The retail industry is changing rapidly. The U.S. Census Bureau found that in 2016, the U.S. retail industry grew by only 2.9 percent while online sales grew 15.1 percent. As organizations face the economic realities resulting from the rise in ecommerce and the decline of brick and mortar store fronts, retail restructuring and reductions in workforce are unavoidable. While companies in retail markets pivot to remain competitive, reductions in force expose brands to negative sentiment through unhappy employees and negative social media.

Brick and mortar stores hoping to grow a more powerful online brand know that a positive brand reputation is critical to establishing and retaining a loyal customer base. To remain viable, stores are seeking ways to build positive brand sentiment despite the seismic shift happening across the retail industry and the inevitable displacement of employees.

Protecting the store brand and keeping negative comments out of the press and out of social media requires a shift in thinking. The outward focus on taking care of customers must be turned inward toward employees and the communities in which they live. When current and former employees speak positively about your brand, or at least don’t speak negatively publicly, the ripple effect is a positive one. When faced with necessary reductions in workforce and large layoffs, there are a few steps you can take to build a positive brand reputation from within.

Step One: Take care of impacted employees

The retail industry is closing doors. Business Insider reported that 10% of retail square footage in the US is obsolete. While layoffs are part of the normal rhythm of doing business in many industries, retail has been particularly hard hit recently. No matter the industry or the role, involuntary separation is difficult for the affected employees. What does this mean for retailers?

It means retailers have a unique opportunity to think about their severance packages and to consider revising their traditional policies around layoffs to better take care of all separating employees. Changes in the retail market are happening at a time when taking care of employees equals creating a positive brand. Now, more than ever, retailers need to create brand ambassadors from within.

A recent report from Aberdeen states, “After all, employees - like your customers – are major brand ambassadors. They have the ability to easily post feedback on social media and company review websites, as well as share their thoughts with their networks – thoughts that, if negative, could be damaging to any brand.”

The transition from brick and mortar is a complicated process and it is easy to be short-sighted when making decisions about who should get severance and what should be included in those packages. Taking care of employees extends beyond offering severance packages to some employees. Trends in best practices among organizations point to the shift toward offering severance, including outplacement, to all employees.

A few weeks or months of salary following a layoff will certainly help an employee, but offering outplacement will ensure that employees land better jobs faster and keep a positive attitude about the brand. Career coaching and job transition guidance helps to expedite the process of finding a new job for displaced employees. In fact, employees participating in contemporary outplacement programs have been proven to land a new job 60% faster than the national average.

Taking care of employees once they leave influences more than the employees you’re helping. When you take steps to care for your workforce, current employees take note and are less likely to have negative reactions and loss of productivity following a reduction in staff. During times of corporate transition, current employees and exiting employees are going to talk about your company with their friends, family, and professional networks. When their experience is a positive one, the effect will be positive sentimentality for your company and a better brand reputation.

Step two: Maintain the trust of remaining employees

Layoffs and store closings in the retail industry may be damaging your brand, whether directly or indirectly. While it’s easy to see the direct impact of negative comments on social media, employers might not be considering the impact of the layoff on remaining employees. The people who remain after a reduction in force are as influential to your brand, if not more so, than your exiting employees. How companies communicate and deal with their surviving team members will greatly impact the organization’s ability to move on from the restructuring event in a productive and positive way.

Getting support and advice about best practices from outside experts will help store management and executives avoid some of the serious pitfalls of layoffs. For instance, during a layoff, managers have a great responsibility and also carry the burden of legal liability based on their words and actions. Given these pressures, it’s natural for people in these positions to feel unprepared and anxious about their expected role.

Although it’s natural to avoid confronting the intense emotions and difficult situations that arise during these events, it’s important for managers to stay visible and instill confidence across the team. Without the right support, even those managers that plan to remain calm will often find themselves overwhelmed by unexpected situations. Without the proper training, unprepared managers risk exposing the organization to legal liability and alienating the employees they are tasked with supporting.

It’s emotional and challenging for any manager to deliver bad news, especially news that puts employees out of work. However, it’s imperative that management and HR professionals are available and prepared to have conversations with impacted employees and remaining employees. Simply being visible instills confidence in surviving employees, increases productivity and decreases the worry that the same thing could happen to them.

RiseSmart’s Director of Practice Strategy, Lindsay Witcher, recommends managers do three things to maintain the trust of remaining employees:

  1. Don’t disappear
  2. Have open and transparent conversations
  3. Discuss career development with each remaining employee

Being open and honest with remaining employees and discussing their development shifts thinking to future plans and personal goals with the company, despite tough news about losing team members. Discussing current projects and goals shifts staff attention away from the negative news and toward a more positive future and increased productivity.

If remaining employees don’t trust their employers, the negativity and loss in productivity can be devastating to the company. If employees continue to have a positive experience and relationship with their managers, they are more likely to remain and stay positive about the brand across their social networks and in their communities.

Step 3: Don’t forget about the community

Retail stores are an integral part of the community where they do business. Employees and families rely on the income they provide, and the community trusts stores to not only deliver products, but to act as part of a community. In a recent blog post about corporate responsibility, we referenced a story about the mass layoffs that happened at the Eaton Manufacturing plant in Roxboro, North Carolina following the 2008 recession. The story, originally appearing in Time Magazine, illustrated how the mass layoffs created negative socio-economic ripple effects across the entire community and illuminated the brand damage that can happen as a result from a single event. While some of the negative effects of a mass layoff can’t be avoided, there are ways to minimize the damage, overall.

When you’re trying to build a positive brand reputation, it’s important to consider the community as an extension of your employees. When large restructuring events are necessary, taking care of employees and making sure they’re not out of work indefinitely will lessen the overall impact and improve brand reputation. Offering outplacement services to all employees is one way to minimize the negative effects of large retail store closings. Without the right support, companies run the risk of employees languishing in unemployment for protracted periods of time – costing more in unemployment taxes, increasing the risk of legal action against the company, and further damaging the brand reputation.

Current and future customers of retail stores live and work in the communities where the stores have been located. Making sure to maintain a positive reputation among separating employees, remaining employees, and community members will help secure future sales.

Employees, past and present, can do more for a brand than any billboard or advertising campaign. Taking care of impacted and remaining employees isn’t just the right thing to do—it’s key to retaining employees who want to work for a respectable company, and customers who want to do business with ethical organizations. There is no stopping the seismic shift toward ecommerce, but retailers can control what kind of employee relationships they choose to build. Your brand can remain positive and attractive, even after an unavoidable layoff.

16 March 2017

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