SAMIKSHA 2020

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Sparrow’s Nest Retail: Organizational Growth Strategy

It was the stifling morning of 23rd March 2019 and Mr. Kenneth Watson, CHRO of Sparrow’s Nest

Retail, was on his way to his office. He had a meeting scheduled at 9.00 AM with Ms. Jessica Rebello,

HR Executive – Recruitment Head, Mr. Dinesh Sharma, Operations Head, and Mr. Keith Sequeira,

Finance Head with the agenda to discuss some of the issues that had developed at Sparrow’s Nest of-

late. He felt there was an urgent need to strengthen the HR department. Sparrow’s Nest had to also

deal with issues primarily related to the recruitment and selection of skilled, effective and efficient

candidates and deal with the limitation of state policies which hindered the set-up and functioning of

dedicated training centers for Sparrow’s Nest employee’s skill upgradation.

The first retail store of Sparrow’s Nest was launched in JP Nagar Road, Mysuru in August 1989 which

was founded by Mr. Merwin Pinto. Mr. Pinto inherited the business of trading in dry-fruits and

thereafter shifted the focus of his business to the retailing of everyday supplies, owing to the slowness

in the Indian economy at that point in time. The first retail outlet was strategically located in Mysuru

which enabled the store to double its area over the next two years. However, in 1991, when the

economy opened, due to the entry of many competitive players in the retail store business, the company

could not grow to scale-up its operations. Sparrow’s Nest took almost 13 years since its genesis to

break even and branch out. In 2006, they came up with a new retail outlet, their second store in Mysuru

itself. Around the same timeline, competing for maximizing the market share, chains like GO-TO

Foods and Healthy World had disrupted the market with their competitive pricing strategies. This

diverted the Sparrow’s Nest’s usual customer traffic towards the competitors. Mr. Pinto had raised the

needed capital by taking a bank loan in order to expand the retail chain even further. Today Sparrow’s

Nest has 15 retail outlets in the state of Karnataka but faces stiff competitions from both: offline and

online stores in an evergrowing market

The scaling-up of the operations in the state had eventually caused an increase in the demand for the

working staff. The hiring increased substantially during the period. Mr. Pinto was of the thought that

to administer these employees effectively, an organizational structural redesign was imperative.

In 2016, considering the volatility and uncertainty in the environment, the CEO, Mr. Printo, had

initiated several changes and recruitment of Mr. Watson was one of them. Mr. Watson was appointed

as the CHRO of Sparrow’s Nest in 2016 to keep abreast of the dynamicity of the market and to do

away with the traditionalistic strategy that was being used by the organization.

Mr. Watson is an alumnus from IIM Kozhikode and had secured a post-graduation in management in

the Human Resource domain. He was the valedictorian of his batch. Thereafter, he succeeded in

completing his management fellowship at the Indian School of Business, Hyderabad. He joined

Sparrow’s Nest Retail after a distinguished experience of 22 years for various leading retail chains

including Moore and Co., which was one of the largest grocery store chains in India with a focus on

the Corporate HR strategy domain.

Sparrow’s Nest Retail

The first store to operate in 1989 had a modest team of only four employees. Today Sparrow’s Nest

has metamorphosed into a workforce of 250 employees with the stores dispersed over 15 different

locations in the state of Karnataka. To put it in Mr. Pinto’s words: “What began as a simple family

venture has now become a widespread household name. Each store employs roughly 15 to 50 staff

members, varying in number in accordance with the store floor space.”

Sparrow nest followed the traditional hierarchial organization structure as it fit the requirements of the

company strategies. The heads of the four functions – Finance, HR, Marketing and Operations –

directly report to the CEO (Refer Exhibit-1).

Some of the responsibilities handled by these functions are as follows:

Marketing team:

• Creates and rolls out Promotion Schemes and Offers on a monthly basis

• Plans and charts for Festive Occasions

• Liaising with Manufacturers, Vendors, Associates, and Sponsors for Offers and Promotions

and Tie-ups

• Continuously scouts for upcoming opportunities to expand

Finance team:

• Manages and controls all aspects of costs related to inventory, manpower resources,

administration and finance

• Controls the company’s financial health and liaison with banks and financial institutions.

• Responsible for all Government statutory commitments relating to GST, VAT, ESI, PF, etc.

Operations Team:

• Handles all ground and field activities connected with the smooth functioning of the stores.

