BrainTrust Query: The Income Gap – The Growing Chasm Between Server and Served
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Prophet Consulting blog.
Review any retail sales training program written in the past 50 years and you’ll likely encounter multiple references to the word "rapport." Rapport, or the relationship and understanding between people that builds trust and confidence, has long been regarded as a vital aspect of effective selling. The idea is that in order to properly assess and address the needs of the consumer, the salesperson has to be able to fundamentally relate to those needs. Then and only then, the theory asserts, can salespeople recommend the best product, from personal experience, to satisfy the customer’s needs, with credibility. In other words, the more alike the lives of the customer and the sales associate are, the easier it is to build rapport.
Over the past 30 years however, the economic distance between the lowest paid Americans (many of whom are front line retail workers) and the highest paid, has been widening at an alarming rate. The likelihood that retail workers are serving someone outside their economic bracket is escalating. A mere 20 percent of all consumers now account for at least 40 percent of total retail consumption — a figure expected to increase to 50 percent of consumption by 2015.
At the same time, roughly half of the nation’s front line retail workers earn less than $10 per hour — which raises the question, how can a retail sales associate relate to the consumer who may be spending more on pair of pants than the sales associate themselves will gross that day? The simple truth is that the front line retail worker of today is less like their customer than they have been in more than 100 years.
Despite the escalating tension the income gap creates, approaches on the part of retail companies have remained relatively uncreative over the last 30 years. Programs aimed at better hiring, increased training and commissions in lieu of base pay have all been relatively standard responses. None of these truly address the issue of retail employees who are losing economic and social ground, leaving them vulnerable in an increasingly volatile economic landscape
This is not to imply that wages and benefits alone deliver employee satisfaction. There’s ample research to suggest that true employee satisfaction is driven by more intrinsic stimuli such as recognition, belonging, autonomy and sense of purpose. However, when wages are so low that even basic needs like housing, education and nutrition can’t be met, other more existential needs become moot. According to Daniel Pink, author of Drive: The Surprising Truth About What Motivates Us, companies need to pay their people at least enough to take "the problem of money off the table." This may be a different figure for every employer. But until they do, Mr. Pink suggests, it will remain a preoccupation and a deterrent to performance.
The question for all businesses, including retailers, may actually be quite simple. If people (those in their stores) truly represent their greatest competitive advantage and the critical medium through which consumers experience the brand, then business expenditure and investment should be guided accordingly. Furthermore, if the goal of the business is not only to compete but to dominate the human brand experience, then it must ignore minimum wage guidelines and target instead a rate of pay and package of compensation that begins (at least incrementally) to bridge the social and economic gap between staff and the customers they serve.
Discussion Questions: Do you see the income gap between customer and front line retail worker as a problem? Should retailers be paying more to workers in stores and, if so, how do they accomplish it while remaining competitive in the marketplace?