Eight reasons why retail employee turnover is so high
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Doc blog.
A CAP study found it costs on average $3,328 to find, hire and train a replacement for a $10/hour retail employee. Hay Group reported a median turnover rate of 67 percent for part-time retail employees.
And while many businesses are adopting impersonal online application processes and pre-employment skill tests, they seem to do nothing to work on why their turnover is so high.
Here are eight reasons why your retail employee turnover is so high.
8. Only management incentives. Find a way to include everyone somehow — not just on a sales goal, but in keeping the "attaboy" attitude — so everyone feels good about the job they do for you.
7. Antiquated policies or procedures. No refunds, no exchanges, everyone works every weekend — all these stupid policies cause friction for good employees … and your customers.
6. Minimal training. Having previous experience doesn’t mean an employee will understand what makes your store different. Tell them explicitly what you are trying to do with your customers.
5. Employees thrown into the job. Millennial employees don’t have the skillset to pro-actively acquaint themselves with other employees. An ongoing effort is required to bring people together.
4. Employees encouraged to do, not think. The younger workforce has an innate positive outlook. Forced to stock those shelves, price that merchandise, etc., gives them plenty of time to say how much their job sucks.
3. Every day becomes the same. Many times we look at an employee as too valuable where they are. Mix it up for employees who have been with you for awhile; give them new duties, training, responsibilities, etc.
2. The wrong people get hired. You need to see if a candidate is able to talk to people, not just say they can.
1. Promoting task-oriented employees to supervisors. Promoting someone because they get things done isn’t the only criteria. Employees quit managers, not brands. A certain type of employee will tolerate managers with poor interpersonal skills, but the best employees will move on quickly. A manager’s main job is to develop a crew who feels it is their store, and not leave them feeling like a cog in a wheel.
Discussion Questions
What steps do you think are essential to reducing employee turnover at store level? Would you add any to those mentioned in the article?
I wonder what the turnover rate would be for employees making $12 per hour.
The truly great retail companies have made store associates a key part of their success. Add in a potential career path, and results are bound to improve.
These eight are great and each will reduce turnover. I would add to this list:
High turnover in retail is by design. And so is low turnover at some retailers. Some retailers encourage high turnover to avoid having to pay benefits, raises, vacations, pensions, etc. Each retailer, whether its Walmart or Costco, creates on purpose a retail environment that is reflected in their turnover. Some retailers would much rather pay $3,328 to hire and train a new worker than perhaps spend more on raises, vacations, retirement, healthcare, etc.
Devil’s advocate warning: Why is turnover a bad thing? Do I want my low-margin, high-cost business to be driven by an ever-increasing average hourly wage rate by keeping people longer-term and being forced to pay them more because they’ve worked for me longer when labor is my largest controllable expense, beyond the COGS? Turnover may not always be a bad thing.
Great list. I would add: pay a living wage and empower. People cannot live on $8.75-10 an hour. If employees have trouble making ends meet they are not going to be loyal. Empower employees to solve problems, both behind the scenes and with customers.
Some of it is unavoidable, if the goal is to continue to bring on “part-time” employees. But anything retailers can do to make every employee feel more relevant in the overall operation will contribute to productivity, longevity and an increase in sales. Implementing employees’ ideas and suggestions is a great step to making all employees feel like they are contributing to the overall success of the business. If they feel ownership in the success, then they will consider it a sense of pride to deliver the best possible customer experience.
Store managers are a vital cog in this process. If the store managers set a good example and are proud of the business, then store associates will follow by example. If the store manager is lazy, sloppy and apathetic, the store associates will follow by example.
Adequate training and updated in-store technology also can be contributors to store and employee success.
These eight points are all excellent observations on why retail employee turnover continues to be high. Out of the eight points listed, number 4: “Employees encouraged to do, not think” resonates loudly. In almost every consulting engagement I’ve had over the past ten years, this issue has mired great innovative and inexpensive customer-centric initiatives. Executives seem to dismiss their customer facing employees and certainly don’t empower them to “do the right thing.”
