When having ‘wrong managers’ becomes the undoing of retailers

Experts say promoting staff for superficial reasons, such as meeting sales targets, has come back to haunt many retail chains in the long term. [Courtesy]

A supermarket or any retail business thrives on sales.

The more the sales, the more profit the business owner makes, contributing to the overall growth of the enterprise.

But giving too much emphasis on the volume of sales over other drivers of growth has been the main undoing of many retail outlets. 

Experts say the problem arises when managers set out to increase sales at the expense of the long-term interest of the business. They use the higher sales as a stepping stone to rising through the ranks.

“Promotion is easy provided the individual can make the sales happen, follow the policy and procedures manual to the letter and always say the right things to visiting head office executives. I have seen this happen many times,” says Wambui Mbarire, the chief executive of the Retail Trade Association of Kenya (Retrak), an umbrella body for retail industry players. 

In some cases, she observes, the short-term gains of such growth always come back to haunt the business in the long term.

“It may turn out to be good for the individual but not so much so for the company. The most unfortunate part is that the company usually doesn’t know it,” she says.

Mbarire says just because a manager can move products off the shelves fast is not reason enough to promote them.

Monica Karanja, a human resource manager at Octagon, a financial services company, says while the whole point of any business is to realise a profit, this should not override other factors.

“At times, even in the mid-level organisations (small and medium enterprises), the person who brings in the most profit, and these are always the marketing people, are pushed to managerial positions, yet you find that they are not equipped with other skills,” says Karanja.

She argues that when you promote someone for driving up sales, you must equip them with financial literacy, managerial and leadership skills to align with the business strategy.

“At times, you find that many people assume cost reduction is a good strategy to grow their business... but and at times, it is the revenue lines that need managing,” says Karanja, adding that managers at all levels should be equipped with relevant competencies on general management.

This, however, does not mean that they need to go back to school to learn new skills; they can learn on the job or through in-house training. 

Just because a manager can move products off the shelves fast is not reason enough to promote them. [Courtesy]

“I would do more of coaching and mentorship rather than taking someone back to school. Going back to school might be important, but it is just an education if you do not get the competencies. You develop a skill by doing it continuously,” she explains.

“Any business should have a succession plan, even if it is a kibanda (makeshift eatery).”

And according to Mbarire of Retrak, one of the reasons for incompetence among managers going unnoticed is that the individual who promoted the person in question happens to have held the same position and is, therefore, likely to overlook some issues.

“Of course, under the guidance of an incompetent mid-level manager who is neither lucky nor smart, it is likely that sales results will eventually take a downturn, prompting a closer look at the individual. However, until that happens, the incompetent manager has total control over a group of stores and employees,” says Mbarire. 

“Imagine the havoc that can be wreaked on an organisation with an individual like this running stores, districts or regions?” she poses.

She further notes that one can be very good at selling, keeping the store clean and neat and visually pleasing to customers and strictly adhering to all company policies and procedures, but their people-management skills may be wanting.

“This person cannot manage people, cannot motivate people, cannot analyse a situation thoroughly enough to see what is really important and what is not,” says Mbarire.

Such a person, she notes, will not go the extra mile to satisfy a customer’s need or to motivate an employee.

“If you have any kind of business brain whatsoever, you will make some adjustments for the good of the customer, the employees and the company,” says Mbarire.

“But the incompetent middle-level manager will not make any adjustments to anything. They have always done things a certain way and, as evidenced by their meteoric rise in the company ranks, it must be the best way,” she adds.

A 2020 analysis by The Kenya Institute for Public Policy Research and Analysis (Kippra) titled The Collapse of Retail Chain Giants in Kenya: Evidence and Lessons for Retailers draws the same conclusion while breaking down the events that led to the collapse of Nakumatt.

“The issue of stock and asset theft through the collaboration of employees and suppliers was brought about by poor execution of inventory management procedures as a result of poor management.

“It is important that surviving supermarkets execute inventory management to the letter, with regular stock-taking to curb lapses at early stages,” reads the report.