BrainTrust Query: Are frontline employees expendable?
By Mel Kleiman, President,
Humetrics, LP, a division of Kronos Corp.
Unless your Unique Selling Proposition (USP) or point of difference is Exceptional Customer Service (like Nordstrom, BMW, Ritz Carlton, and the Container Store), there’s no reason to sweat it when you lose frontline employees. Most likely, they were not that good anyway because, truth be told, you haven’t invested a lot of money in your hourly hires and even the training you provided, if any, didn’t cost much. In fact, their replacements will probably be just as good and may be even better than those you lose.
New employees are excited about their new jobs and will probably have a better attitude and try harder – at least for the first three-to-six months. On top of this, employee turnover will probably reduce your labor costs because you won’t have to fund any benefit programs for a while.
And there’s no need to worry if the new hire doesn’t know very much because the customers don’t expect them to know much when customer service is not your USP. You may even want to have new people wear a button that says: “I’m new. Please help me help you.”
Customers are expecting less and putting up with more in large part because automation has taken a lot of the service out of customer service. Voice mail and automatic attendants have eliminated the need for most phone operators and receptionists. Voice recognition software has reached the stage that it can direct your customer to the proper self-service option or you can send them to your website to look up the answer for themselves.
Pay at the pump, self-service gas has replaced the need for station attendants. And how about self-service checkout at grocery and retail outlets? Then we have touch screen ordering, self-service check-in when you travel – not only with the airlines, but also for your hotel room. (If they could only get you to make your own bed!) These self-service options are often faster and the machine always says “thank you.” Production jobs are being performed by robots and no one does repair work any longer because we don’t get things fixed any longer, we just replace them. The list could go on and on.
Today, a few great workers can do as much as what a lot of average workers used to do. Just remember that those few workers better be great because by the time your customer gets to talk to or deal with a real human being, he or she is going to be so mad and frustrated that it will take a Herculean effort to defuse the situation and keep them from going to the competition.
The Bureau of Labor Statistics says by 2010 we are going to be more than 10,000,000 workers short in this country. Don’t believe them. In 2000, they said by 2007 we would be 5,000,000 workers short and we still have about 4.6 percent unemployment in this country because they did not factor in the jobs that technology would replace.
Things have come full circle since the start of the Industrial Revolution and, in today’s world, frontline workers are once again replaceable cogs in a giant wheel.
Discussion Questions: Do you think many store managers and even retail corporate leaders feel that retail workers are expendable? To what degree are they right? And if there is this widespread perception, how do you change it?
Relationships with consumers are a key component of loyalty and relationships are developed with people, not organizations.
What kind of shopping experience do consumers want? If they are seeking information about products, that can be obtained online. If they have questions about products, they often need to talk with a real person who is knowledgeable.
To develop deep consumer insight, information from interactions with and observations of consumers are critical pieces of information. Friendly service is part of the value equation consumers use when choosing retail outlets.
For which of these activities can you afford to have uninterested, unfriendly, ignorant employees or no employees at all?
I’m not sure the poll is conclusive, since we don’t know if anyone in upper management actually responded here.
That said, perhaps upper management sees everyone as expendable, simply because they see themselves as expendable? Why would that be? Well, executives certainly job hop more than they used to as they work themselves into richer and richer deals (good for them, btw, if they can swing it). So perhaps they just expect the lower downs to follow their example and act like they’re “pseudo” self-employed?
Every man for himself, as it were.
I run an HR department for a convenience store company. Not only do we care, we have proven it to be a fact. We track store retention and compare it to store performance. With very little exception, the stores with the longest tenured employees have the lowest turnover and produce the higher bottom line profit. The reality is the stores that have the most experienced employees provide better customer service which translates to higher profit.
We have learned that when we open new stores we want to have a base of experienced employees rather than have all new hires. The stores become profitable much quicker when we use that model.
Too often there is an inconsistency with a company. The store managers always want good people who are friendly, reliable and will become loyal associates. And too often management won’t invest in basic training and pays low entry wages. This results in potential employees going elsewhere (or worse yet, staying with the company and not providing much customer service).
