CSD: You Don’t Have a Turnover Problem?
By Mel Kleiman, President, Humetrics, LP, a division of Kronos Corp.
Through a special arrangement, presented here for discussion is an excerpt of a current article from Convenience Store Decisions magazine.
Hiring strategies need to begin with a strong focus on retaining good frontline employees. Most employers in the convenience store industry think they have a frontline employee turnover problem and, heaven knows, the research surveys seem to confirm your thoughts.
According to a Bureau of Labor Statistics survey in February 2008, 78 percent of 16- to 19-year-olds and 54 percent of 20- to 24-year-olds had a tenure time of 12 months or less with their current employer. Employee turnover for all age groups continues to soar despite the shrinking job market.
Across industries, turnover is highest in the group that has the most customer contact: our hourly service workers. It’s no surprise then, as frontline turnover increases, customer expectations drop lower year by year.
So, how did we get ourselves into this sorry situation?
Less than 30 years ago, the U.S. economy was manufacturing-based. What we needed for the assembly lines and loading docks was strength, stamina and an ability to tolerate repetitive tasks. Because there were plenty of people who wanted those jobs and little training was required, management viewed those frontline, hourly employees as replaceable cogs in a wheel.
The problem is, as we shifted to a service-based economy, too many managers kept thinking this way. Frankly, management continued to think of frontline positions as menial tasks that anyone could do. They overlooked one crucial difference: manufacturing frontliners don’t interface with clients as service frontliners do.
While frontline turnover has always been monitored and analyzed, few firms have ever gotten a handle on how to control it. In many cases, when turnover wouldn’t be tamed by higher salaries or length-of-service bonuses, employers wrongly concluded that constant turnover in the rank and file was just “the nature of the beast” and reluctantly accepted it as an unavoidable cost of doing business.
Today, there aren’t enough entry-level workers to fill the jobs available and the problem is not going to go away. All of a sudden, everyone’s looking at ways to recruit the best of a shrinking labor pool while keeping the good people they’ve got from jumping ship. The focus for all companies is trying to “control turnover.” The thing is, this isn’t a turnover problem – it’s a retention problem. And if you’re treating it as a turnover problem, you’re finding that you’re getting nowhere fast.
When you look at this problem and call it “turnover,” you’re focused on facts and numbers and you come up with facts and numbers solutions – increased compensation, sweetened benefits packages and exit interviews.
When you call it a “retention” problem, however, your focus shifts to where it belongs – to the people involved. When you focus on people, you’re doing what magnetic companies do in order to attract, select and retain the best. Magnetic companies use hiring systems to identify the employees who best fit their jobs and their cultures. Magnetic companies conduct regular employee satisfaction surveys and act on them.
Discussion Questions: To what degree do you think chronic turnover is “the nature of the beast” for retail? Do you agree that shifting management’s thinking from “turnover” to “retention” would help? What are some smart and perhaps underutilized solutions for reducing retail turnover?
Employee turnover has in fact become the “nature of the beast,” but it needn’t be that way. The real issue is not entirely one of pay, or hours, or training, or potential or any number of the issues raised in this discussion. The real issue to address is the level of engagement your employees have.
Because retail has become more of a stop-gap job, the level of potential engagement has been severely diminished. It just isn’t there anymore, and what’s worse top level retail management does not see it as a useful tool to encourage growth of their respective businesses. I’ve found that engagement is a misunderstood, and overused term at the same time. It takes on a different meaning when used by people not fully cognizant of its true nature and potential. Subsequently, as the industry (retail) continues to decline as a positive source of employment, that potential disappears, leaving managers with un-trainable staff, and a dwindling customer base.
Today, front line retail positions are filled with part time students, part time retirees, part timers who have trouble holding jobs, part timers looking for extra income, part timers who need to limit their income due to welfare restrictions and on and on. The key is part time. There was a time when retail was a full time venture. It always was low paying, with little hope for any benefits, but it gave a body full time hours. The retail worker relied on the job to feed the family and pay the rent. And because of that helped to develop a good relationship, and a high level of engagement for the workers.
Today, for the most part, there is no sense where the job pays for the groceries and rent. It’s usually supplemental, with most retail workers only working 15-20 hours a week. Nowhere near enough to pay bills, but it helps. So there is no relationship between the position and having a need for that position to the employee. So they don’t care as much as they could. Since they don’t care, there is no need to view the position as a step on the stairway to advancement in the organization.
