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Growing the next generation of buyers

By Lindsey Lanzisero, Lindsey.Lanzisero@HayGroup.com and Craig Rowley, Craig.Rowley@HayGroup.com

More than ever, companies are relying on their merchants to make game-changing decisions that significantly impact top- and bottom-line performance. While it’s no secret that these great buyers are in high demand and hard to come by, many organizations are still baffled by the puzzle of how to take entry-level merchants and turn them into the next great buyer or DMM. While we are not offering a magic bullet, there are key differentiators that enable the best organizations to cultivate, develop and retain top merchandising talent.

Dip toes before jumping in
Historically, buyers started out buying small volumes for regional retailers. This narrow focus minimized risk, while giving buyers valuable exposure to the local stores and customers. They gained firsthand knowledge about customers and how products were selling. When these buyers were recruited by national footprint retailers, like Athena springing from Zeus’ forehead, they were fully formed and ready for battle. With the nationalization of retail, many of these regional retailers are gone and companies have to grow their own talent capable of buying large volumes.

The organizations that are the best at developing buyer talent today still allow them to start small. As associate buyers, fresh talent are given a small area to buy under the watchful eye of an experienced buyer. With this oversight, the junior buyer is given the opportunity to make small mistakes, learn, and gain valuable real experience that will make the transition to a full buyer smooth and easy. Organizations that aren’t giving junior buying staff this opportunity put themselves and their employees in a high risk situation -- newly promoted Buyers with minimal buying experience are purchasing hundreds of millions of dollars’ worth of inventory. If the assortment flops, the company loses money, and the buyer may be out of a job.

Cross pollinate
When did your organization last move someone from buying roles to planning or allocation, and vice versa? Is the organization openly sharing talent or are functions fighting to keep the “stars?” Over the last decade, the buying career track evolved to provide only buying experience, i.e. moving from assistant buyer, to buyer to DMM. This created great specialists, but they often lack context to understand the intricacies of panning and allocation.

Many organizations have moved to “team buying” where buyer, planner and allocator work closely together to make decisions in managing the line. However, the best organizations are moving junior talent across all three functions with a focus on creating well-rounded merchandising leaders. Employees with this diversity of experience have a greater appreciation and understanding of all aspects related to managing a category, including financial and inventory management and working as a true team to reach the same goals. It also gives aspiring buyers a chance to test their chops in another function. Not everyone is cut out for being a buyer, and this gives the organization a chance to encourage employees with a knack for planning or allocation to stay in those functions, allowing the company to build up talent there as well.

Cross-pollination also serves another purpose -- preventing restlessness. We have all read articles and research about how the new generation isn’t happy unless they receive a promotion every two years. Cross-pollination, done correctly, can be communicated as both a developmental step and a promotion with a little pay bump.

Hire a tour guide
Having a clear career road map is critical to keeping junior talent. The new generation wants to understand their career and growth opportunities in an organization. If they see or sense a ceiling, they will not hesitate to find a better opportunity at a competing retailer. Clearly articulating potential and probable career paths, and plotting out what an employee needs to do to reach the next level, can help improve retention efforts. 

The best organizations are actively managing their talent pipeline and carefully orchestrating career moves. Merchant leadership is partnering with HR to calibrate performance, plan promotions and identify development roles -- a process enabling GMMs and DMMs to look outside of their teams for talent. These organizations value experience in multiple categories and well-planned career moves give incumbents the necessary experience and knowledge to continue moving forward. 

Throw a little money at it
Organizations that are developing merchandise talent well have also thoughtfully accounted for the compensation piece of the puzzle. As a key function, merchandising usually has a slightly different (usually higher) compensation philosophy than the rest of the organization.  The best companies are able to fully utilize their pay ranges and compensation increase guidelines to best deal with three key factors: 

1. There is an extremely large pay gap between an entry level assistant buyer and a senior buyer – at least 2x to 3x.
2. It is cheaper to develop talent internally than to hire fully functioning buyers from outside.
3. Typical merit and promotional increases do not increase compensation commensurate with the additional value junior buyers are bringing to the table as they increase their capabilities.

While many developmental roles are lateral moves, they are defined as promotions with a small pay increase, and then “true” promotions may receive pay increases above the company guidelines. Guidelines are typically 10%-12%, but key talent may receive 20%. A higher merit budget may be utilized for the Merchandising function or just for key roles/talent as well. The best organizations are ensuring a good return on their reward investment by creating opportunities for growth and development, rewarding appropriately and ensuring that buyers are working at their full capacity every step of the way. 

Organizations must invest in giving junior talent the necessary experience, development and compensation to become engaged, successful buyers to insure against having a dearth of inexperienced talent in this critical function. The key differentiators outlined above do not cost a fortune, but do require thoughtful and deliberate planning.

Lindsey Lanzisero is senior associate at Hay Group's Retail Practice. She can be reached at Lindsey.Lanzisero@HayGroup.com. Craig Rowley is VP and global leader of Hay Group's Retail Practice. He can be reached at Craig.Rowley@HayGroup.com. Hay Group is a global management consulting firm.