I firmly believe that you can only grow your company by growing your people. The inability to retain long-term employees will limit your ability to retain your best customers.
There seem to be two movements afoot. One believes that staff is expendable and that the retailer will succeed on lower prices. The other believes that staff should be well trained, because this will build loyalty. It seems as if most retailers today are operating in the middle, trying to straddle both movements.
This yin and yang can also be seen in consumers. They want low prices, particularly in the current economic climate, and they want knowledgeable, helpful sales associates when they have a question. Are they willing to pay for well trained, knowledgeable, friendly salespeople?
Retailers may have to make a choice. Consumers may have to make a choice.
Having been the one who posted this item, it has been interesting to read the comments and see how many agree that a lot of top management talks the talk but forget to walk the talk. One of the posts stands out to support my argument that the C-Suite talks one way and acts another.
How many of you have horror stores about bad customer service from a Macy’s store in the last year because of either lack of training, or lack of motivation of a front line employee? Even after their CEO stands up at a national convention and talks about the need to retain great employees and train and develop them?
By cutting out the human element in their stores, both customer service and other transactions, retailers have found an excellent way to cut costs; something that is commendable during this economic downturn. In fact, I intend help these companies reduce wear on their infrastructure and load on their internet servers by not going into their stores or visiting their e-commerce sites. Plus, I will encourage my friends and relations to do the same.
I believe that there is a profound disconnect between “Our people make the difference” corporate pronouncements and executing against those values.
At last week’s Global Retailing Conference, Terry Lundgren (head of Macy’s) spoke of his passion around training the future leaders of retail and how he now devotes time each week to interacting with Macy’s “high potential” employees. He also talked about how retail has lost talent to other industries by undervaluing it; a process that will take deliberate counter-effort to reverse.
As we ride this current recession wave, no doubt countless companies will slash training and employee enrichment programs first. I would caution them to think about the long-term implications of giving their best away to competitors.
I spend most of my time working with small and independent retailers, and questions like this leave them drooling. How important are front-line people? For these retailers, front-line salespeople, and the knowledge, enthusiasm and helpfulness they bring, are a critical component of their USP.
As the shear size and scale of many retailers has grown, and their business models, and USP, have become increasingly predicated on high volume and low margins, their front-line people have evolved from being thought of as essential revenue generators to an expense line to be reduced and controlled. Amongst these retailers, customer service continually fails to meet even minimal consumer expectations.
This represents a critical competitive advantage for smaller, independent and emerging retailers, for great customer service begins with great employees and great employee relations. Experienced, empowered, knowledgeable and motivated employees can be the driver in attracting higher-end, loyal customers, and creating meaningful differentiation from larger, well-established competition.
The question is not one of whether top management should care and if it is good for business. The question is, do they care? It looks like over 50% of the poll respondents say they really don’t care.
As I see the picture, we can imagine the retail process in this way:
The customer is the tire on the car.
The frontline employee is the lug nut that holds the tire onto the car.
If you don’t pay attention to your lug nuts–keep them tight and in good condition–you lose your tire and risk totaling your car, which in this example is the retail organization.
In other words, pay attention to your lug nuts.
Is that simple enough?
Frontline employees will reflect the attitudes of the most senior managers. If they feel expendable, they will act expendable. However, give the lowest level employee the dream of someday becoming the CEO and moving through the ranks, then you have defined corporate loyalty.
A successful military leader trains his frontline troops to be skilled in battle and loyal to his commanders. That is the only way to win conflicts and to make sure your position is not overrun. To convey to the troops in any fashion that they are expendable fodder will inevitably lead to defeat at some future point. Not only will they abdicate their responsibility in the front line, they may go so far as to join the other side or desert.
For those businesses who think letting their front line staff go because customer server is not their USP, then it would only make sense that their new USP will become NO customer service.
Sure, maybe we can fill our own gas and checkout our own groceries, but do these activities really have anything in common with the interaction between a sales person and customer in a retail environment? Last I checked, the casher at my local A&P was nothing more than a data entry clerk. Her job description alone makes providing any real level of service beyond a smile almost impossible.
However when I have a question, require product information, or the buying process can be complicated, not having access to knowledgeable and motivated staff can turn the entire buying experience into a negative one. And a negative customer experience is the best way for any business to end up laying off more than just front line staff.
