Sears Holdings Sorts Out Employee Situation
By George Anderson
It’s not a surprise, but Sears Holdings Corp. is deciding which of the 4,000 employees at Sears’ headquarters in Hoffman Estates, Ill. and the 2,000 at Kmart’s offices in Troy, Mich. will stay with the company and those it will let go.
According to a report in the Chicago Sun-Times, Sears Holdings has already begun laying-off some department managers and administrative assistants.
A former employee told the Sun-Times that the majority of cuts appear to be coming from those in support functions and not involved in store operations.
Chris Brathwaite, a spokesman for Sears Holdings, told The Detroit News, “This particular activity is aimed at creating a new organizational structure. Stores will not be affected.”
At least half of those working in Kmart’s executive offices can expect to be let go as Sears Holdings goes about consolidating its headquarters’ operation in Hoffman Estates.
Moderator’s Comment: How long will it take for Sears Holdings to get its headquarters and store operations performing optimally? Are there other business
cases that offer the company lessons on how to minimize the disruption caused by the merger? –
George Anderson – Moderator
Don nailed it.
Absent a “vision” shared and communicated to all “remaining” employees, you may be rearranging the deck chairs on the Titanic.
Define success and the goal for everyone. “We are going to convert 800 Kmarts to Sears Essentials over the next 24 months. The remaining Kmarts will focus in on an urban edgier mix minus Martha, with limited Craftsman and Kenmore offerings. 200 Mall Sears will likely close, X% will convert to Sears Grand, X% to Sear Essentials, and Martha will be added to the mix in the remaining “SEARS” stores while we evaluate their continued operation over 12-18 months.”
The remaining stores will be sold for their real estate value.
Right now most observers look at this as the death by 1000 cuts and see no end to the bleeding (employees as well). Tell everyone where it stops and then you can create a positive approach, because people can buy into the “vision” and plan their lives beyond next week.
I have to agree that if neither company could do a good job separately, how can we expect them to be better as a much larger company? That, coupled with all the challenges of merging distinctly separate cultures and two corporate offices two states apart, would seem to lessen the odds of success. This has to be a very difficult time to be in either of their corporate offices waiting to learn your fate. Depending on the ultimate outcome, the people receiving severance pay may be the real winners, even though it won’t seem like it to them at the time.
Unfortunately for Sears Holding, there are few case studies to refer to in managing the post merger integration between Sears and Kmart.
This is not just a task of reducing head count, determining job overlap, and finding appropriate economies of scale supported by technology and process. Rather, it is the task of creating an entirely NEW organization, culture, and ethic.
Fundamentally, the nuts and bolts of this new organization will be found in the number of buyers, planners, replenishers, store personnel, advertising staff…..as well as the tools and processes these people use to execute their responsibilities. Esoterically, though, the problem is that neither the Sears culture nor the Kmart culture was particularly successful as a stand alone player in the market. It would be short sighted to pick one of these and attempt to force integration by members of the other.
What will be needed to make this merger (and is it really a merger or more properly a redefinition?) work is a strong, vibrant and easily communicated vision from the top. This vision will tell everyone…”old” Sears, “old” Kmart and “new” (and yes, there will be new from outside either group) what this new entity stands for. How decisions will be made. What metrics will be looked at. How the vendor community will be managed.
Let’s look beyond the grim statistics of head count reduction for evidence of such a vision. And then begin to assess if the people, processes and technology retained support, enhance or detract from that vision.
At the store level, I was impressed to see that the transition from “Kmart” to “Sears Essentials” is already well underway in one of the more run-down Kmart locations in my area. The store looks better already … the addition of plasma and flat screen televisions along the front wall (all tuned to Sears’ in-store network) is an early move. Apparel, home, and automotive/tool will follow. Seeing this seemingly unredeemable Kmart get new life has given me renewed hope for the acquisition.
Cutting people is easy. Running a large retail chain optimally is something neither Sears nor Kmart ever did. How can anyone expect the combined entity to do so after cutting staff and costs? How can they ever compete with the likes of Wal-Mart, Target, Home Depot, and Lowe’s? They are just too far behind and they don’t have a proven competitive format.
I think Don is right on target for this issue. The issue really isn’t head count as much as it is forming a NEW organization. To Don’s point, however, absence of a vision; how do your create the optimal organization? It appears that they are maybe one step ahead of the process in reductions. First vision, then formation. Neither organizations have yet been able to clearly delineate a vision, not of where they are or where they would like to go.
My concern is that with this absence of vision, how do they know who, what and how to consolidate? It’s not a good sign for their employees or their customers. It appears they are headed for less of both.
Besides cutting people, Sears has to decide that it’s in the retail business and nothing happens till the product is sold. Cutting people is fine, but you need more soldiers and fewer chiefs—the chiefs that are left need to talk to customers in the stores and see what needs to be fixed. Paid focus groups are nice, but it does not take the place of person to person contact. Go to the stores. Talk to the people there. Don’t send someone to give you a report. There is a loyal base of customers and employees–don’t throw them away for something, but use them as a foundation to build on. There is nothing wrong with your mother’s store; you just need them to bring the children and grandchildren in and make sure you give them what they want.