Thinking in terms of turnover and retention only turns a human being into another statistic. We already make them feel that way by the way they get treated on the job. If you want to keep good help, give them hours. Take away from people that underperform and give the hours to people that do perform. Get rid of the attitude that 30 hours a week is a full time position, because it isn’t. Lead your hires in the direction you want them to go, don’t push them into doing something. Learn about the engagement principles and implement them. Train your hires the way they need to be trained.
But the best way for the situation to begin to change would be for corporate executives to stop looking at payroll as an expense, and look at it as an investment. Think of your employees as tools that need to be kept in good repair and sharp. Your profit level will rise if you handle your staff in the right way by improving the bottom line. Engaged retail employees will help increase your customer base, lower your expenses, reduce returns and other problems, and improve your stores relationship within the community. Your employees are not statistics, they are human beings. Treat them that way.
Higher employee turnover at convenience stores is not the “nature of the beast.” Because if it were, how is it that chains like QuickTrip are able to retain employees? For the past three years in a row, QT has been FORTUNE’s Number One of the Top 100 companies to work for! The key is to focus on the characteristics of the employees who stay, and look for similar characteristics in new employees when hiring.
The angle of this article is right on the money! We’ve continually proven that you can do a better job of retaining your employees by doing some basic but important things as managers.
Spend more time in the hiring process.
Run a proper orientation to make them successful right away.
Constantly train them so that they have the skills to succeed.
Coach them daily. Pay attention to them and they stay. Ignore them and they leave.
Raise the bar on accountability for performance. No one wants to lose, or to work for an organization that accepts losing.
Retailers can drive down turnover rates by 30 to 50 percent. Imagine then how much easier the recruiting task becomes!
It’s not an employee turnover problem. It’s an employee experience problem. Any retailer is going to see sales associates, counter people, etc, move through their organization. It’s the nature of the industry. Retailers need to understand and accept that. They need to focus on making sure the employee had a great experience while they were working, and consequently that employee would be more likely to stay, more likely to return if needed, and more likely to recommend to family and friends. Employee experience is just as important as customer experience.
A job on the retail floor means long hours, working on holidays and weekends, and dealing with demanding customers. Of course, all that means nothing to the retailer/merchant who loves the challenge of working face-to-face, one-on-one with the customer. These individuals are rare and when a company finds one, they are usually quickly promoted, and given aggressive store opening strategies.
In general, most people love to be served, not provide service. And in an industry in which the customer is always right, it’s difficult to find a true customer-oriented retail employee.
Great article! Employers just don’t get it and that is fortunat for consultants! Treat an employee well and your retention statistics will go way up.
This is a good article for a lot of companies. They wonder why they lose people?!? Just reviewing employee retention in a company who thought the problem was geographic, results showed, low pay, disrespect, lack of training, no focus, and several other problems. Forget about turnover! Concentrate on retention!
Realize how much it costs you to hire and rehire A and B players. Sometimes what is needed to retain them is minimal and has nothing to do with cost.
Mr. Klieman’s article touches on some really important aspects of the turnover problem retailers are facing. I tell my clients that retention problems start when the candidate drops off his or her resume. There is a process in uncovering future problems.
Managers that interview and hire need to be aware of how potential employees carry themselves. Through body language and open ended interview questions, managers can discreetly gauge a candidates ability to handle the job. Ongoing training and feedback is also necessary to combat turnover. The goal is to have the employee take ownership in the store which creates a culture that enhances productivity and morale.
Perhaps turnover is not really a problem but more of a designed labor model. Walmart encourages turnovers in order to reduce costs associated with tenured employees. The tasks performed require minimal training. However, when turnover is not intentionally factored into a retail model, then it does become a problem–especially for stores that intend to emphasize customer service. Publix and Hy-Vee easily solved this problem by becoming employee owned. The longer an employee works for them the more they build up equity in the company.
Agreed. Stop treating them like cannon fodder, give them focus, training, support, coaching, make them feel valued and create a great place to work. Give them career path options.
The problem, of course, is that entry-level workers rarely see retail as a career. It’s a job to meet immediate needs and provides a paycheck while they’re searching for their career. Back in the Ice Age, when I was with Southland Corporate, our 7-Eleven employee longevity averaged 34 days. Before that, when I clerked and managed 7-Eleven stores during college, it was just a brief stop on the way to my real life. I was the only employee in the store 90% of the time, with no one training me and with nobody for me to train. Usually I also had an additional job or two plus my classes, and I suspect that most C-Store employees have additional jobs just to survive. It’s hard to focus on and commit to a low-level retail job when there’s so much other stuff going on your life.
