Tuesday, November 6, 2012

A Quarter of Spain Unemployed – Is Spanish Supermarket’s Strategy the Solution?

The unemployment rate in Spain has surpassed 25 percent – that’s about 5.78 million people who are seeking unemployment benefits. With a deepening recession, the government’s cost of paying unemployment is going to exceed the current cost, which is 4 percent of gross domestic product.

During this economic downturn, the Spanish supermarket chain Mercadona SA has managed to hire 6,500 new employees last year, with sales rising at a steady pace.  Their new strategy is to improve worker productivity by implementing flexible working conditions, extensive employee training and performance-linked bonuses.  This is a fairly successful strategy used in Northern European countries, such as Germany, to improve efficiency and implement lean practices.

Juan Roig, President of Mercadona
The determination to improve practices at Mercadona began when Juan Roig, the owner of Mercadona, noticed that store shelves were poorly stocked and managers constantly checked employee bags for stolen items at the end of shifts. At this point he decided to stop using temporary contract workers, which then covered about 60 percent of Mercadona’s workers. This led to implementing following actions and practices to train and retain full-time employees:

·      90% of the workforce must be permanent full-time employees
·      Invest $6,500 and four weeks of training for each new employee
·      Additional 20 hours of training every year for all employees
·      Pay above-average wages
·      All employee bonuses based on company attaining profit targets – bonus up to two months’ salary

With additional benefits and job security during recession, Mercadona required dedication, flexibility and efficiency from its employees. Since these changes have been implemented in 2004, sales per employee have increased by 62 percent. Mercadona’s market share has risen by 5% since 2008. As of December 2011, Mercadona had 70,000 permanent employees and its annual profit increased by 19 percent to $619 million.

Should Spain implement laws based on Mercadona and other Northern European countries’ strategy to reduce labor cost, improve efficiency and create secure jobs?

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.