Budgets Built From the Store Floor Up

“The stores, he said, operate in an environment that they don’t completely control. Their region could be affected by an economic slowdown or, inversely, by inflationary factors or by intense competition. “They deliver the profits that they’re capable of delivering,” he explained; and that’s why the people who are in the best position to define their profitability objectives are managers and their supervisors. That’s where the projections for each division should start. Such an operation obviously requires more work than a decree handed down from the top. In fact, the consultation process would have to be launched in January to be ready for April. “It was a complete education for people in operations and the stores, to empower them and teach them open-book management,” says Bouchard.”

“Of course, more had to be done. Accounting requires a certain amount of regularity to be effective; the same goes for establishing team spirit. For that reason, Couche-Tard instituted a mandatory meeting during which each division would report its results every four weeks. Holding the meetings in person was impossible: The territory to cover was too vast, the distances too great and upper management’s time too valuable. Telephone was overly impersonal; it wouldn’t help unite the senior management team effectively. They decided on video conferences. These virtual meetings—innovative then—would become an integral part of Couche-Tard’s business cycle. They would involve comparing gross margins earned on each product line: gas, food, cigarettes, etc. Earnings, however, were not the only measure for business performance. Was store traffic growing? Did the manager turnover rate exceed the limit, fixed at 20 percent annually? “If a division is at 30 percent,” says Plourde, “there’s a problem with human resources management. You’re either picking the wrong people, failing to integrate them or not training them properly.” It’s a signal that it’s time to look closely, to find the root cause and make the necessary corrections. Failing to do so will inevitably start to affect morale at all levels. This will have an impact on customer service and, in turn, store performance. The same logic can be applied to many other indicators: the number of workplace accidents, absenteeism rates, use of overtime, employee attendance for training offered by the company. All variables were measured, compared and discussed in Couche-Tard’s meetings.”