Sometimes a topic just triggers a rant….
When I started out in retail, I worked on a sales floor with a great group of experienced, very skilled salespeople. They were paid on commission and the were pros.
Therein lies the rub. They were unionized and paid on commission, so the company we worked for viewed them as the enemy. They were a cost factor to be managed and minimized, and eventually their jobs were eliminated altogether in the name of increased efficiencies.
But that missed the point. The point was that regardless of how they were compensated, whether they were unionized or not, they were professionals. They had exceptional salesmanship, they engaged their customers and developed long term relationships, and they hustled their ass off. They delivered. Yes, they were motivated by money, but the key is that they were motivated.
Somewhere along the way, corporate retail decided that salesmanship was overrated and that salespeople were disposable. They de-professionalized retail selling, across all formats and segments, and decided to treat front-end payroll into a cost center, rather than a profit center.
This isn’t to be nostalgic, this is to point out things don’t have to be the way they are. For those retailers racing to the bottom whose strategy is predicated on price alone being the predominant competitive criteria, then perhaps salesmanship is an unaffordable luxury.
But there are far fewer retailers, and retail categories, who that truly applies to than they might think. There are very few stores I walk into, including Walmart or Target, where a little knowledgeable assistance and a professional approach might make a huge difference in what I spend.
For many years employee turnover has been an important issue for both convenience stores and retail in general. Part of the problem is that many of the people hired in retail are young. They either get bored, have other priorities in their lives or change jobs because they have friends working elsewhere. There is little any retailer can do about these things.
What retailers can do is do a better job of hiring; spend more time and effort on training both front line people and managers; and create the kind of place where people WANT to work. It starts with the hiring process. In our work we see managers conduct five-to-ten-minute interviews and wonder why they have high turnover. We also see companies who do little to teach managers how to interview and how to chose people who are more likely to stay. We also see managers who simply don’t know how to create a positive, pleasant work environment where people feel good about coming to work.
While some retailers struggle with turnover problems, others have learned that good hiring practices and great places to work are the keys to low turnover. High employee turnover is one of those very costly things any retailer can fix if they actually want to do so!
When corporate America recognizes that their most valuable employees are on the front-line, they will identify value-based solutions in resource allocation that reflects this. This will allow them to better deploy human assets to match up against needs and minimize turnover, increase employee and customer satisfaction, while presenting the best possible environment for both customers and employees in their stores.
The one thing not mentioned is the work environment. I recruit for c-stores. Some of our best employees are the ones who visited our stores and had a ‘fun’ shopping experience and decided that they wanted to come to work for us. In many ways it is our best recruitment tool. We tell people that they should have fun working here and if they don’t then maybe it is not the right job for them. We believe that environment helps us with retention.
We actually track retention and that is the gauge we use to measure how we are doing from year to year. We compare retention to turnover and the graph will show you exactly where your problem stores and management teams are. The ideal situation is a store with high retention/low turnover. And guess what–those are also usually the most profitable stores!
Problem is that there is no career path anymore in retail… most retailers are owned by huge, faraway conglomerates and the ‘man on the floor’ knows that he is replaceable because there really isn’t much room for a rise up the corporate ladder unless he/she wants to pull up their stake and move to some faraway city. OK, sure, you can end up ‘floor manager’ someday, but chances are, there isn’t a full time professional position for you regardless of your talent and drive. Might as well look elsewhere for change and a small raise as you have nothing to lose when you get tired of doing the same thing over and over again.
This is all very sad since corporations rarely promote from within anymore and the experience of starting out as mail room clerk or bagger or packer and ending up years later as a fully experienced manager in corporate is not reality as not many companies are locally owned.
The staff turnover problem in retailing didn’t start 30 years ago. It started around 1941 when the USA started gearing up for the war and folks could find better jobs. Retail companies easily kept staff turnover down during the Great Depression because folks had few better alternatives. Store work has always meant long hours on your feet, dealing with the public, with awfully repetitive menial tasks.
And there ain’t no labor shortage. There’s just a shortage of desperate people anxious to work for the minimum wage. Pay better and you can recruit the cream of the crop, anytime. Just ask The Container Store and Costco. By the way, they’re not employee-owned. They just have high-IQ managements.