Target is serious about cutting employee turnover

Discussion
Photo: RetailWire
Mar 01, 2022

Target cut its employee turnover rate between 2019 and 2021 to a five-year low, but clearly the chain’s leaders think it can do better. The retailer made news yesterday when management said it would offer starting wages as high as $24 an hour depending on the job and location. Target offers a $15 minimum wage, which went into effect in July 2020.

“Our team is at the heart of our strategy and success, and their energy and resilience keep us at the forefront of meeting the changing needs of our guests year after year,” said Melissa Kremer, chief human resources officer, Target, in a statement. “We continuously listen to our team members to understand what’s most important to them, then use the feedback to make investments that meet their needs across different career and life stages. We want all team members to be better off for working at Target, and years of investments in our culture of care, meaningful pay, expanded health care benefits and opportunities for growth have been essential to helping our team members build rewarding careers.”

Target will invest up to $300 million to meet its wage pledge and to expand healthcare benefits to more of its associates.

The retailer said that it will be the “wage leader in every market where it operates.” The $15 to $24 pay scale applies to hourly associates working in the chain’s stores, warehouse facilities and headquarters. Target plans to set pay based “on industry benchmarking, local wage data and more.” Associates will also gain quicker access to the retailer’s 401(k) plan.

The company shared that it would give hourly associates quicker access to healthcare benefits beginning in April. Target is cutting the number of hours per week from 30 to 25 that associates need to work to qualify for healthcare. New hires will also qualify to receive benefits three to nine months sooner than before, depending on position.

Target is also providing additional benefits such as virtual physical therapy at no cost, and adding fertility benefits and other offerings to its medical plans.

The retailer debuted a new debt free college program last fall. All of the company’s full- and part-employees are eligible to participate, with new recruits eligible on the first day they begin working with the company.

DISCUSSION QUESTIONS: Is Target succeeding in being perceived by current and prospective retail workers as an employer of choice? How can Target and other retailers get employees to think of building careers with them instead of simply doing a job?

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Braintrust
"I presume, with the unionization of Starbucks locations, Target is getting in front of this and proactively elevating employee packages."

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21 Comments on "Target is serious about cutting employee turnover"


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Mark Ryski
BrainTrust

Resounding YES! In the strongest pay raise statement yet, Target continues to set the standard for driving up worker pay. I can only believe there is one key reason why – because a well compensated, appreciated, happy workforce delivers better results. Imagine how it must feel to work for a company like Target that continues to look for ways to enrich employees? Pretty good I’d bet. This makes Target one of the retail employers of choice, and in the battle for talent and especially frontline team members, this is a big advantage. As Target’s Chief HR Officer put it, “our team is at the heart of our strategy and success” and this certainly rings true by these actions.

Neil Saunders
BrainTrust

The market has changed and it is now incumbent on retailers to reward their staff well if they want to attract and retain good people who deliver great service. Target’s move is a recognition of that simple fact. However because of its effectiveness as a retailer – which has pushed up sales and profits – Target is in a strong position to do this. That in itself is telling: the pathway to success comes from investing and nurturing businesses, not from short term cost cutting to artificially boost profits!

Christine Russo
BrainTrust

I presume, with the unionization of Starbucks locations, Target is getting in front of this and proactively elevating employee packages.

Liza Amlani
BrainTrust

Target is not only a leader in getting closer to their customers but they have also proven that investing in their employees pays off.

Target is the employer of choice from corporate positions to shop floor and there is good reason for it.

Dick Seesel
BrainTrust

Target recognizes, like a handful of other retailers such as Costco, that investment spending on human resources pays for itself over the long run. The money spent on hiring and training is an endless expense cycle where the funds would be better used for higher wages and better benefits.

Target is not doing this out of the goodness of its heart, but because great HR management is a sustainable competitive advantage — just like its “best in class” omnichannel management, its array of private brands, and so forth.

Kevin Graff
BrainTrust

Here’s the mic drop from the article: “Our team is at the heart of our strategy and success, and their energy and resilience keep us at the forefront of meeting the changing needs of our guests year after year.” Target “gets it” — now it’s time for every other retailer to get it too!

When retailers truly believe that the front line teams are at the heart of their success, then (finally) they’ll make the investments long overdue in their staff.

Lee Peterson
BrainTrust

Finally, steps away from low-road capitalism (few earn many, many earn few). Target just put themselves ahead of the game. You have to like the way they’re thinking all around, right? Private label, neighborhood stores, fair pay, remodels, etc. Good looking future; best getting better.

DeAnn Campbell
BrainTrust

Target has consistently led the way in revamping their business model to support the realities of today’s omnichannel customer expectations. Even pre-COVID-19, Target shifted their logistics strategy to fill online orders from physical stores, developing an engagement app and bringing in partnerships like Disney and Ulta to create a more valuable shopping ecosystem for their customers. Underscoring the value of their employees is another important building block for continued success.

Lisa Goller
BrainTrust

Target continuously enriches the employee experience by investing in relationships, teamwork and unity.

