PURE SPECULATION SERIES

I have worked in retail and fashion for many years, and many of the companies I have worked for are no longer in existence today.  Some of the clothes I still pull out here and there to use on my blog. (I mix old, novelty pieces with fabulous new things!)  While the blog satisfies the creative, visual merchandiser within… there is also a business woman inside of me that has spent years working for retailers, driving sales teams, managing staff, hiring, training, supervising, being internal loss prevention detective and dealing with, as well as observing and working in conjunction with many different corporate office cube farms .

The companies either died or were bought out and then died or they are currently close to death.  The cause of death in each case was or is from internal injuries.

Sure, sometimes there are years in which the US economy is worse than others, but the truth is, in retail…the company’s personal economy is always hanging in the balance.  Either internal losses, poor decisions in the buying department, management issues or hiring, are always the keys reasons for failure.

Because of this, it impresses me tremendously when I find a successful and stable company that is very careful in the decision making process and their success generally comes from who they allow to make these decisions.  The perfect balance of product, people and presentation can be a profitable and rewarding work environment in any world economic temperature, however, the “people” part of the equation is usually the hardest part to get a handle on.  Without the proper “people” part of the equation… the “presentation” and “product” are in imminent danger.  A previously successful balance of brand and management can see hard times by letting poor “yes” men call the shots.

I first became familiar with the term “yes men” when the workers and friends surrounding Elvis Presley were referred to this way in the media.  The term stands for those people who stand around, telling you everything is ok and well, the whole time sucking the $$$ out of you.  “Yes” men nod their heads, smile, act and sound knowledgeable, and look good doing it as their true goal is to keep the gravy train flowing as the company keeps making wrong turns.  Most power jobs are typically held by the same type.  A high energy smile, quick minded answers and positive, upbeat nods of agreement, even when agreement or approval isn’t warranted. Have you ever noticed the type of people who talk and give ideas and opinions, but upon further speculation…you may realize that nothing of any value was even said? Appearing as an effective leader and actually being a doer and a true asset is completely different.

People do not like to rock the boat.  Some are very good at presenting themselves in a perfect light.  They pretend everything is fine, ideas are golden, and they pretend to completely understand the math and the long term impact that seemingly insignificant decisions can have on a company’s future.

There are also management employees that sometimes feel the pressure to justify their existence by adding or amending policies which can be detrimental to company success.

As far as retail empires are concerned, I am very impressed with the successes of Michael Kors, Tory Burch, Marc Jacobs and the Jessica Simpson Company.  These appear to be retailer houses that employ and surround themselves with great management and the success and dollars (because dollars = success) they generate is amazing and they all make it look simple and easy.

One of the key issues that management struggles with in the retail arena is hiring.  To be successful, you absolutely must be equipped with the ability to hire well.  Without the right people, you are nothing.  The wrong hires beneath you will help you lose your  job.  You can not hire someone and then complain about them to your superiors, because in reality, you are then highlighting your inability to hire.  So if you are not intellectually equipped to know what to look for in hiring or recruiting  a great employee at any level, become equipped.  The wrong people will cause company loss.  If you hire the wrong people to manage others, then they will hire the wrong people.  Then you have a mess.

The wrong people steal. They lie.  They cheat.  And they sound and look good doing it.  A good thing to look for in hiring, is people who love your company and the opportunity you are affording them.  This is important so that the decisions they make will always be in order to serve the best interest of the company,

An example would be Rhonda.  Rhonda was an Assistant Store Manager for a retail company for a few years, before working her way into the Store Manager position.

Rhonda had a four year college degree.  During Rhonda’s 8 year stint as a Store Manager for this retail chain, she often hired people she was friends or acquaintances with.  This created an unfair balance within the store level.  “Friends” were treated well with better position upgrades and higher raises, while others floundered and drifted away due to lack of acknowledgement of their years of service and hard work.

Rhonda eventually worked her way into a Multi Store Manager position, thanks to her District Manager.  Within the first year of holding this position, Rhonda alerted the company as to the bad habits of her District Manager, who was then fired, while Rhonda gained her position.

Rhonda’s stores were not doing very well in her District, as she continued to hire “yes” men (friends) to manage her stores.  Blinded by friendships, internal theft was growing in many locations.  One of her Store Managers was caught by another employee after stealing thousands of dollars of company bank deposits. Rhonda never caught the employee theft because she was blinded by her personal relationship with the manager that was stealing.  Rhonda, however, took credit with her corporate office for catching the theft, and used the opportunity to make herself look even better.

