Organizational and Compensation Transformation in Retail

Vivendum Ratio Solutions partnered with a retail company in the technical goods industry to overhaul their organizational design and establish an effective salary and bonus system.

Our comprehensive review of the client’s organizational structure, processes, procedures, and job systematization revealed critical inefficiencies. The organization operated with a highly hierarchical structure, divided into five directorates and a general director’s office, but functional groupings misaligned with business needs. For instance, core operations like product management, sales, logistics, customer loyalty, and marketing were fragmented across four directorates, stifling coordination and innovation.

Procedures and work instructions were informal, lacked management approval, and omitted key business processes such as budgeting, product management, and sales. Managers and employees showed limited awareness of the importance of adhering to and updating procedures, exacerbating inefficiencies, poor communication, and weak strategic alignment.

The systematization regulations and job descriptions were inconsistent, with descriptions based on current employee tasks rather than process needs. Moreover, the absence of a formal salary and bonus system led to salaries being negotiated individually between employees and employers, creating a sense of injustice as employees in the same job position received different pay. The lack of job positions weighting resulted in less critical roles earning higher salaries than essential positions, such as those in sales, negatively impacting the salesforce, particularly amid industry-wide salesforce shortages and high turnover.

Vivendum Ratio Solutions delivered a streamlined transformation to enhance organizational efficiency and compensation fairness. First, we created a flatter organizational structure with two directorates: Operations and Corporate Services. The Operations directorate unified marketing, product management, sales, and logistics into a single department to boost coordination and align with business needs.

The Corporate Services directorate consolidated supportive functions, including HR, Finance, Legal, corporate compliance, and IT, to streamline support processes. After analyzing and mapping their business processes, we standardized job position titles and defined talent levels, creating job descriptions based on the respective processes the job positions were involved in. We conducted salary research to develop market data for benchmarking and established a weighting system to assign appropriate value to each job position. This informed a modern, competitive salary and bonus system, aligned with industry standards and tailored to roles like salespeople and store managers, incorporating base pay, commissions, and performance-based bonuses, with a focus on strengthening the critical salesforce.

We also implemented a Balanced Scorecard performance management system to tie bonuses to measurable outcomes, such as sales targets and customer satisfaction. Throughout, we mentored and coached HR personnel to ensure seamless adoption of the new structure, job descriptions, and compensation system, fostering independence and sustained alignment with strategic goals.

Our transformation significantly enhanced the client’s organizational efficiency and compensation fairness, aligning their operations with strategic objectives. The streamlined structure improved coordination across core operations, eliminating inefficiencies and fostering innovation.

The new salary and bonus system, informed by market data and a job weighting system, ensured equitable and competitive compensation, particularly for the critical salesforce, which gained stability after the implemented systems were in place. This stabilization reduced turnover and addressed industry-wide salesforce shortages. The Balanced Scorecard system drove performance by linking bonuses to clear metrics like sales targets and customer satisfaction.

Ongoing mentoring empowered HR personnel to sustain the transformation independently, strengthening the client’s position in the technical goods retail industry.