Retail should consider taking a play out of the high-end restaurant business playbook. If you go to Antoine’s in New Orleans, the waiters have been there forever. Why? Because they create and nurture “clients” who ask for them by name. They are empowered to serve their customers to make certain they have the most incredible experience and, yes, they get paid handsomely for their efforts.
Understanding that your customer-facing employees are one of the few advantages you have over online shopping. Focus far more attention on them as your critical brand ambassadors and differentiators may help you retain the good ones!
There are two issues not really addressed: $10.00/hour is not a career wage and most retail workers have no career incentive.
Until retail finds a way to leverage technology so as to reduce the number of employees on the floor and give that smaller group of employees more responsibility, latitude, pay, and growth opportunities, nothing will change significantly.
For decades, retail has been the bastion of high school students, working mothers, retirees, and a small number of career people. When the career people are made the focus and treated as such, that’s when physical retail will realize the benefits of boots on the ground. That is, if retail wakes up and moves in this direction fast enough.
As always, Bob is spot on.
If it was a lawyer presenting this list, the last sentence would be “I rest my case.” I tried to find another angle to comment on or some point to add…but nope, Bob’s spoken the plain and simple truth. Doesn’t have to be this way, mind you, but right now that’s the situation in most retail.
In discussing high turnover with a retailer he echoed something similar to Ralph’s comment. He stated that his company doesn’t mind the turnover because it helps control their cost of labor. I was surprised to hear anyone make that statement.
Our business focus is in an industry that has 100% or more turnover. Given the enormous cost (hard and soft) associated with it, every company I know is working to reduce turnover. Admittedly turnover falls into two general buckets – those whom you terminate for one reason or another and those who leave voluntarily. The former is something that is necessary, but retail companies should do all they can to reduce the latter.
Habit is the easy way to be wrong again. So break it.
Grocery store employees have become commodities for seasoning a small portion of grocery retailing, day after day, routine after routine, with few inventive challenges required. That creates a low-paying avenue to boredom. Boredom seeks release and employee turnover occurs. (Rocket science #101.)
Retailing is a people business. Customers want to be pleased. That requires satisfying the customer via a happy team delivery. Build an operating paradigm aimed at how employees are measured in satisfying customers vs. only management and manuals.
If employees stayed around too long, they might form a union. High turnover is a designed business model for long term success in many cases.
Antiquated policies that do not allow individual store managers to make decisions that are best for their store are a real killer. Not listening to employees’ valuable observations and suggestions is another.
Why force someone to work a minimum of Sundays who wants to go to church while you have another employee who is willing to work every Sunday? Having to work random shifts that don’t allow employees to schedule regular activities in their lives wears people out. Most employees would prefer having a regular schedule with the willingness to be flexible to fill in when someone is sick or on vacation.
Policies that restrict employees from helping to make the store run more efficiently erode moral. As a previous store manager, I found it very frustrating to be given a set budget for supplies and be forced to only purchase them from a company sanctioned supplier whose prices were considerably higher than local sources. Salespeople can be a wonderful resource for streamlining procedures, but their suggestions are too often overlooked.
Enforcing rote calls to action without having any understanding of how actual interactions and transactions take place. How reasonable is it to ask sales people to ask customers to sign up for the store’s reward program, ask for donations for a charity, and promote the next promotion in one breath while ringing up the customer during the holiday season with a line of customers waiting impatiently?
Another problem is not having clearly defined and enforced disciplinary actions. Employees that are allowed to get away with being late, bad talking coworkers, or slacking off makes those employees who are diligent and responsible feel unappreciated and grow to resent management and their fellow employees. It’s then that the better employees choose to depart.
This is only a short list. Many retail environments are brutal with little flexibility towards their workers, mostly from corporate dictated policies. It’s a shame, because there are many bright, resourceful people whose talents are being squandered.