In a different area of inadequacy, Rhonda’s corporate office offered mail out coupons to their recurring customer lists.  The corporate office decided it would “track” usage per store of client coupon use and decided it would be beneficial to use this as a tool to measure success of the coupon.  It would appear to the cube farm employee, that dreamed up the coupon in the first place… that if “Store 999” accepted 100 coupons this month, and the coupons were responsible for x amount of sales, then we could conclude that their coupon brainstorm generated those sales.   At the same time, the company also was pushing for each District to have an average of 2.0 units per transaction.  In their cube farm thinking…this surely meant that the salesperson was worthy of employment and that the staffing was fabulously performed by the District Manager.

Reality would prove, that the employees would often tell the customer, that if the would just pick out a second item… it would be $25.00 off  because they had a coupon they would scan for them at the register for a discount off the second item.  This helped the sales associates to appear effective via the cube farm report, by having two units, however…never mind that nothing was actually paid for the second item. The District Manager would also get  to appear successful, when actually the company was losing $25.00 per transaction. Of course, the cube farm corporate hack who hatched the coupon, without appropriate fine print constraints and proper tracking to insure coupons were only used once, also looked like a genius.   Usually a consumer was purchasing a dress, and then the coupon amount would cover a pair of earrings or other accessory.   While it would have been a true generation of company profits if the consumer was actually driven to go to the store and shop due to receiving the coupon, all bets are off and it is pure asset loss when the discount was not the motivator in the first place, and money is literally being taken away from the company by it’s ill motivated District Manager and all of their underlings.  A true business person would realize and care that their company is losing in the short and long term.

Sometimes on paper, what looks profitable and actually is profitable is not the same thing.   I have always believed that every retail corporate office employee from the cube farm should have to go work in a store for 30 days at some point, so as to understand their corporate position better and how policy truly effects the company from a financial perspective.  This would help each corporate person at every level understand the reality/fantasy of certain measures before implementation.  Consequently, it would benefit companies if employees at store level were trained on business education as opposed to being pushed into wrong doing for fear of retaliation in case the excel chart doesn’t show a false increase.

One last example I will give is from a fabulous company that was once in their prime and now no longer exists.

I won’t say the name.  It hurt s too much.  However, to cut costs and to appear effective…someone at the corporate headquarters decided to cut down on store opening management down from two employees every morning to one person.

This person was to open the store, get the bank deposit, get back into their car, drive to the bank and then return.

Just a few shorts months after this policy went into play, the company shrink became unmanageable.  To continue cost saving measures, the company began buying lower end merchandise which then had a negative impact on sales.

During this time, I traveled to other states to visit problem Districts and was amazed at the loss I saw.  Merchandise levels off by 80%, bank deposits off by 80% in store after store.   When I asked a Regional, “When is the last time you were in these stores?”  There was dead silence on the other end of the phone because she had no answer. My turnover % was always lower than any other store, District or Region so I have tried to help teach others the secrets to hiring and succession planning.

When you factor in time clock fraud, poor visual merchandising, and the hiring of lower end, less skilled employees and terribly declining merchandise quality in order to combat company costs…the loss was so severe and poorly managed, I left the company knowing the inevitable was close.  Six months later this once fabulous, successful and growing retail chain was dead.

There are people I’ve had to fire in the past, that are now multi unit managers.  One pretends to have a college degree, but could barely doing math even with a calculator but now has a great job.  I could go on.  My point is, listen to people during the interview process.  Stop talking, and really listen.  You do not want people who lie managing in your company.   Integrity is above all else.  It’s something a person is born with.  An individual with integrity won’t always say yes. A person with integrity is golden in the survival of business at every level.  A person without integrity is a danger, and the words they say are useless drivel.

Death by the “yes”men.  Death caused by the very employees you hire to protect your corporate assets.  Death  because the company can not run itself, no matter how fabulous the products you sell, no matter how fabulous the location of your stores, and death no matter how many credit accounts you force your store employees to open for people too stupid to know that if you actually need a credit card to shop and spend…they probably shouldn’t be shopping and spending.

Generating a positive income from selling a fabulous product line is not as easy as some companies can make it seem.  There are so many other factors to consider… and unfortunately, all factors are effected by the people you hire.

Oh, and Rhonda?  Rhonda worked her way up to an even bigger corporate level…her company is operating at a loss, according to their quarterly results and there are shrink issues throughout her region.

The next 12 months will prove to be very volatile in the retail arena, and challenging from a sales perspective as it is.  So Happy Hiring.  Your company’s future is in your hands.