[Biz] The results I got from challenging the pay structure benchmark in Brazilian retail
Challenging the status quo in the retail industry
When I moved back to Brazil to kick off the retail operations of an Australian brand I remember having an interesting conversation around wages for retail staff.
When I asked my Aussie VP of retail at the time what the payment structure would be like the answer I got was: ‘let's do whatever the rest of the market is doing.’
Having lived in Australia I knew that retail jobs there pay by the hour and there were very few places that added a commission package back in 2010-14.
Which meant that the job was mostly focused on customer service and being somewhat passive to customer's wants and wishes.
Whereas in Brazil there's a quite generalized practice of paying retail staff personal commission over their monthly sales. In some places that is all they get and in other places they also have a base wage. But the sales performance dictates about 80% of their salary.
What this meant to me at the time was that this was the root to a culture where the need to close the sale overshadowed the needs of the client - even if that happened in detriment of the customer experience - and it unfolded into several negative aspects of organizational climate:
a highly competitive environment amongst salespeople and a feeling of 'owning' a customer, failing to understand that the customer belongs to the brand and not to a specific store or person.
excellent high performing store managers willing to climb the corporate ladder but having their promotions blocked by supervisors that would rather have them bringing sales on the floor.
biased salespeople that would pick and chose the customers they were willing to host based on assumptions of how much they would spend, causing a terrible damage to customer experience land a basic human value called respect)
schedule staff based on who deserved to be selling on the most profiting days and punishing all the rest that would always get Mondays and Tuesdays on the roster.
high staff turnover rates as the salespeople would easily leave your brand for the store next door that was offering 0,05% extra in commission.
and the list went on...
So when I was told that we would pay whatever the market was paying - at a brand that highly valued customer experience and teamwork - I couldn't help but challenge the status quo in the industry.
I gathered all the information I could, educated them on the retail customer service situation in Brazil. benchmarked salaries, created an alternative that would reward staff equally while also incentivizing team work and store sales (rather then individual sales), projected the impact on costs of the alternative vs the standard pay and built my case to the GM of the Americas at the time.
In this specific situation all it took was 'it hurst the customer experience' argument to convince him to do things differently.
And as a result I was able to build a team of incredible retail associates that had strong focus on customer experience while keeping an eye on Conversion Rate and Average Transaction Value and at the same time increasing Customer Retention.
The team work in the stores was remarkable: everybody worked with the same effort to help each other and maintain the store operations, we constantly had customers sending thank you notes and compliments on the service, we almost always hit sales target and when one person won - everybody won. Not to mention we had an unprecedented staff retention rate.
By simply challenging one very basic status quo we had set the bar very high by creating a customer centric culture built on respect and relatedness.
I’m not saying that all brands that reward staff with personal commission suffer from all the side effects listed above. If you have a great company culture and a solid hiring and training process and strong leadership amongst your store managers, you can certainly make this system work for you and secure both customer experience and high sales performance.
The message here is simply to challenge the status quo in the industry every time you sense that 'there must be a better way to do things'.
We can't get different results if we keep doing the same as everybody else (it's a big cliche, but so true).