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STUDY: South African retailer busts silos

STUDY: South African retailer busts silos
Friday December 6 2013

Self-service support and improved operational process help break down barriers between head office and stores for Lewis Furniture Retail Stores

For many of those setting up home in South Africa, Lewis Furniture Retail Stores is typically the first stop they make to buy everything from a new sofa, bed or wardrobe, or even a washing machine or TV. With 350 stores spread across rural and South African urban centres, customers are never far away from one of its outlets. 

As one of the country’s largest retailers, the task of managing, communicating and looking after Lewis’ 8,000 employees is the responsibility of Niel Jansen, human resources (HR) director. 

Following his appointment to the role in 2009, Jansen became aware of a number of issues with staff performance across its 350 stores. Jansen called in Inspiring Business Performance (IBP) and together they reviewed monthly sales figures that revealed that many stores and their managers were failing to hit daily and weekly targets. This was underpinned by a higher than expected absenteeism rate. Jansen and IBP quickly undertook a tour of Lewis’ retail outlets to meet with the company’s store, area and district managers to try and ascertain what the issues and challenges were. 

Taking the store staff temperature 

It quickly became obvious that there were considerable issues between store employees and head office that needed to be addressed. Inspiring Business Performance (IBP) undertook a culture and climate survey of both instore and head office staff to ascertain how motivated and committed they were. The climate survey revealed that those employees based in-store had a greater negative perception of the company than the group norm (average of all staff). 

Jansen explained: “We could see that employees instore were critical of the company, and more specifically of their colleagues at head office, but we needed to understand why. Since these employees are frontline staff they represent the Lewis brand to the thousands of customers they meet everyday. A negative or disillusioned member of staff can have a real impact on sales and the Lewis Stores brand.”

The climate survey was able to identify that sales staff on the shop floor had a very negative perception of their colleagues in the support functions located in head office. These support functions included finance, IT, human resources, product support and repairs, and customer support. These poor performing relationships had a real and financial impact on the quality of service being delivered in each store. 

Having obtained an overview of perceptions, Jansen decided to drill down further into attitudes and gather more qualitative data that could be used to develop and implement a change plan. Using IBP’s Silo Buster tool Jansen set out to establish where silos existed and what internal bottlenecks were impacting company performance. 

Busting out of old operational habits 

The Silo Buster tool was implemented in May 2011 and once again surveyed all staff but this time measuring the perceived quality of services offered by employees to their own colleagues as mapped against 12 key performance indicators. These indicators include attitude and professionalism during service delivery; the quality of information and feedback provided during service delivery; quality of communication between the two employees; the accessibility and reliability of an employee during the exchange; the urgency of response; the impact of service between the two employees or departments; and importantly the attitude of the employee during service failure and how that supports customer loyalty during the interaction. 

Carlo Froneman, head of organisation diagnostics at IBP, explained: “The accuracy and efficiency of internal business processes and working relationships play a significant role in the success and profitability of a business. The Silo Buster reviews services provided to fellow employees and other departments within an organisation, as well as the suppliers and anyone else with whom we work.” 

The tools identified and rated the relationships between departments at both a qualitative and granular level. For example, the tool identified that the lack of urgency in communication between the store and the finance department meant that the store was unable to query billing or credit enquiries in a timely manner. Long delays resulted in customers going elsewhere meaning stores were missing sales targets that they should have been able to achieve. 

The tool also identified, amongst other issues, that the turnaround time on requests from the store to head office support function was protracted and delayed. In some cases orders were being taken in store, and sent to head office for processing, only for product support departments to advise latterly that the product had been discontinued or that the colour or fabric was unavailable. 

Putting change plan into practice

The net result of these examples was that the store considered head office staff to be unhelpful with a bad attitude. This was having a direct impact on sales and customer service. Having identified where the silos existed, Jansen and IBP set about developing an internal change plan.

A number of initiatives were implemented. IBP ran workshops, on behalf of Lewis, with senior managers to highlight the problems and develop new processes to overcome the issues with internal service delivery. The HR team also incorporated feedback from staff at all levels into the new processes as a way to improve engagement. 

Staff at head office now have a two-hour time slot to respond to requests from store colleagues. If answers are not received in that timeframe, the store is able to escalate its enquiry. The stores have also been provided and trained on a new self-service support IT system that enables them to find answers immediately to billing and stock enquiries. By empowering the stores to help themselves, they are able to respond to customers quickly and accurately. 

The change plan has been underway for a number of months. Jansen estimates that it will take until November 2013 to implement fully at which point he intends to re-run Silo Buster a second time to see how perceptions have changed. 

“We’ve already seen a vast improvement in internal service delivery that has resulted in a shorter turnaround times on customer requests (both in store and on the phone), on product information, availability of new product ranges, financial applications and requests, product repairs progress and delivery time of pre-ordered furniture. The impact of improving internal service levels has resulted in improved sales and retention of existing customers,” Jansen added. 

Positive effect on customer service

By reducing employee frustration that was causing staff turnover, eliminating activities that were not important, and identifying training needs by uncovering gaps in competencies and performance, Lewis has been able to improve external customer service and delivery of products and services. 

IBP worked with the company to analyse scores and profitability. According to Jansen: “The relationship between the Silo Buster score and profitability (92% correlation) is so strong that stores with low scores, reported low profit growth for the same period. IBP was able to identify that a 5% improvement in Silo Buster score corresponds with a 4.5% improvement in profit growth.”

He added: “Customer service has also realised benefits. By improving the Silo Buster score by 3.5% the stores’ customer satisfaction levels have increased by 6.5%, which means more return customers.” 

“Overall we also established that a 1% improvement in the Silo Buster score has a positive impact on all of our company key performance indicators including profit growth, staff turnover and customer satisfaction levels,” concluded Jansen. 

Lewis has now created a culture of feedback, ensuring that individuals feel empowered, engaged and able to make a difference. Silo Buster results have now been incorporated into personal development plans and are linked to relevant customer service interventions. By taking a proactive approach to customer service, delivery and retention Lewis is now able to more effectively support stores across South Africa regardless of location. 

Tagged as: Lewis Furniture | South Africa | head office | store | processes | HR | support | targets | absenteeism | service | IBP