• Ensures timely arrival of required products

In addition to these four functions, there is an Administration department as well, which manages and

controls all physical requirements related to administration and operations such as stationery,

uniforms, staff welfare facilities, licenses, surveillance, operational safety and hygiene

Investment in Technology:

The IT Act of 2000 transformed business practices unparalleled to any other era for Indian markets.

Information Technology was revolutionizing trade and commerce in India. Processes became

transparent and quicker than ever before. Businesses of most organizations began adopting technology

into their day to day operations.

Mr.Pinto took up the expanding technological opportunity to revamp the existing processes. He

believed that any delay to adopt technology would lead to futuristic losses in terms of sales and

revenue. The benefits of emerging technology inspired Mr. Pinto to adapt to the changing

technological climate. Sparrow’s Nest was an organization known for its passion for innovation. At

present, all of its outlets are fully equipped with state of art refrigeration and display equipment,

shelving and merchandising tools, CCTV monitors, and a fully customized Enterprise Resource

Planning and Customer Relationship Management software. They also have a biometric attendance

system in place which is integrated with the Finance department to enable automated generation of

employee salary and wages.

The Human Resources Department

In the initial days of Sparrow’s Nest, there was the absence of any HR department as hiring was solely

intended for a single store. Mr. Pinto, however, realized the need for an HR department once the

employee count crossed 50 in 2008 and it became difficult to manage various employee aspects like

payroll, recruitment for new stores and day to day HR activities. The stores had been performing fairly

well as far as the daily operations are concerned owing to a well-established set-up mechanism

deployed at the stores.

However, of late even the operations at Sparrow’s Nest have begun to become inefficient. There was

rampant miscommunication amongst the employees leading to sloppy co-ordination. Some staff

members, when asked, seemed confused about their duties at the store. This has been one of the

primary concerns of Mr. Pinto as he is unable to find the chinks in the otherwise robust armor that he

considered his Operations team to be.

Recruitment at Sparrow’s Nest Retail

Initially, the recruitment and selection of employees was decentralized and lacked procedure. The CEO

himself was involved in the process and the procedure was highly informal. As the number of stores

grew, this decentralized procedure was discarded and a centralized one with all the benefits from

modern practices came into the picture. The primary reason that resulted in this change was due to a

change brought about in the HR manager’s job role. Earlier, only one HR manager handled both the

recruitment and the day-to-day operation process. Since the industry faced high turnover, the HR

manager was often occupied with the task of finding fresh talent while the store's operations stagnated.

This resulted in disrupts of operations and a decrease in productivity. To counter this phenomenon, the

management decided to employ two HR managers – one to handle the day-to-day operations and the

other to recruit the staff.

Though the operations at the stores were efficient, recently there has been an increase in employee

complaints regarding their duties. The complaints mainly revolved around overlapping duties.

Mr.Sharma, the operations head had confined the following to Mr. Watson on the same: “On one of

the occasions, a single shift was given to two of the staff members when their shifts were supposed to

be separate. This caused the next shift to go without any staff and the store lost some business that

day.”

Presently, the recruitment process is straightforward at Sparrow’s Nest. Job advertisements are posted

in local newspapers to attract a pool of prospective candidates. They have the option of either applying

by sending their CVs to the email ID available in the newspapers or by simply walking in. There is a

single HR in charge of recruitment who took interviews directly, pertaining to the technical aspects as

well, such as SAP, CRM and, ERP POS.

Mr. Pinto’s vision for the year 2024 was to set up a retail chain that had 40 stores. He had guesstimated

that this would roughly translate to an additional 2,00,000 square feet in area and a minimum increase

in headcount by 1000. He had relayed the same to Mr. Watson and had assigned it as one of his goals.

With a very weak HR structure and only one HR Executive responsible for recruitment, Mr.Watson

did not know how to go about recruiting such a humungous number. He would either have to set up a

stronger HR architecture in the organization or outsource the recruitment of employees. Both ways the

organization would incur huge expenditure. But this was the need of the hour to facilitate

organizational growth and expansion and Mr.Watson was thoughtful on the methodology to be applied

as he wanted a system that would be flexible in terms of usage and money.

Learning and Development at Sparrow’s Nest Retail

Initially, only a few people were required to operate the store efficiently. Hence, it was easy to train

them on the job. For this reason, Mr. Pinto did not consider the possibility of a learning and

development setup. The scaling up of the operations in the recently established stores equipped with

emerging technologies, like Digital Cash-registers, training the personnel for certain skills, eg.

