Kroger Sees HR as Key

CINCINNATI On the day after the Reds claimed their first Major League Baseball division title in 20 years, another local team celebrated its winning ways. Katy Barclay, the newly named senior vice president of Kroger Co., explained how investing in employee engagement has contributed to the retailer's success including driving sales and profits, customer loyalty and productivity. Her presentation

CINCINNATI — On the day after the Reds claimed their first Major League Baseball division title in 20 years, another local team celebrated its winning ways.

Katy Barclay, the newly named senior vice president of Kroger Co., explained how investing in employee engagement has contributed to the retailer's success — including driving sales and profits, customer loyalty and productivity. Her presentation was part of a day-long investor conference held for analysts here last week.

“We truly believe that Kroger's continued success in driving its competitive advantage will in large part be determined by how our associates engage with our customers,” Barclay said. “That's our sweet spot. That's what creates a superior shopping experience.”

Barclay, who joined Kroger in January to head its human resources department after serving a similar role for General Motors, noted that engaged employees were one of the four key elements to Kroger's “Customer 1st” strategy. She said the company has over the past 18 months developed a set of sophisticated tools to measure employee engagement, which she defined as workers with “a positive emotional attachment” to the company and a desire to help it succeed.

Central to the effort is acknowledging, reinforcing and rewarding positive interactions between store employees and shoppers, Barclay explained. This is accomplished through training that involves all associates and leaders at the company.

“Communication and training keeps our associates really connected to the business and it recognizes and reinforces behaviors that make a positive impact on our customers,” Barclay said. “We're promoting a really strong spirit of collaboration within the company, all the way through top to bottom and side to side, and it assures that our managers are actively encouraging that input, those ideas and that feedback from all of our associates.

“Most importantly, we are celebrating the successes with our associates by recognizing the behaviors that positively impact that customer experience,” she added. “Because, again, that's really what it's all about.”

David Dillon, chairman and chief executive officer of Kroger, later described attending front-end training programs and telling associates they were learning skills they can apply while doing their “real job.”

“They look at me like, what are you talking about, we're learning how we do our real job, and I said you're really not. We're teaching how to do the activities while you go about your real job. Your real job is to make sure that the thousands of customers who come through the store that day feel better about the world around them just a little bit than when they came in the door,” he said.

Rodney McMullen, Kroger's president chief operating officer, in a separate presentation said that the company “people” scores have improved by 12.1% from a 2004 base. The company tracked similar improvement in other key areas of the “Customer 1st” strategy including product development, shopping experience and price, he said.

More coverage of Kroger's investor conference on Page 8.