Mahatma Gandhi and one of the  overwhelming themes was living on what you need to get by.

I would put it to you that many, many multinational organisations gather in vastly more resources than they need and yet their staff at the bottom level struggle to exist on the minimum wage. The question emerges - do the leaders of the organisation at the top have more of an obligation to look after their employees (higher wages, more annual leave and better benefits) than their obligation to their shareholders (lower costs, greater profit and better dividends)?

And it's not just with wages that I feel organisations need to look at their obligations. I read this article yesterday with some interest-

http://www.independent.co.uk/news/business/news/boots-to-cut-700-office-jobs-in-the-uk-10305508.html?origin=internalSearch

A genuine "restructure" where a company redeploys it's resources into different parts of the business for commercial reasons makes sense. Adapting the online offering, moving people from traditional marketing to the social media team or moving people from one store to another to react to customer demand all make sense.

The euphemistic restructuring that companies use as a buzzword now means job cuts and a drive to reduce the overheads a business faces - at the detriment of the workers who lose jobs, have hours cut, have to relocate, are under-employed or don't deal with the change very well, sometimes because they aren't supported through this change by the organisation that brought it about.

Again, it begs the question of where the company's priority obligation lies.

I've often thought that there are enough people in the UK that believe in equality and fairness and they could be mobilised to buy shares in a company and apply pressure on the policies that the company has, in terms of salaries, environmtal considerations and ethical business practices.

Rigid structure or go with the flow?

Is structure and a set way of always doing things the right way forward? Or is rolling with what is thrown at you and adapting your business to deal with this the correct way in the modern world?

I have thought a great deal about this over the past few weeks. I have worked for many multiple retailers who have set policies and procedures for just about every eventuality. They usually have a company intranet where you go to find out what they require of you if a customer falls over, if an employee calls in sick, if a customer claims they have been given the wrong change, if just about anything.

There are other companies I have worked for and with that operate under a flatter management structure, where the heads of divisions and areas are much closer to the action and the team are empowered to make decisions that benefit the company and, more importantly, the customers.

You can probably tell from my tone that I am in favour of the second type. I think that training, coaching and mentoring your colleagues in the ethos of the company, and how you operate will give them the confidence to make the right decisions when dealing with customers. Being the business owner (as I'm sure many of you are) means that it's your ethos and your operation that you will be communicating. This flat structure means that there are not many layers of authority and it's easy for your sales team to contact you with any questions, suggestions or feedback.

Thinking in your feet isn't just something that you, the business owner, should be doing. You want an entire team that is able to be entrepreneurial in the same way. Building in incentives, to make your employees think that they own a part of the business will help you in this cause. Whether that is offering shares or offering a proportion if the sales commission is entirely up to what you are comfortable with.