Handling the registers etc. became a necessity.

Currently, the following timeline is followed for newly hired personnel :

The work hours of the store are from 10 am to 10 pm every day wherein the staff works in 2 shifts –

first being from 10 am to 4 pm and the next shift starts from 4 pm to 10 pm. On the day of joining, the

employees are addressed by the HR Executive-Ms. Jessica Rebello who also heads the recruitment

processes. All the recruited employees are briefed about their key responsibility areas. On the same

day, the Sales and Support staff are provided with uniforms. On the second day, based on the domain

they are selected in, the employees are briefed by the respective departmental heads. Any technical

and non-technical queries faced by the employees are addressed to the immediate supervisor, all the

employees are expected to cater to customer queries and on its failure are subjected to strict actions

including suspension and wage cuts.

For smooth transactions, all employee grievances were directly addressed to Mr. Samay Jadeja the

Employee Relations HR Executive. Mr. Jadeja apart from being an employee relations executive was

also in charge of charting of growth opportunities for the employees and maintained an open door

policy. However, since the training of employees was timeconsuming in itself, the focus element

remained on the smooth running of operations and career growth remained secondary.

Mr. Watson contemplated that it was necessary to train the employees in their respective domains so

that the organization could function efficiently. He knew that the state did not possess any such training

centres and was thinking of setting up a training centre within Sparrow’s Nest in order to upskill the

employees. However, he was afraid that the main focus of the organization would be lost in the bargain.

He did not want the success of Sparrow’s Nest to plummet because of this decision.

Performance Management at Sparrow’s Nest:

Managing the performance of the employees in a retail chain is extremely essential in order to keep

them motivated and objective-driven. A robust Performance Management system helps in the retention

of employees by making them involved in their jobs. This, in turn, ensures employee organizational

commitment which results in improved organizational performance.

A staff is appointed on a Contractual Employment for a period of 6 months. At the end of 6 months,

there is a review of the work done by the staff. The staff is converted as a permanent employee only

after the key deliverables are achieved as set by their Managers. On becoming a permanent employee

of Sparrow’s Nest, an Annual Performance Evaluation is done (refer to Exhibit 2) which begins with

the process of self-evaluation of one’s performance. It then sequentially passes through the

Department/ Store Head, followed by the Operations Head for comments before it is finally presented

to the HR head for the employee’s appraisal. The assessment of the performance of the employee is

conducted on various parameters which are thoroughly scrutinized before promoting them to higher

positions or providing them with increments.

To understand the problems faced by the employees and get a deeper understanding of their

expectations from the organization, a simple Employee Survey Chart is circulated at the end of each

financial year (refer to Exhibit 3). Based on the feedback collected from the employees, necessary

operational adjustments in practices are made.

The Future:

Mr. Watson had just completed his meeting with his subordinates and was scheduled for a meeting

scheduled with Mr.Pinto towards the latter half of the day. His main agenda was to discuss the future

of the organization and how to attain the targets set by the organization.

As he sipped his coffee at his work desk, he imagined Sparrow’s Nest becoming the best retail chain

in the state with over 1000 employees spread across their 40 stores. The only challenge left in front of

him was to charter a path with clear direction in order for the plan to bear fruits. He had charted the

following questions that needed to be addressed for the same:

1. What problems must be addressed immediately?

2. What approach must he take with regard to the organizational structure? Should the present

one continue?

3. Since 40 stores and 1000 employee was ambitiousness in nature, what should be done in order

to reach the same? Was there something they were overlooking?

4. What should be the methodology adopted to reach the expansion goals?

5. Is it wise to invest in a Training and Development Center and develop it from scratch? If not,

then what are the alternatives for the same? (A cost benefit analysis is required here)

6. What other options are available with the company?

7. Are there any problems that the company had overlooked? If yes, what are the solutions for the

same?

Contemplating all these thoughts, Mr. Watson stepped into the Board Room to find Mr. Pinto, along

with a few other members, anticipating the meeting.

Exhibit-1

Exhibit-2

ANNUAL PERFORMANCE EVALUATION FORM ----------------------------------

PERSONAL DETAILS ---------------------------------

Name: ________________________________ Designation: ____________________ Outlet: ____________________ Joined since: ________________ Joined as: ___________________________ Dt of Review: ____________________ Current CTC: ________________ Educational Qualification: ______________

-------------------------------- PART A

-------------------------------- Performance Assessment in terms of current role requirements.