The elephant in the room is really low pay, which causes good employees to leave as soon as they find something that pays a living wage.
Once again the “all of the above” button has been strategically misplaced. That said, we have here another outstanding discussion with many great insights. It is such a shame that the needs to expand and energize retail are in the hands of accounting principals and not progressive business people.
I’m going on a rant since all I do is spend my life training and consulting companies on reducing front line turnover.
Forget all of the items above and make this very simple.
1. Managers and companies get the employees they deserve.
2. When it come to the front line workers upper management in most retail companies are DUMB. They take the easy way out spend time and money on almost everything else but where the rubber meets the road – the interaction between the employee and the customer. Over 67% of all customers quit dealing with you because most employees don’t care about the customer, and that because most companies really don’t care about the employees.
3. Companies don’t invest in training managers. Employees join companies and leave managers.
Some retailers get it right but the number are few and far between. Take a look at Fortune’s top 100 companies to work for and you are going to see a few retailers on the list.
To start with, look at the list above. All are excellent. I’d take a closer look at a couple of them.
Hiring the right people is key. More than just someone who can talk, you want someone who has a customer service mindset. Find out prior experience, and just as important, if not more so, learn about their background and how their parents raised them. Nordstrom is known for their legendary service, but when asked how they train them to be so good at customer service, they are quick to point out that the employees are initially trained by their parents. Sure, we can train someone to deliver great service, but it’s much easier if they already have good values when they come to the job.
Second, I’d push for stronger training in the beginning. Yes, it costs more to train someone, but how much does it cost to have untrained people alienating potentially loyal customers?
The epiphany of value! Retailers must realize that their employees ARE their store. Unless one is providing a 100% self-service business (convenience store), then a motivated employee can make a huge difference. Take a minute to look at the books and share information with your employees. Make them understand where the break-even point is and give them some incentives to make it happen quicker.
One aspect of turnover is hiring the wrong profile to begin with. Given the nature of the job, regardless of all the ideas in the list, there is only so much room for advancement (as in small) better training etc. Reality is, the job is the job, and the salary while it could be better isn’t going up 30% anytime soon.
How about (for those stores where the profile works) hiring more older workers for whom the income is secondary to the part-time need of getting out and being in a good, challenging and collegial environment for part of the week? Come on Pac Sun, there must be some grandparents who are ex surfers who can stock shelves and help kids pick out clothing? Well maybe it doesn’t work for everyone….
Two part time workers are never going to be as invested in their jobs as one full time worker.
I know I sound like I am on a soap box each time I mention them. But The Container Store is an excellent retail employee model to use. As Cathy said, wondering if $12.00 an hour would be the difference maker. Yes, it would make a difference, but not solve the problem. Retailers have to learn and understand that paying more, training better and always applauding good efforts can and will be the difference maker.
The Container Store’s turnover rate is so low the retailers used in this survey couldn’t find them with a microscope.
I would add – find MEANINGFUL incentives and opportunities to be recognized. I would also add – some variation of Open Book Management where employees can see how their actions impact the bottom line (and are rewarded for moving the metrics in the right direction!).
Blatantly absent from this otherwise good list is the wage being paid to front-line retail employees. Costco has much lower turnover than the industry average and also a CEO who believes in paying employees fairly in order to keep them. Paying decent wages isn’t “socialist” or “idealistic,” it’s sound business.
I agree wholeheartedly with the points raised by the authors. There’s plenty we can do to fully engage and leverage our employees’ talent, but fixing these 8 problems is a terrific place to start–and should keep us busy for awhile.
The other respondents fall into two very different camps:
1. High turnover is undesirable–we could do better by retaining employees, building long-term relationships and loyalties, developing and engaging our team members
2. High turnover should happen by design–it’s a strategy to minimize the cost of wages and benefits and to prevent the formation of unions
I’ll go out on a limb and suggest group #2 is diverging from the demands of our ever-more-important Millennial customers and employees. Those who maintain this point of view will find themselves at odds with an entire generation of shoppers.
