ORGANIZATION TRANSFORMATION

HEALTHCARE RETAIL GROUP IN AN EXISTENTIAL CRISIS:

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Background

Following the untimely demise of its founder, a well-known healthcare retail group was left directionless. As competitors evolved into modern healthcare retail chains, this organization remained a traditional retail pharmacy, struggling to remain viable. Recognizing the urgent need for revitalization, the founder’s family enlisted the element’s expertise to overhaul the HR infrastructure and make the business attractive to potential buyers. Here’s the strategic story of how element transformed this organization using comprehensive HR and organizational development initiatives.

Initial Diagnosis and Challenges

Upon engagement, the Element team conducted a thorough HR diagnosis and identified several critical issues:

• HR Function Solely for Compliance: The HR department operated reactively, focusing mainly on compliance rather than strategic talent development.

• Legacy-Based Advancement: Employees advance based on tenure and familial ties, leading to stagnation and a lack of innovation.

• Non-Competitive Compensation: Salary packages were not aligned with market standards, leading to difficulties in attracting and retaining top talent.

• High Inventory Costs: Inefficient inventory management was driving up costs, leading to substantial dead stock.

• Lack of Procurement Planning: The absence of strategic procurement processes was evident.

• Low Customer Footfall: Customer traffic was significantly below industry standards.

• Ineffective Manpower Planning: Poor workforce management practices led to compliance risks and operational inefficiencies.

• Outdated Customer Experience and Visual Merchandising: The stores lacked modern appeal, and employees were not trained in consultative selling.

HR Report and Recommendation - Building the HR Infrastructure

The element team's detailed report outlined a strategic plan and recommendations aimed at not just establishing the HR organizational framework but also driving a transformation of the entire organization to compete with long-established retail groups in the industry effectively. Their immediate objective was to prepare the business for sale, leading to Element being entrusted with the task of setting up a robust HR operational function and infrastructure within a challenging 4-week timeframe. The initial steps involved:

1. Establishing Core HR Functions: Implementing essential HR processes such as recruitment, onboarding, performance management, and compliance.

2. Creating Competitive Compensation Packages: Conducting a salary benchmarking exercise and designing a market-aligned compensation structure.

3. Implementing Workforce Planning: Introducing effective manpower planning and scheduling to optimize workforce deployment.

4. HRIS Implementation: Setting up a Human Resource Information System (HRIS) to streamline HR operations and improve data management.

Despite the strenuous efforts put in place, the business found itself unable to garner interest from potential buyers. This lack of attraction stemmed from the underlying weaknesses in its fundamentals, stagnant inventory, and antiquated store setups. It became evident to the management that a more extensive and thorough transformation was imperative. As a result, they decided to reopen discussions with Element to explore the possibility of implementing a strategic overhaul.

The solution: Comprehensive Organizational Transformation

With a mandate for a deeper transformation, Element crafted a comprehensive three-year strategic plan for human resources and organizational development. The plan focused on several critical areas to drive meaningful change and growth within the company.

1. Leadership and Functional Expertise: Bringing in Experts: Hired a CFO, Procurement Manager, Retail Director, and Retail Consultant to provide strategic direction.

   • Talent Acquisition: Actively sourced top talent to fill critical roles, ensuring the right skills and experience were in place.

   • Talent Mapping: Used the 9-box model to assess current employees and identify future leaders
     

2. Operational Efficiency and Inventory Management

   • Mystery Shopping Exercise: Conducted to gain insights into customer experience (CX) and store operations.

   • Footfall and Sales Analysis: Mapped footfall, sales, and talent deployment patterns to optimize store performance.

   • Inventory Optimization: Collaborated with the procurement manager to streamline inventory management, reduce dead stock, and improve SKU efficiency.

   • Category Management: Improved product assortment and inventory turnover by focusing on high-priority SKUs and reducing non-moving items.

     
     

3. Customer Experience Enhancement

   • Consultative Selling Program: Designed to shift the focus from product pushing to building trust-based customer relationships and increasing the average transaction size (ATS) through upselling techniques.

   • Visual Merchandising Training: Implemented to enhance the appeal and functionality of the stores, improving customer touchpoints.

   • Loyalty Program: Developed and launched a loyalty program to increase customer retention and lifetime value.

     
     

4. Employee Development and Engagement

   • Training and Coaching: Focused on building confidence and engagement, encouraging proactive customer interactions and improving conversion rates.

   • Performance and Reward Programs: Introduced gamified performance metrics and reward systems to boost morale and productivity.

   • Employee Engagement Initiatives: Fostered a positive work culture through continuous learning opportunities and recognition programs.

     
     

5. Cultural and Structural Changes

   • Rebranding and Modernization: Rebranded the organization and modernized store layouts to attract more customers and improve the overall customer experience (CX).

   • Organizational Redesign: Aligned the organization structure with future business plans, ensuring clarity in roles and career paths.

   • Digital Transformation: Implemented digital tools to streamline processes, improve communication, and enhance the overall employee experience.

     
     

Monitoring and Continuous Improvement

1.  Regular Reviews and Adjustments: Established mechanisms for continuously monitoring and improving HR processes and business operations.

2. Feedback Loops: Created channels for employee feedback to ensure ongoing engagement and adaptation to new strategies.
   

Key Results Achieved

Over the three-year transformation period, Element’s strategic HR and organizational development initiatives yielded significant results:

• Increased Customer Footfall and Sales: Customer traffic and sales increased dramatically, thanks to improved customer experiences (CX) and modernized stores.

• Enhanced Average Transaction Value (ATV): The consultative selling program and upselling techniques led to a higher ATV.

• Optimized Inventory Management: Reduced dead stock and improved SKU efficiency through effective category management and procurement planning.

• Improved Employee Morale and Productivity: Effective training programs, performance metrics, and a positive work culture boosted employee morale and productivity.

• Expansion and Profitability: The business expanded from 15 loss-making stores to over 50 profitable locations, demonstrating sustainable growth and operational excellence.

element’s comprehensive approach not only revitalized the HR infrastructure but also fundamentally transformed the organization’s operational and cultural landscape. This strategic transformation set the business on a path to long-term success and competitiveness in the healthcare retail market, ultimately achieving the family’s vision for a modern and thriving business.