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    Grooming Future CEOs

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    The most important part of building any industry is the creation of capability as well as capacity, says , Founder- TRRAIN and Vice Chairman – . Retailers in India need to introduce management development programmes to groom entry-level employees to rise through the ranks.

    Indian modern retail has remained in its infancy for a long period now. The industry has grown in volume and value sales, but the contribution of modern retail to the overall retail hovers in the 5 percent range. The hard truth is that modern retail has not surpassed our country’s consumption growthin a big way. At the same time, traditional retailers are expanding and modernising themselves. Modern retail has attracted a large share of media space as well as mindspacein the consulting practices – after all, nobody can deny its benefits and positive contribution to the India growth story. Unfortunately, the politicians and the beaurocratic set-up of the country have not understood the impact modern retail can have on the Indian consumers and the economy. For strange reasons, modern retail in popular imagination has got associated with the FDI issue.

    For me, the most important part of building any industry is the creation of capability as well as capacity. Both require government encouragement in terms of promoting and supporting the industry and infrastructure planning. In the absence of such an enabling environment for modern retail, bright youngsters and working professionals would not consider it as an attractive career option.

    The government’s lack of action in developing modern retail has left retailers with no choice but to build the infrastructure and the entire business on their own and thus suffer the pangs of uncertainty and low profitability because retail is very capital intensive, whether for infrastructure or working capital.

    In such a situation, capability building has to be taken up by retailers themselves. In hindsight, one of the best decisions I took in Shoppers Stop was the “Graduate Trainee Program” in 1992 or the “Baby Kangaroo” development centre in mid-1990s. Both these programmes have been of immense value to the company as well as the industry.

    , CEO of Gili; , CEO of Celio; and Pooja Dhawan, now Business Head for SS.com, are all products of this management training programme. They are now part of the leadership of the industry. They have grown through the ranks, worked in various departments and in more than a decade of hard-core retail experience become CEOs of businesses. They have seen many successes and a few failures during their tenure. What is very important in consumer-lead businesses is to learn “what not to do” because every book, magazine, and journalist glorifies the success of retailers and the CEO and keep talking about what they have achieved.

    However, there are very few articles or research papers about what leads to failure of retail businesses, retailers, and the retail CEOs.

    All the above people have gone through these experiences personally. I am sure each of our retail companies will have many stories of individuals who started as an associate at the bottom of the pyramid or as graduate trainees and rose through the ranks.

    The “Baby Kangaroo” programme at Shoppers Stop was introduced to tap the talent at the grassroot level, train and groom them with mentors, and prepare them to take up roles as department and store managers. Today, it has developed into many programmes such as “Baby Kangaroo,” “Kangaroo,” and “Senior Kangaroo,” well-aligned with the development centre programme of the company.

    The reason I have mentioned about the capability exercise is that the industry will have to set up for itself a management development programme centre at the company, group, or industry level. We will have to groom youngsters to take higher responsibilities keeping a 5-10 year time-frame in mind. We have to consider this investment as a CAPEX item, otherwise HR managers will not look at these kind of investments as their line of sight is between two increment years.

    CEOs and company boards question and debate about issues such as store signing, fit-out investments,lease period, longevity of stores, and ROI. I have rarely heard them asking questions about the talent pipeline in the company. An investment of Rs 50,000 a year on an individual can build a great manager of tomorrow.

    A new store costs anywhere between Rs 50 lakh and Rs 10 crore depending on the size. An architect’s fee is between 2 and 4 percent of the CAPEX invested. A PMC charges 1 percent of the CAPEX. But how about a model where a training company charges 1 percent of the CAPEX and delivers a standard of measurable retail experience year after year and gets paid for that every year?

    It is time the retail industry works on a business plan for the development of employees over a five-year period and the boards of retail companies review it every year. I am sure in the next 10 years, we will have highly experienced retail CEOs emerging from India who, in the next few decades, can become the global CEOs of companies like WalMart and the M&S, similar to what we have seen in Unilever and Citibank. I am sure this is not just my dream – it will happen in our life time.

    *This column was originally published in May 2012 issue of Images Retail