Article: FDI reforms will unleash a war for talent


FDI reforms will unleash a war for talent

Shailja Dutt, Managing Director, Stellar Search
FDI reforms will unleash a war for talent

to be written


The recent reform measures are a welcome change, and the impact would be unique in each instance, as each industry segment is different. For retail, it certainly will boost development of back-end and supply chain infrastructure all throughout the country, something that has been much needed for quite a while. It will help in bringing in greater investments, latest technologies and the best practices in use in different parts of the globe. It will bring the “global” best to the country. Given the size of the market in India, with organized retail comprising a mere 4% of the overall market, I feel there is enough space for both organized retail and traditional mom and pop stores to co-exist side by side. Fears about the kirana stores being wiped out are highly exaggerated. I also feel SMEs stand to gain immensely, if they were to look upon this as an opportunity wherein leading global players could form a part of their client/customer base, especially given the mandatory sourcing clause in single brand retail (mandatory sourcing of a minimum of 30 percent from Indian micro and small industry). For aviation and broadcast, I don’t see any significant impact at this stage.

With the recent policy announcements coming into effect, companies need to be prepared for an all out war for talent, in a country already struggling with a huge gap between the demand and supply of employable talent. The struggle for talent will really be at several different levels with myriad perspectives. The paucity of talent in retail specific functions like Store Insights, Buying & Merchandising, Store Planning, Visual Merchandising etc will be one of the key challenges confronting global retailers looking to set up shop in India and Indian retailers looking to compete with the best across the world in their industry.

With a vast majority of Indian retailers still new to the game, bringing on board seasoned retail professionals with the requisite vision, strategic foresight and global experience would be a necessary component of organizational strategy. Besides the conventional leadership competencies, strategic vision and communication skills par excellence, globally successful retail leaders are characterized by competencies which are a balanced confluence of the art and science of retailing, namely marrying the mind of the local consumer in emerging markets to the application of best practices followed in evolved markets globally.

In the absence of adequate numbers of such leaders available within the industry locally, it would be advisable for retail firms to adopt a two-pronged approach when it comes to putting a leadership structure into place. A strategist/operational expert format, one in which the primary responsibility of running day to day operations falls upon an individual familiar with the task at hand (even if the experience has been gained other emerging markets) whilst the strategist’s responsibility of formulating long term strategic goals, rests with someone well acquainted with the mindset & preferences of the Indian consumer could be the way forward for a majority of retailers still uncertain about how to go about putting a leadership band into place.

Relying exclusively on expatriate professionals to bring in key competencies is not a viable proposition. Development of local/native talent will be the key for sustained success over the long term. Simultaneously, lack of adequate training for personnel at the shop floor level could also emerge as a major stumbling block, for domestic and global players alike. In an industry such as retail, it’s usually the foot-soldiers that determine the shopping experience for a customer, shaping their perceptions and his/her decision to return to a particular store or not. It would be imperative for large players to focus on this segment of their workforce to ensure they provide their customers with a shopping experience at par with global standards.

As Indian compensation levels, especially in this sector are fast catching up with global levels and salaries in excess of $500,000 for the top job are not uncommon, wages are most like to increase. However, the compensation trends for the last two years show conservative growth given the cautious consumer sentiment with majority of retailers giving increments in the range of 9-15%. Variable pay is becoming a larger component of the overall compensation mix varying between 15-40 percent of total compensation. At the junior management levels monthly/quarterly incentive based payouts are becoming an effective tool to motivate and engage employees. At the bottom of the talent pyramid, retailers will grapple with an acute shortage of skilled shop floor personnel. They need to put the necessary structures in place to ensure a steady pipeline of such talent from the very inception of their entry into the market. Instituting vocational development programs in collaboration with academic institutions, government vocational skilling institutes, inclusive growth non for profit bodies could be an option.

Based on my discussions with colleagues in the industry, I can say that most players have realized that the conventional rules are unlikely to apply in the Indian context. I feel a majority of Indian retailers have woken up to the challenges they are confronted with and have begun to brace themselves accordingly. The entry of large global players into the market will further catalyze this process. In terms of actual steps being taken, though a beginning has been made there is still a long way to go. We will have to wait and watch.

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Topics: C-Suite, Strategic HR

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