From the displays at NRF in New York in January, you are indeed right. On the platforms the SVPs preached customer service. In the trade show, they were keenly interested in how much technology could let them cut costs and deliver an acceptable return. One need only look at the path Sears took to manage themselves out of business in the 80s to understand Circuit City in 2008.
The trick is getting someone at the top to truly understand that warm bodies on the floor isn’t staffing, it’s foolish.
This issue has got to be the most debated in retail when it comes to people issues. From a business standpoint, I am in complete disagreement with this piece. What is not mentioned is that it still costs money to train staff and turnover does cost the company money in different regards such as shrink and lower productivity. If a chain gets a reputation of being a meat plant when it comes to staff, quality and capable candidates will not apply. How does a company move forward when its front line veterans are only 6 months old? And the bitterness and jaded estimate of 3 to 6 months is optimistic if not a long a shot. Without support and training, new hires don’t stand a chance.
We can’t ignore the effect turnover has on the basket. Who’s going to upsell in your store when your staff doesn’t have the experience to be confident?
The cons for turnover far outweigh the pros. Circuit City is an excellent example of the value of having an experienced frontline team. Turnover = bad!
I must agree with the commentary here. It is truly foolish to think that the “live” experience consumers get is not meaningful. Yes, it is terrific that consumers can bypass this more and more when they do not want or need it, but–and this is the big one–when they do need to interact, it is at this point they are most influenced to by a “customer.” How can retail best influence–at this point–if there is no one to go to?
Of course, turnover and costs are more than just a small issue, but unless as was stated no service is needed it will be hard to retain consumer mind share with no one to share with.
Frontline employees must be properly compensated, particularly if the retailer relies on them for customer service. Point: At one chain near me, all of the front end employees start out at less than $7 an hour, whereas another chain starts their front end people at $10 an hour. Guess which chain is constantly lauded for its customer service? The powers that be cannot expect long-term loyalty if their employees cannot live on the wages they are paid.
No GOOD employee is expendable. The cost of training, opportunity replacement costs, organizational change issues, and corporate training is expensive, let alone affecting a company’s moral. The price of employee turnover is HUGE. No one should discount what happens when an employees leaves. People are tremendous resources and the absence of anyone who is a good employee should never be discounted.
Ask any retail executive these 2 questions: (1) how many W-2s did you mail this year? And (2) how many folks are on the payroll this week? Nine-and-a-half out of ten will immediately get defensive: “Well it’s like that for all retailers” and “Everyone knows how hard it is to get good help these days” and “We hire a lot of (students) (part-timers) (seasonal folks).” Costco has legendary low margins, nice sales increases, great financials, and they don’t “pay competitively.” They pay well, deliberately better than other nonunion stores. They don’t have Tiffany margins. Are they magicians? Or just smart retailers?
Anyone who has any doubt about the importance of retaining well-trained,well-compensated frontline employees should consider the mass layoffs of the seasoned salespeople at Circuit City and the customer dissatisfaction that has been the result.
As several people pointed out in another recent BrainTrust discussion, the background of the CEO matters and affects how employees are perceived. Usually, if the CEO is a marketer or merchant by training, he/she will be highly aware of the importance of PEOPLE–the connection between trained and knowledgeable front line employees and satisfied loyal customers. If the CEO is a financial guy who is more attuned to the possibility of NUMBERS, then not so much.
Retailers as a whole are famous for underpaying their staffs, almost guaranteeing ferocious turnover. In no other industry are people paid salaries this tiny. Imagine what law firms would look like if they paid $8 per hour.
When retailers decide that they want to provide excellent customer service, they will pay their people more than a subsistence wage.
Customer service always needs to improve but the real question is how this can be achieved. In other words, retail stores need to find a better connect between humans and technology. The media buying experience on iTunes is far superior to any of those old record stores where customers used to shop. If your staff is not well trained and motivated, I would suggest automation is the lesser evil. However, the ultimate service is exploiting technology to leave salespeople there for the customers they can best serve. We often assume there is only one customer out there, but there are in fact many different customers with many different needs.