Ratings as follows: 1 (Poor) upto 5 (Excellent)

Self Super -visor

General Attitude Self Super -visor

Job Competency Self Super -visor

Initiative

Punctuality Knowledge of the job currently doing

Self Motivation

Attendance Product knowledge

Ability to grasp and absorb

Personal Grooming Upselling skills

Yearning for learning

Greeting Skills Communication Skills

Emotional Stability

Honesty Interpersonal Relationships

Use of Company Resources

Loyalty to organization Productivity

Peer appreciation Vices and addictions

Customer relationship Skills

Mathematical aptitude

TOTAL OF POINTS

---------------------------------------

PART B ----------------------------------------

Write down your comments, thoughts, experiences or suggestions. This part will help us to understand what makes you different from the others and what are those special qualities that you

need to develop.

(1) NARRATE A SPECIAL CONTRIBUTION THAT YOU MADE AFTER YOUR LAST REVIEW PERIOD THAT:

(a) Improved the image of the Company: _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________

(b) Provided Customer ‘Delight’ due to your presence: _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________

(c) Promoted Staff unity and harmony: _______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________

(2) NARRATE ANY EVENT THAT COULD HAVE BEEN HANDLED BETTER: (a) To improve the Company image:

_______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________ (b) To provide Customer ‘Delight’:

_______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________

(c) To promote Staff unity and harmony:

_______________________________________________________________________________________ _______________________________________________________________________________________ _______________________________________________________________________________________

(3) IF YOU WISH TO GROW IN OUR ORGANIZATION TICK THE DEGREE OF IMPORTANCE YOU FIND IN ANY

OF THE MENTIONED ACTIVITY AND EXPLAIN YOUR REASONS, IF NEEDED. Ratings as follows: 1 (Least important) upto 5 (Most important)

(a) To learn cashiering [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5 _____________________________

(b) To learn GRN making [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5 _____________________________

(c) In Training & Dev. [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5 _____________________________

(d) Salary & Designation [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5 _____________________________

(e) _________________ [ ] 1 [ ] 2 [ ] 3 [ ] 4 [ ] 5 _____________________________

TO BE FILLED BY REVIEW OFFICER/ AREA MANAGER

---------------------------------- PART C

---------------------------------- FINANCIAL

(A) FINANCIAL TARGETS:

Stated

Achieved

(B) PERSONAL GROWTH TARGETS:

Stated

Achieved

(C) POTENTIAL OF GROWTH IN OUR ORGANIZATION:

Opportunities Threats

Reviewer’s overall observations: _______________________________________________________________________________________________

_______________________________________________________________________________________________ HR Recommendations: _______________________________________________________________________________________________

_______________________________________________________________________________________________ Management Recommendations: _______________________________________________________________________________________________

_______________________________________________________________________________________________

Decision Date: Earlier Currently decided

Designation:

Salary Increment:

Effective From: ______________________ Authorized by: ___________________ Intimated on: _____________ PTO to add further notes………

Exhibit-3

EMPLOYEE SURVEY CHART KEY PAIN POINTS OF EMPLOYEES Dear Employee Please set down your comments/opinions on areas that you like and those where you would want improvements. Thank you. MOST WORRISOME FACTOR AT THE WORK PLACE:

(A) WORK CULTURE (i) Bad Work Culture [ ] (ii) Company working on building a strong Work culture [ ] (iii) Strong Work Culture exists [ ]

(B) CAREER GROWTH (i) Monotonous and less challenging work [ ]

(ii) Biased Managers/ Immediate Superiors [ ] (iii) Fading Skill Sets [ ] (iv) Due to own attitude [ ]

(C) REPORTING MANAGER (i) Happy with the Immediate Reporting Manager [ ]

(ii) Not happy [ ] (iii) Unclear Vision of the Manager [ ] (iv) Favouritism practiced by the Manager [ ] (v) Rigidity and impractical rigidity [ ] (vi) Lack of domain knowledge [ ]

(D) LEARNING & DEVELOPMENT

(i) Bad [ ] (ii) Good [ ] (iii) Great [ ] (iv) Have Access to Tools for purpose of skilling [ ] (v) No access [ ]

(E) RECOGNITION AT WORK

(i) Feel valued at Work [ ] (ii) Not feel valued at Work [ ] (iii) Appreciated at Work [ ] (iv) Sometimes appreciated at Work [ ] (v) No appreciation at Work at all [ ]