Increasingly, people expect companies to focus on more than just their own bottom lines. And while this may be anathema to Wall Street, our millennial consumers on Main Street definitely factor these things in when deciding where to shop.
FACT: 92% of those born after 1981 believe that business success should be measured by more than just profit, and according to a recent Deloitte survey, this Millennial generation sees businesses – not governments – as the institutions best suited to taking a leading role in solving some of society s biggest challenges.
I firmly believe employees at all levels can be valuable to an organization. They should be respected, engaged, and compensated well enough that they can focus their energy on doing a great job.
I’ve seen it work: low-wage front-line employees can be transformed into a powerful business asset if you value them as a strategic resource and not as low-cost “machinery.”
Witness the successes of Costco, Trader Joe’s, Whole Foods, and even QuickTrip. Their approaches have raised controversy, but nobody can argue with their results–or with their passionate following of brand believers and advocates.
You don’t have to believe me, but it’s hard not to believe Craig Jelinek, CEO of Costco when he says, “An important reason for the success of Costco’s business model is the attraction and retention of great employees. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty.” If you want to be successful in retail, he seems a reasonably good role model.
It all sounds great. Just be like Costco, Whole Foods, and Trader Joe’s, with all those long-term, wonderful employees with low turnover. The problem is there are only so many of these good employees to go around. For the less than ordinary employee, they need a place to work too. But because of their shortcomings it would be too expensive to keep them past a year. Therefore we need certain business models that are high turnover by design.
From my time in store management, employees at the low end of the pay scale will leave for a difference of .25 or .50. These differences are significant to them.
Most stores have to hire a mix of talent just to optimize their tight budgets. This means that there will be some students – who are not invested in the company long-term, some retirees – who generally can be counted on, some in career quandaries, and maybe one or two department managers or supervisors you can count on, some FT and PT overall mix.
Hiring the right people is a start, providing a career path or giving students business problem solving and leadership skills, having managers with a higher than average emotional intelligence (perceptive, caring, adaptive, customer friendly, yet on task and efficient) are all part of an ideal environment which just might be impossible or improbable to achieve.
In every community, there are usually a few known retailers that have a good “reputation” from word of mouth from those in the lower pay ranges. Word gets around. Leadership sets the tone for the culture.
I used to work people’s schedules like a jigsaw puzzle and soon had dedicated people for each day. I also scheduled people for a full shift; no three hour segments to avoid giving them lunch. With the “on call” part-time mentality that most stores have adapted, plus three hour shifts, not only do you make people leave to find a better job, you also don’t give them a sense of belonging. They know they are replaceable and act accordingly.
Let’s face it, Walmart has ruined retail. Their pricing strategy has put a lot of competitors out of business and any survivors have had to cut payroll to the bone to get by on razor thin margins. Middle manager jobs (Assistants, Department Managers, etc) used to be incentives for people to move up and also gave people the opportunity to hone their skills and grow. But, all of those types of positions have been reduced or eliminated. With fewer retailers out there, job prospects and opportunities have evaporated. On top of that, the reduced workforce has created the need for various efficiency matrices that work in a perfect world theory but do not take the true human element into account. All of this creates stress and job dissatisfaction.
I’ve been known retail almost 25 years. I am so thankful to be in field management; I doubt that I would be challenged and motivated in today’s store level environment. And, it’s basically the same all over. I’m a realist; public companies answer to Wall Street and Wall Street is only going to be satisfied with a healthy bottom line. Too many retailers have overstored themselves and labor is too often the only line that these companies can effectively manipulate.
I love retail and always enjoyed studying different companies and what differentiated them from their competitors. I also really enjoyed what I did in my first 15 years. But, the field has become so homogenized, it’s taken away a lot of what made retail fun and challenging.
I think employees need to feel appreciated. The article makes a lot of good points. They also would like to be proud to say they work for your company. Employees do not want to say they work for a company that is wrought with bad rumors and lacking in reputation.