WHERE
The Kontti Recycling Department Stores of the Finnish Red Cross sell only goods donated to the Red Cross, such as clothes, furniture and household items. The decision to establish the chain in its present form was made in autumn 2000 and the operations were started in 2001. In 2006, there were Kontti stores in eight towns throughout Finland and two more stores were to be set up by the end of year 2007. The chain administration is located in Jyväskylä, central Finland.
Effective proven process for sales monitoring and using the results in management communication
Each store is led by a Kontti manager responsible for its financial result. The store managers report to Director of the Kontti Chain who in turn reports to the Secretary General of the Finnish Red Cross and the Kontti Board.
The Kontti chain employs on average 600 long-term unemployed persons on a part-time basis and 25 permanent staff, in addition to a varying number of trainees and volunteers. The total volume of operations is expected to be approximately 3,500,000 € in 2007.
The Kontti chain was a partner in the EQUAL Development Partnership Response.
WHY
It is essential to monitor key performance results in all businesslike units. There is a need to follow up the realisation of the agreed targets annually and on a shorter term, as well as to identify any deviations from these targets so that corrective actions may be taken.
Traditionally, systematic monitoring of sales and fund-raising activities have not been perceived as central elements of organisational culture in Finnish civic organisations.
HOW
Objective and indicators of successful results
The objective described here is related to the sales targets and their realisation in the Kontti recycling department store chain and in individual Kontti stores. Sales is a key performance result, the development of which is reported regularly to the entire staff. In addition, numbers of customers, average purchases and financial profits are monitored on a regular basis.
The sales targets are set as follows:
Kontti chain’s budget for the coming year is defined in August. The total sales target is included in the budget. The sales target is divided between the individual stores on the basis of previous annual sales and significant changes in operating environment by a common decision of the Director of the Kontti chain and each store manager.
In each Kontti, the store manager prepares a monthly distribution of the sales target. This is based on the existing data on good sales months, etc. The monthly targets are recorded in the common financial data system. A typical monthly target in a store can be at a level of 40,000 euros.
MEASUREMENT, MONITORING OF RESULTS
There are 14 product groups, such as men’s clothes, furniture and books, plus campaign sales. There are no chain-level sales targets for product groups, but in individual stores such targets have in some cases been set, for example, to develop the sales of a certain department. In any case, if there is a notable decrease in the sales of a certain product group, action will be taken.
The sales accounting and monitoring takes place as follows:
Each store manager records the daily sales in the sales report form by product group and sends the form to chain management every Monday. A corresponding monthly report is sent to the chain management at the beginning of each month.
At chain level, weekly and monthly sales reports are assembled to a joint financial data system. In addition to giving the whole picture, there is a possibility to compare the results of different units.
Communicating the sales results to staff
The key results of sales performance are reported orally in weekly staff meetings.
The monthly sales report is usually displayed in the staff’s coffee room. Normally, the report consists of the actual monthly sales of all Kontti stores, the set target and the actual sales as a percentage of the target, and the sales of all Kontti stores by product group. At the minimum, the report presents the monthly sales in the unit (target, actual sales, and the deviation from the target).
In the staff coffee room, the own unit’s weekly sales are presented by product group. This report presents the actual daily sales of the previous week for all product groups, the total weekly sales of the product groups, the previous year’s sales in the same week and a comparison to the previous year’s sales as a percentage.
Examples of sales reports (PDF)
Results and actions taken
The sales are discussed in Kontti chain meetings attended by the work management of all units and the chain administration. When an exceptionally good result has been reached in a unit, the store manager of that unit shares his/her views about the reasons for the good result. Other store managers can use the good practice examples in their own units, when applicable.
If a unit’s sales remain under the target, the result is discussed only between the Director of the chain and the store manager.
In each store, the work management will give the staff feedback about the sales as a whole and at product group level. Thanks are due for a good sales result and actions to develop sales are discussed together.
The persons in charge of departments (product groups) have, at least in some Kontti stores, also set their own sales target and monitor how these are met.
Improvements to the reporting system
The reporting system has been influenced by a similar system used in a Finnish retail trade chain (K Group). In the Kontti chain, the reporting system has been modified by including new product groups, such as young people’s clothes. The basis of the system has proven effective.
Experiences
- Close monitoring of sales and continuous communication has clearly motivated the units’ work management to reach good results. Motivating to improvements is very important.
- In an individual Kontti unit, the staff is highly motivated to follow the development of sales by product group. This promotes positive competition within the store and motivates the staff to develop the different departments.
- Comparison of sales by product group between the different stores has proven challenging and it is not usually done. It is motivating to reach good sales, but in comparison to others, less successful results can be de-motivating to the employees.
- Bringing forth the other units’ successful product groups with good sales results can be a motivating factor to a limited target group with good self-esteem willing to genuinely learn from others (e.g. corresponding department responsibles in another unit). For this purpose, study visits have been arranged to get to know how things are done in other stores.
Transferability:
- The chain management needs to have enough time to discuss results with each unit’s work management.
- The reporting system is applicable to any organisation with a set profit target and in which the key results can be accounted for in terms of money.
For more information: Finnish Red Cross, Kontti Recycling Department Store Chain, Director Maija Haaranen, maija.haaranen(at)redcross.fi