Leading Retailer Case Study

Our client, a leading brick-and-mortar apparel retailer, wanted to reimagine its post-pandemic human capital management (HCM) strategy. As the retailer reopened stores, management aimed to revitalize employee relationships through a newly defined employee value proposition.

To redesign the HCM strategy for a decentralized broad-based population, boards must understand how to measure both the attractiveness and effectiveness of new HCM measures. This company’s board assigned oversight of HCM to its compensation committee. As the committee dug in, it wanted to consider how various methods of incentivizing management on HCM metrics would align with the company’s strategy. For instance, working towards specific representation targets was not a relevant goal for the company, as the employee population was already quite diverse. Additionally, how would HCM components supplement existing pay design, and how would they measure progress across performance periods?

With our support, the committee refined its charter and agendas to align on the inclusion of HCM. It also began to regularly monitor the HCM outcomes to better understand key trends and the initiatives that would make an impact.

We also informed our client on how its peers used different HCM metrics in compensation plans. Few peers meaningfully tied HCM metrics to compensation, so the company had an opportunity to lead in the HCM space and strengthen its employee value proposition. The executive compensation plan for directors and above now carves out a portion of bonus pay based on the achievement of the new HCM scorecard. Using quantitative HCM metrics in incentives rather than solely board discretion is a leading approach that continues to position the company’s incentive design ahead of the curve.

With the committee’s deepened support, management has achieved outcomes that include a workplace environment emphasizing self-expression and an employee education program geared towards internal progression and learning. The management-committee partnership has prioritized HCM, focusing on impact and continuous improvement.