In a sector known for high turnover, Target earns workers’ trust and loyalty, a huge advantage given today’s war for talent. By prioritizing its people, Target positions itself as the retailer with the biggest heart. And it pays off, as happy workers are productive workers.

Competitive wages, generous benefits and growth opportunities help retailers evolve from short-term jobs into rewarding career destinations.

Scott Norris
Guest

Not only is it great from a shopper experience and personal relationship perspective to see consistent faces at the registers and in the aisles month after month, but it also means staff is fluent in procedures and effective at keeping shelves stocked, which means everything just flows more smoothly.

Gary Sankary
BrainTrust

Store team turnover is a significant expense for retailers. You would think more retailers would understand that. Kudos to Target and honestly more than a few of their competitors for realizing that being an employer of choice is a competitive advantage.

Brandon Rael
BrainTrust

The retail industry remains one of the most prominent and influential sectors of our economy, and that won’t be changing any time soon. We applaud Target for recognizing how important, committed, dedicated, and loyal employees are to the customer experience. It’s impressive to see Target step up, set a new standard for hourly wages, and enhance the health benefits plans.

In an industry that has experienced so much turnover at the store level, Target is taking meaningful steps to provide an actual career path, a livable wage with benefits, and the opportunity to grow from the store level. As we have witnessed with Best Buy and other firms, a loyal, empowered, and well-compensated employee will be a crucial part of driving outstanding customer experiences. Well done, Target!

Liza Amlani
BrainTrust

Loyal, appreciated and well compensated employees are happy employees. Brandon you make some great points!

Mel Kleiman
BrainTrust

This is a great marketing move and another step in the right direction to hiring and retaining great employees.
I would like to see Target take action and not get any press but make all of the difference. It is important to start talking about what they are doing in management development at the store level. Pay is significant, but the quality of the front-line manager is the real key.

David Slavick
BrainTrust

I’ve worked with Target Corporation as a partner for almost 20 years. Their culture is brilliant and the commitment they show to employees by treating them with respect, listening carefully and giving back to the community they serve is stellar. This goes beyond cutting employee turnover. The employee on the floor of the store represents the brand. A happy, satisfied employee does more to engender true loyalty and affinity than any other component of the service solution. That is why Target wins every business day.

Ananda Chakravarty
BrainTrust

Target has always been successful at positioning itself as a premium employer. Ever since visiting their HQ in Minneapolis a few years back, I’ve been amazed at the resilience of this company to motivate its employee base.

The added focus on wages and ensuring that their employees are better off than their competitors means they will secure the cream of the crop for their labor force, and if done correctly, keep them and grow them. Building a career in retail remains accidental, and usually means going to corporate for a full-fledged career. Much of the recruiting work here needs to be in the hands of store managers, and that will be the key for Target to enable careers as opposed to temporary positions for the retailer.

The added benefits and perks are more of an acquisition play than a retention play. Developing store management, and giving assistant managers the chance to grow will be success metric Target (and other retailers) need to think about.

Patricia Vekich Waldron
Staff

Target walks the walk when it comes to employee experience. From compensation and working conditions to career and personal development opportunities, TGT is doing for employees what it did for customers.

Kai Clarke
BrainTrust

Go Target! Where Target goes, Walmart, McDonald’s, CVS, Walgreens, Costco and so many other major national chains will follow. They have to in order to stay competitive and to provide for a satisfying, happy, workplace that shows that they are concerned about the health, happiness, and well-being of their employees both in the workplace and outside of it. These benefits are incredible, along with the wage increases, and will finally start to move the USA as a leader of their workers for the rest of the world to follow. Oh yeah, the major unions, including the AFL-CIO, UAW, NEA, and others will also have to ensure that they are doing the same when they negotiate their next contracts! Go Target!

Shep Hyken
BrainTrust

While others are struggling, Target is doing something right. We can all learn. Be focused on employees and their needs. Provide competitive and important benefits. Be reasonable with evening/weekend hours. I’m not saying to give in to every employee whim, but be fair.

I asked an employee what they liked about working weekends. The simple answer was, “Extra money.” She went on to say that now they compensate for working late and on weekends. That made it more palatable. She also liked her manager and the company overall. Isn’t that what every employer wishes their employees would say about them?

Cathy Hotka
BrainTrust

Target just keeps doing everything right. Now they’ll be the retail employer of choice. So exciting.

Anil Patel
BrainTrust

Yes. I think Target deserves to be the employer of choice. Employee satisfaction and retention are one of the major challenges today. Given these conditions, Target seems to be in the right direction towards employee retention. Their efforts to let employees know that they care about employees’ wellbeing will definitely show a positive impact in the long run. This will also help increase customer lifetime value as motivated employees will work harder to serve their customers better and drive loyalty.

However, mere salary hikes or incentives are not enough to make employees see their future in the organization. Retailers here would need to identify employees that can be inspired and help them achieve milestones. Retailers then can build use cases around those success stories and promote them to motivate the next set of employees. Employees would work better when they get recognition while retailers create role models every time to motivate others.

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Braintrust
"I presume, with the unionization of Starbucks locations, Target is getting in front of this and proactively elevating employee packages."

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