Should large retailers have HR on-site?

Home Depot takes HR out of U.S. stores

In the face of a struggling economy, Home Depot in the United States is slashing its staff of HR managers by one-half and taking the remaining managers out of the stores.

On May 1, 1,000 of the 2,200 in-store HR managers were laid off while the rest were grouped into 230 district teams comprising one HR district manager and three HR managers. Each team will be responsible for six to 10 of the Atlanta-based chain’s 1,970 stores.

Each home improvement store still has an administrative HR employee to oversee scheduling, and Home Depot is hiring 200 HR representatives to staff a new HR service centre. The chain will use the savings from this restructuring to hire three new sales associates for each store.

Home Depot Canada is not following suit and will be leaving all HR managers in the stores, said a spokesperson for the chain’s Canadian division.

Whether or not this restructuring will work depends on how effective the new HR supports are, said Frances Gunn, associate professor at the Ted Rogers School of Retail Management at Toronto’s Ryerson University.

“Any time you’ve got a centralized HR function, it’s going to be dependent on what kind of systems they have in place that drill down to the store,” she said.

A lot of HR information and support can be downloaded to an intranet or outsourced to a call centre, but the material available online and the training call centre representatives get needs to be robust enough to replace that in-store HR presence, said Gunn.

Many large organizations are moving HR information and services that typically fall under the purview of an HR generalist to employee intranets and call centres, so Home Depot’s move isn’t that unusual, she said.

While the trend might be to outsource HR or to create a central HR hub, removing the personal interaction is a mistake, said David Crisp, an HR consultant and former senior vice-president of HR for Toronto-based retail giant Hbc.

There needs to be someone, in any workplace, who deals with people issues and who is known to all staff as the go-to person for those issues, he said. More often than not, the best person for that job is going to be an HR manager.

Once that person is taken out of the store, employees don’t know where to go for help when they have an HR-related issue, said Crisp.

“They’re often the kinds of issues where you just need to ask some human being a question. Phoning somebody can be a little dicey if it’s a question that has privacy overtones, like your health,” said Crisp. “If you don’t have the ability to look somebody in the eye, face to face, it’s tough.”

That’s why Hbc stores (including Zellers, the Bay and Home Outfitters) all have one or two in-store HR managers, plus regional HR and training managers across Canada who provide additional orientation and HR support for the more than 600 stores, said Christine Brown, general manager of HR for Hbc Stores.

“We have an open door policy where employees can visit any time to ask about their benefits, pension or any other HR-related question. We feel that more employees take advantage of this, rather than a central location that they would have to call in to,” she said. This openness leads to a stronger relationship between employees and the organization and improves retention, she added.

If employees don’t have anyone they can talk to, “problems fester and sometimes explode,” said Crisp. This is also when retail stores can become vulnerable to unionization because employees feel like they don’t have a voice, he said.

“The ideal is that every manager is trained so well that they can answer all these human questions that people come up with, but the practical reality is that only about one manager in 10 has that kind of sensitivity and knowledge base,” said Crisp.

While an in-store HR manager spends only 30 per cent to 60 per cent of her time on HR tasks, she is available 100 per cent of the time for employees, said Crisp.

“The HR person does a little bit of everything and they’ve got to know where to go to get the detailed information,” said Crisp.

In-store HR managers are feasible only for large retailers that have 200 or more employees on-site. For smaller stores, with only 10 or 15 employees, an in-store HR manager isn’t cost-effective, said Derek Nighbor, senior vice-president of national affairs for the Retail Council of Canada in Toronto.

“HR functions still tend to be anchored in the head office,” he said.

Centralizing HR like this ensures consistency in the treatment of HR issues from store to store, said Nighbor.

However, there still needs to be someone who works in the store who is the go-to person for HR issues, said Crisp. To make that effective, the corporate HR team needs to train every store manager on HR issues and needs to be available if the manager has questions.

There should also be another employee in the store who is familiar with HR issues in case an employee can’t go to the store manager with a particular issue, said Crisp.

“There is a bit of a conflict if the store manager is the only person who deals with these kinds of problems,” he said.

The most common HR issues that come up for retailers are questions around municipal and provincial holidays, vacation entitlement and, increasingly, questions about benefits, said Nighbor.

“We’re seeing a lot more stores, in an effort to become an employer of choice, offering an increased benefits package to their front-line staff,” he said.

With enhanced benefits, employers have to be prepared to answer employees’ questions and educate them about their choices, said Nighbor. Because of this trend, and the general recognition of the importance of HR issues, Nighbor predicts there will be more HR-based training for store managers in the future.

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