Cuts Are Not a Step Towards Unemployment; But a Step Towards Growth

Job cuts create fear, but can they be the first step to a better, future jobs market through increased efficiency? Here are the facts about the recent changes to supermarket structuring.

Cuts Are Not a Step Towards Unemployment; But a Step Towards Growth

Mass redundancies at Sainsbury’s and other major UK supermarkets have hit the headlines recently and stunned the HR community, as despite these announcements, supermarket profits have been generally on the rise.

Even though supermarkets need to save money, cuts to HR staff in such high numbers seem unusual, given the increased need to manage staff effectively and budget as leanly as possible, in order to operate efficiently within tight profit margins.

To understand the context of the recent cuts, it is crucial to comprehend the way the hierarchy of supermarkets is changing. In 2015, it was big news that Aldi had overtaken Waitrose to become the sixth biggest supermarket in the UK. This change could have been seen as a hangover from the recession, with budget still placing ahead of luxury in the public consciousness, albeit temporarily. However, in 2017 Aldi made the news once again, as it became the UK’s fifth-largest supermarket chain, passing Co-op food, a much more established chain.

A budget grocer overtaking two mid-to-high range brands is no revelation. The notable change is that the budget supermarkets are becoming more attractive alternatives for retail careers as a result of their innovations and working practices. A great example is Aldi’s human resourcing team who are implementing a pay rise of 3.75% nationally to £8.85 (higher in London) for all employees from 2018. At over a pound above the British minimum wage this is an impressive investment from a supermarket outside the top four, yet Aldi are an employer setting the new standard for the market.

This trend demonstrates the importance of investing in the best staff at every level. Cuts are inevitable, so it is crucial to maintain and get the best out of the employees who remain. The Aldi pay rate is their own minimum starting wage for new employees, within a typically lower-paid sector. By taking such a bold step, other brands may feel pressure to follow suite, or face further staffing reductions.

Market changes

Few people are likely to be shocked by further restructuring or cuts in 2018, as 2017 was a year of disruption to several markets; with both the transformation of the way business is done and the type of staff being employed.

Each year there is speculation over the death of the high street, with many shops closing down for good against fierce competition from online retailers. Several smaller artisan brands have managed to fill the empty buildings, but the big brands of a decade ago have struggled to maintain dominance in their industries, and this year may signify the permanent passing of the guard. Amazon CEO Jeff Bezos has just overtaken Bill Gates as the richest man on the planet, which seems symbolic, with technology used by the public primarily as a tool for shopping, rather than one for business.

This is evidence that online shopping has not stopped growing and with further power-shifts like ASOS overtaking M&S and Just Eat delivering more market value (and take-away meals) than Sainsbury’s, the demands of consumers are clearly changing, and so must the knowledge and technology of HR departments and managers; if high street shopping is going to survive.

The change in sales environments means a change in staff. While the need in retail stores may be for customer-facing sales people, selling products online is more often in the hands of web-designers and content marketing professionals.

Further evidence of this shift in job roles is displayed by the recent announcement that supermarket giant Morrison’s are cutting 1500 middle management jobs, suggesting that automation can perform many of the low-level management duties. Without the mid-level employees, senior management can work on the bigger ideas, knowing that general shop staff have a clear idea of what they need to do and can support themselves with self-service software, in collaboration with one or two remaining senior staff members.

Cuts to management and HR staff show a need for remaining HR staff to do things differently. This applies to the retail sector and many other areas of employment, with several important changes on the horizon. The main change is that HR staff need to become very specific in their skillset - expert knowledge of the roles they are trying to fill means a better chance of finding ideal candidates; employees who have very specific skills, for very specific roles.

With the best staff in place, another big move is in the work that staff will not need to do. The staff themselves can now perform many of the duties of managers and administrators using self-service software, which makes it simple for them to manage things like holidays and working patterns themselves. So if employers are willing to put their trust in workers (another reason to evolve the recruitment process), they will be repaid through happier staff with a sense of purpose, and the business will have a simpler job making cuts and cost savings, as is evident from the news stories of the past few months.

With better employee / employer relationships and ownership of their own careers, many staff can work in new ways. Customer-facing staff will always need to be in store for as long as physical shops exist, but people will be employed for shorter, set timeframes as independent workers, saving supermarkets from investing so heavily in training; instead benefiting from experienced retail workers who require little training. Staff with more technical, less hands-on roles can be given the option to work at home or on the go, or at least work flexibly to help meet the requirements of staff in managing their lives and supermarkets in managing their needs.

Change is now, and has always been part of business. While job losses cause fear, the growth of the economy has led to high levels of employment overall. Certain jobs will disappear but the displaced employees will have job opportunities elsewhere, owing to more effective working methods which result in higher profits, a stronger economy and a bigger need for skilled workers. Even though companies like Sainsbury’s are cutting many HR staff nationally, there will not be a loss of HR talent. Instead, there will be an increase in the standard of service provided by HR staff, creating a better and importantly, more job-specific workforce.