Will More Full-Timers Give Cumberland Farms a Competitive Edge?
All large retail chains are faced with the same situation. Beginning January 1, 2014, they will either have to provide healthcare coverage for workers averaging 30 hours a week or more or pay a penalty of $2,000 per uncovered employee under the "Pay or Play" provision in the Affordable Care Act (AKA Obamacare). While some plan to reduce workers’ hours to avoid covering them, Cumberland Farms, a 600-store convenience store chain in the eastern U.S. and Florida, is taking a completely different approach.
The company announced plans to offer more hours to an additional 1,500 employees, making them eligible for its health insurance plan. The chain, which currently has 3,000 full-time and 4,200 part-time employees, will have 4,500 full-timers and 2,700 part-timers after the reclassification.
"We could have pushed everybody [now working] under 40 hours below 30," Ari Haseotes, president and chief operating officer of the family-owned chain, told the Orlando Sentinel. "We’re making a proactive effort here to go above and beyond, and clearly differentiate ourselves in the job market as a place to come to work."
"This is a great opportunity for us to put our money where our mouth is," John McMahon, senior vice president and chief human resources officer at Cumberland, told the New Hampshire Union Leader. "We are walking the walk about being a people-oriented organization."
Mr. McMahon said the company planned to work with store managers over the next three months to identify strong employees who are interested in working more hours and move them to full-time.
Discussion Questions
What do you think of Cumberland Farms’ decision to move a greater percentage of its workforce to full-time status rather than reducing hours to get around the Affordable Care Act? How will this policy affect the chain’s ability to attract and retain talent? What effect, if any, will it have on how customers view the chain?
I think this is (with proper screening of course) a great move, especially when you consider the alternative.
How loyal would workers be if they realized they had just had their hours cut so that the company didn’t have to offer them benefits? I suspect not too loyal. The new policy should make it easier for them to attract, retain and grow truly talented, truly loyal employees.
Hard to say what this will mean from a customer’s perspective, other than service levels should improve. But one thing is for sure, it can’t hurt the company to be known as a business that cares about people.
Being a parent of an ex-retail part-timer, I can say that this is a smart move. I understand the retailers’ situations and know why one of my kids lost hours. What retailers need to do is make sure that they understand what is happening too. My retail pro kid left his job last week and took on a new job that is full time. He hated to leave, but needed the hours as he continues his education.
Cumberland will create a magnet for people and to get the best people they need to make sure that their interview process weeds out the “I just want a job” types and lands the “I love helping people” players.
In addition, Cumberland needs to make sure that their online talent tools are up to par. In this world of MOOG education, retailers need to get employees more and more educated online to help them improve on the job.
Go Cumberland!
One thing we have to keep in mind when a company chooses this business model is that they will not be hiring the stereotypical downtrodden convenience store employee. They will be hiring younger, fitter, better looking, and harder working people that they hope will keep them profitable.
If they want to milk this as some kind of publicity stunt, well fine. However, this is a viable business model that has worked well for other retailers. Looks like they will be weeding out some of the less than ordinary workers and rewarding the ones that are keepers.
This is a good move for Cumberland. It helps them attract and retain employees because so many other retailers in the c-store and other industries are going the opposite way and cutting hours so that they will not have to provide health care benefits.
The c-store industry’s employee turnover is high. NACS (National Association of Convenience Stores) reported non-manager turnover at over 76% for 2011. Some of these were full timers and some part time, but the majority of even the full timers didn’t have health benefits. Offering full time employees health benefits will help reduce the turnover rate and the tremendous expense associated with it.
Cumberland is trying to show its employees and the market place that it has a heart. At the same time I have to wonder what their policies have been in the past. Is this a break with attitudes toward staff or part of a continuous effort to be supportive? For sure employees will appreciate the opportunity for health coverage. Loyalty to Cumberland will be based on more than access to insurance. Can’t help but think there’s more to this story.
Cumberland Farms is proactively addressing one of the chief challenges of the retail industry—associate turnover. The turnover is especially troubling for the hospitality and convenience store industry.
The benefit that Cumberland Farms’ will experience lies in the area of having more dedicated associates, who have a greater familiarity with their customers, products, and services. Provide these associates with added coaching and training in a positive manner, it should be a recipe for increased customer satisfaction, speed of service, cleanliness of operations, and stronger top line/bottom line revenues.
The Affordable Care Act is going to cost Cumberland Farms and other retailers more money. However, taking proactive steps, such as this one, they will find greater efficiencies.
I wonder if we could get the Federal Government to act more proactively and efficiently? Probably a subject too long for a blog.
Having loyal, talented employees is a huge asset. Making an investment to create this resource and sustain an image of valuing employees, sends a strong message to current and future employees about the company. This is a great investment in the future.
This appears on the surface to be an excellent move for Cumberland Farms. They will have better, highly motivated and committed employees. That will drive sales and profits. I applaud them making this commitment. They are definitely an employee first company.
I’m joining my peers with a “high five” for this move to make employees full-time. Real jobs in retail improve the life of the worker, and also improve the worker’s service attitude to the customer. It’s time for many other retailers to step forward with this kind of commitment. The dividends can be termed as “better engagement” all the way around.
Totally agree with the thread here. The additional effect will be that full-time employees with better attitude will make part-timers and newcomers better, happier workers also. Customers will like working with a better class of employees. Win-win all around.
Unless they plan to reduce the part time hours, the proposed plan will be increasing total store hours. Over the years there have been many discussions as to the productivity of full time vs. part time labor. Full time typically has lower turnover than part time. When all things are factored in, more full time can benefit a retailer with less start up and shut down time, customer knowledge and taking on greater responsibility.
The one area where it does not help is servicing volume surges during the day. No retailer schedules full time labor to cover the volume peaks. Cumberland Farms’s full time approach will be an advantage in the labor market. A large number of people are working two part time jobs, getting no benefits and making less money.
How well this works for them will depend on whether or not other retailers adopt similar strategies (although since some of us think—well, one of us thinks—the “real” unemployment rate is zero, this move may have been inevitable anyway). Customer reaction will be two fold: an initial reaction to it simply being done (which is limited to the few people who read the news stories, and will fade quickly) and the reaction to having (presumably) higher quality employees.
You’ve gotta love the stated intention here. I’m rooting for Cumberland Farms to win big with this policy, because it would be an excellent benchmark for other retailers.
It has a good chance of succeeding, if the firm hires with care and forms a caring bargain with its full-time employees. After wages themselves, health coverage could be the next most powerful reason to protect one’s job by doing it well.
Ultimately, however, Cumberland Farm’s policy will have to translate into profitable operations and a superior customer experience in order to be sustainable. If this comes to pass, we’ll all be commenting on the case study in this forum two years from now.
Having run the HR survey for Convenience Store Decisions magazine for the last 4 years, I can say without a doubt this is a great move. If done properly, it will become a true competitive edge. In the C-store industry, the quality of your people truly determines the quality of your service.
I think this is just smart business. Statistics tell us that health care is one of the benefits that most workers, part or full time, need and want. This will ensure Cumberland Farms of a motivated, grateful work force who will not change jobs for a few dollars an hour more, and who will be happier (and more productive) in their work. We as a society will be much better off with this kind of approach. I wish I had a Cumberland Farms store near me—I would shop there just to support this.