Power to the people

Recruitment is a non-core business function, right? Wrong. Belinda Smart discovers why.

It doesn't take an expert to see a community whose members constantly have to steal resources from each other in order to survive is not a healthy one.
But while this description might resemble the plot line of Hollywood's latest post-apocalyptic offering, it is also a pretty accurate description of the Australian fashion industry in terms of one of its most important yet overlooked resources; people.
The Australian Centre for Retail Studies (ACRS) recently raised the spectre of poor development and succession planning in the wake of top level executive changes at Esprit, Myer, Colorado and Just Group, with ACRS executive director Amanda Young describing the industry as plagued by a shortage of developed talent.
Sydney recruitment specialist Chase Recruitment agrees with Young's view, citing low productivity as one of the undesirable by-products of under investment in succession planning.
"As the more junior staff are keen to learn and progress, they will move to other companies if they aren't receiving internal training where they are. This lack of succession planning in companies causes a knee-jerk reaction whenever they lose staff. They then need to recruit staff from external sources urgently to fill their vacancy. In this market there aren't a flood of skilled people to choose from," says Chase director Debra Haigh.
According to Melbourne recruitment specialist Empire Consulting this culture of poaching - in which the best candidates work the head hunting merry go-round while the large pool of undeveloped potential goes unnoticed - is now prevalent; but the alternative to poaching is equally unappetizing, says director Renae Quinn.
"Sometimes companies will simply get desperate and hire someone knowing they are not quite right for the role. In those cases the person ends up leaving the company after a short while and then it's back to square one."
Clearly, rather than a last minute scrabble to plug holes, recruitment and human capital should be regarded as an ongoing and integral part of a company's brand equity.
However, most of the industry has a long way to go, Quinn says.
"There are probably very few companies that really understand the importance of succession planning and how that relates to overall employer branding."
So how did the fashion industry reach this sorry state of affairs?
According to Sydney retail recruitment specialist Trak Recruiting, the demise of the "job for life" career culture and the growing competitive threat from China and other offshore hubs means recruitment, training and development are increasingly regarded as grudge spends.
"In addition many of the country's leading retailers have publicly listed in recent years, and are consequently driven by the short term need to provide dividends for their shareholders rather than look at long term investment in areas like recruitment," claims Trak director Garry Connell.
Fashion retail brands are also suffering as a result of major structural shifts in the industry. The big retail companies are no longer family businesses where succession planning plays an important role; at the same time they are much more complex beasts, where those in senior roles increasingly need business acumen rather than just retail skills, he says.
Melbourne retail recruiter Orex Recruiters claims while there are plenty of entry-level candidates in the pool, things get trickier further up the pole.
"It's at the assistant buyer or assistant planner level that there is now a hole. That is the price we are paying for five years of not developing people," claims Paul Fetterplace, Orex senior consultant specialising in fashion.
And while it might make sense to nurture entry level employees, even the most model employers fail to make the most of one of their greatest resources; the shop floor or entry level employees, he says.
"There was a time that [fast food chain] McDonald's would keep information on what their casual student employees were studying, so for example when they needed to employ an accountant they would approach one of their employees who had studied accountancy. The fashion industry could certainly learn from such practices."
If commentators are right, the fashion industry is in a catch-22 situation; less money to spend on training, development and succession planning than in the good old days when department stores and chains had graduate training and ongoing programs, countered by hindered growth due to the lack of developed talent and resulting high turnover levels, which do little to enhance its attractiveness for the brightest candidates.
Far from being doomed however, companies might start to redress the balance by working to a business paradigm that puts people back at the centre of what they do, claims Orex's Paul Fetterplace.
One such company is Melbourne apparel giant the Just Group -- which owns Just Jeans, Dotti, Jacqui E, Jay Jays, Peter Alexander and Portman, he claims.
Despite Just Group managing director Howard McDonald's recent announcement of his intention to step down, the company's reputation as a good recruiter is likely to weather any storm.
"At Just Group they're very good at what they do overall, in every aspect of the business. They've made themselves an employer of choice and because of this there is no shortage of good candidates who want to work there. They've built a culture that is nurturing, caring, and encouraging; and it's a fun place to work."
This sort of "virtuous circle" is what all companies should be aiming for, Empire's Renae Quinn claims.
"One way that companies attract the best recruits is by offering them more than just training and salaries, the non-financial incentives, such as flexible working hours and a good work life balance."
This is particularly important for the much-talked-about Generation Y employees - the market group born between 1977 and 1994 who are "more demanding about what's in it for them and the culture and values of the business" - but it applies equally across the board, she adds.
"If you are branding your business as an employer that is values-based you are going to achieve a better long-term outcome."
Clearly companies that fail to see the importance of succession planning as part of their overall branding strategy do so at their peril, and for Trak's Garry Connell the equation is simple.
"There is clearly a real cost if you start losing staff on a regular basis. Eventually it will impact on the bottom line."
According to Orex's Paul Fetterplace, the jury may be out on precisely how much companies are losing in financial terms as a result of poor human resource practices, but the threat of long term brand erosion is the real cause for concern.
Shareholders and the offshore threat are not going to go away; but neither is this threat, he claims.
"Companies simply cannot measure what opportunities they are missing as a result of not being able to grow their business and their brand due to a lack of well-trained staff. The problem is, by the time they find out the damage may already be done."