Ahhhh yes. The topic of bonuses, one of my favorites of working life at a Kroger owned store.

Most grocery retailers, and pretty much ALL grocery retailers in the past, give performance bonuses to their department management, and store management. Makes sense to me, motivate people to peform above a standard on certain metrics (sales, shrink, etc.) by offering some money. 

Kroger, however, has gone to a very odd system of bonuses. Store department management (meat, seafood, produce etc.) don't get any bonuses at all anymore. In the past these were as high as 2-3k a year for top performers. Now we get bupkiss. No real reason to peform above average, other than personal job satisfaction and no pressure from management/regionals (not a bad reward in my book, so I do!) Also just my simple ethical standard of performing the job i'm paid for to the utmost of my abilities.

However, there ARE bonuses for overall managers (store directors, co-managers, food managers, apparel managers, home dept. managers, etc.) and they are based on all sorts of numbers. 

Stories always percolate about how the bonuses are tied to basically every expenditure. Like lets say theres a total bonus available of $10k. Someone who did everything perfectly would get the full amount. Certain stats have a percentage of the bonus pie. 

So what seems to happen if this is true, is that managers manipulate the store labor hours, expenditures on maintenance and new equipment, and other things to ensure that they get a big bonus.

The problem with this approach is obvious. A store could be excessively busy, and truly need the amount of hours ELMS or VLM or whatever the labor software says is needed for that level of business. However, a store director or manager is tempted to schedule far less than that amount, in order to achieve their bonus goals. Sure it works to reduce the hours used, but it does it on the backs of the employees who have to work harder with less hours to pay their bills, or the department management who are held to standards of service, stocking, and whatnot with less than the actual staff needed.

Same with maintenance. Store directors may refuse to authorize needed repairs or equpiment replacement simply to protect the percentage of their bonus based on their expenditures. Then what happens is as soon as Period 1 rolls around, they get a new budget to spend, so the stuff gets done. 

So a store can become VERY messed up operationally if the management is constantly worrying about their own bonus, and lies to the staff that the reason theres cuts in the hours is because "the main office ordered it". They never do. They provide the store a certain # of hours. I would agree there is probably some modification from the main office, and maybe they do on occasion cut back way too much. But the penalty for going over hours isn't disciplinary for the managers, its monetary. It's not like the district manager is going to be up a store directors ass for being 10 hours over budget! 

If they were hundreds of hours over, and lots of overtime, then I can imagine they would be, but the idea that the "bosses boss" orders the reductions in hours is laughable. Its all about getting that bonus, when it comes out of the blue.

This is creating a bad problem in the company overall. I'm lucky to be at a "special" store with a relatively obscene amount of hours, and huge leeway to use even more than that when we're super busy. We have all full-service departments and lots of special stuff, so its always approved. But for regular stores, some are staffed to the bare bones. There are stores with way more sales than ours, who have barely more hours than standard. Customers can't be too pleased to find that the seafood counter has 1 employee available during the busy dinner rush, and there can be waits of 4-5 customers at a time in busy stores. One meat guy on duty too, and he cant cut the 3rd list and also keep the self-serve areas stocked at the same time, and also clean up to a decent cleanliness too.

It's getting ridiculous, and will destroy the business if it isn't recognized at stopped. This I think is a worse problem than all the Key Retailing nonsense, it all turns a simple job (have product, stock product, provide excellent service, sell product!) into rocket science.

So (TL;DR VERSION) yes, your store may be operating very unefficiently because the store director wants his big bonus, and not any directives from the district office, or cincinatti!

Fishy wrote:

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So (TL;DR VERSION) yes, your store may be operating very unefficiently because the store director wants his big bonus, and not any directives from the district office, or cincinatti!

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 99% spot on. The one thing not mentioned, is that corporate designs the program from the beginning to be near impossible to make 100% on bonus. In my time with the company, the most I ever hit in a store was about 65%, and that was a lucky fluke. Most of the time it was less than 50%, once as low as 20%. In one store, during the height of the recession in a definitely declining area we were given a 6% sales increase goal. Considering sales were down 2% previous year, that was insanity. Also, the goals vary from division to division, but from what I recall from this years plan was ~30% sales, 30% EBITDA (look it up if you can't figure it out) and 30% inventory/backroom precentages. Remaining 10% split amongst Key Retailing, controllable costs, part time/full time ratio etc. You may think I left out hours/OT, but they figure into the EBITDA line. Because the operating statement is split amongst departments, it makes it easy to rob Peter and pay Paul in terms of hours.

Also, bonuses for co-managers are really chump change when it comes down to it. My division (Central) was tiered at $4k-6k-8k for co's. But because it's titled as a "bonus" it gets taxed at near 40%. So, if I made 50% of my 6k bonus, I only got $1800. Now, I can't speak to what a unit manager's bonus range was, bit it works effectively the same.

At least where I am at now all employees can get some kind of bonus, and my location maxed out at 100% last quarter, and have averaged 80% or better for 8 running quarters.