Retailers Not Wowing Gen-Y Workers
By Tom Ryan
A study from Deloitte and the National Retail Federation finds
that while retailers agree hiring, developing, and retaining top talent
is essential to achieving their business strategies, efforts around attracting
tomorrow’s leaders among the Gen-Y generation are often lacking.
In the study,
Thom McElroy, U.S. talent leader, retail, Deloitte, noted that, according to
numerous findings, Gen Yers "value career progression, accelerated
learning, and a work culture that matches their values." A survey of senior
executives from 29 of the largest retailers in the U.S. conducted in Fall
2009 found many of these issues are "already on the radar screen for
many retailers" but
not as high as they presumably should be.
For instance, 41 percent of the respondents
felt that their companies were not effective at helping employees develop the
skills needed to move up and succeed at the next level, while half acknowledged
that their organizations did not effectively map clear career paths for ambitious
employees. A third felt that their organizations did not have effective succession
planning.
"These deficits will especially loom large for talented, ambitious workers
in today’s job market," wrote Mr. McElroy. "If they see greater
long-term opportunity elsewhere, they will likely pursue it."
The study
also found that while 75 percent believe their compensation levels are competitive
with the rest of the industry, the study’s authors believe paying a "competitive" wage
may not be enough when it comes to attracting and keeping talent.
"That could prove particularly problematic as retailers strive to please
younger and increasingly less loyal and more opportunistic Generation Y workers," wrote
Mr. McElroy.
Finally, the survey found that even in the tight labor market,
respondents considered employees’ increasing demands for work-life balance
to be only a mid-level talent issue, based on the average score of only 3.0. The
highest ranking was 5.0.
"We believe retailers who adjust their talent management strategies to
Gen Y will be better positioned to tap into this crucial talent pool," said
Mr. McElroy. "Retailers who do not will likely face challenges, as this
group tends to be less loyal and more restless than prior generations."
Other
findings from the survey:
- Retailers ranked merchandising as the function that most needs highly talented
resources, followed closely by retail operations. Merchandise planning, store
associates, and finance all tied for third.
- A wide majority of executive (76 percent) cited "financial rewards
and incentives" as the primarily tool for attracting and retaining high-potential
employees. That was followed by offering "training and development opportunities",
69 percent; and "brand attraction", 66 percent.
- Forty-one percent do not have the human resources technology to support
talent management within their organizations.
- Twenty-four percent are not tracking what key competitors are doing to
manage critical talent.
Discussion Questions: What in your opinion are the primary talent
development challenges faced by the retail industry compared to other industries? How,
if at all, will recruiting and developing talent have to change for Gen-Y workers
versus previous generations?
One of the underlying trends of the past decade making it harder to attract talent to retail in the first place is consolidation. There are simply fewer places to work, and even in today’s tough hiring climate for college grads, there are several other industries that probably offer more long-term career mobility. (After all, today’s Gen Y worker expects to change jobs every five years or so, and is willing to do more job-hopping than his or her parents.) The retail employment model of thirty years ago–where every city had its own department store, with a well-established training program–was unsustainable over the long haul, but it did develop a fertile national pool of retail executives.
This is a monumental and critical long-term risk. The Gen-Y workers think differently and are motivated differently. How a company handles this transition will make the difference between survival or becoming obsolete. The same HR models will not work with the Gen-Y workers we are already experiencing this, so HR policies will need to evolve.
Recruiting will need to be accomplished on the internet. Gen-Y workers are “wired” continuously. Retaining is much more important than developing. This generation is the “drive by” generation. They’ll try it for a couple months and if they don’t like it, they’ll move on. They don’t take managing well and feel they are on equal standing with everyone. A very challenging generation…hold on to the baby boomers!!!
Is the author implying that retailers were EVER good at retaining talent?
I know I’ve said this on these pages before. My old friend Greg Girard used to say “Take any roomful of senior executives anywhere in the US. Ask for a show of hands for all in attendance whose first job was in retail. Guaranteed more than 90% of the people will raise their hands. The obvious question–retailers get first crack at the best talent in the country. How do they let it slip through their fingers?”
Retail store managers are over-worked and over-stressed and have not-so-much time to identify top talent. Those they do recognize end up as the “bench” for more store managers with very little view into what the worker might really want to do. And the managers have very little flexibility and very few tools and techniques to retain quality workers, particularly the in-store workforce.
To change this age-old situation, retailers must begin to look at the in-store workforce in a new way. This is unlikely to happen in tight economic times.
Teach, lead, & motivate. Those words shouldn’t begin and end in classrooms, the athletic field, or concert/band rooms.
Generation Y, just like their forebears, are interested in stimulating work. They want to be challenged and developed. Baby Boomers, who represent much of top level management, have to see this as a critical aspect of their roles. Bring this talent pool of 72 million + adults through the pipeline in a successful manner–they represent, perhaps, the greatest legacy that the Boomers can leave.
If those Boomers in retail need an example/bellwether to follow, just search back to the great retail merchant, Marshall Field who offered “Things to Remember:”
1. The worth of character.
2. Improvement of talent.
3. Influence of example
4. Joy of origination.
5. Dignity of simplicity.
6. Success of perseverance.
7. Value of time.
8. Pleasure of working.
9. Obligation of duty.
10. Power of knowledge.
11. Wisdom of economy.
12. Virtue of patience.
If the Boomers ‘hear the call’, and develop this generation, they will have powerful and lasting organizations in retail, and other fields.
First of all, let’s remember retail had trouble attracting and retaining the cream of the Boomers and Gen-Xers, so the problem attracting Gen-Yers isn’t all that unique.
Next, let’s think about this…why wouldn’t any fast-tracker not be attracted to industries where starting pay is low; most new hires are worked below full-time (and often on call at that); they don’t receive benefits; training is draconian; advancement paths are unclear and mercilessly slow; and the work (at least on the new hire level) is as stimulating as a ten hour sermon delivered in Middle English?
Oh, and let’s not forget that almost every other option out there pays better, has higher status and offers some challenge.
Retail maybe getting plenty of new recruits now that the economy is suffering, but until somebody takes a scalable approach to making it more attractive, those recruits will be deserting en masse as soon as economic conditions allow.
I am afraid Ryan is right. Everyone in my family worked in retail in high school or college, but saw no career path there. Retail’s problems with attracting and retaining top talent are self-inflicted. Until retailers decide to address systemic issues and provide workers the opportunity to advance, they will experience high turnover.
Gen-Y is not receptive to the idea of “paying your dues” and biding time to slowly move up the corporate ladder. It is the instant gratification generation who grew up with huge amounts of positive reinforcement and “everybody wins.” All industries need to become less hierarchical and faster to recognize and reward performance to meet the expectations of the incoming workforce. With retail being among the most traditional and conservative industries, it will have to work extra hard at revamping how talent is recruited and retained in the 21st century.
The problem with retailing is that the pyramid is too steep. How many sales people can become store managers? What do the store managers get promoted to? How many buyers do you need for a 100-store chain?
The top notch people that retail wants to hire understand this and if they don’t, they will after working for a short period of time.
One major retailer has taken a pro-active position on our campus to get involved with the professors, students, administration, and organizations. After several years of having alumni working for that retailer also come to campus, students are beginning to think about that retailer as a career option, not just a part-time clerk position while going through school.
Does that same recognition transfer to other retailers? No. If retailers are serious about recruiting new students from college, they are going to have to make an effort to make these students aware of career opportunities.
I agree with Dan above about employees not wanting to “pay their dues.” When I hear things like “respondents felt that their companies were not effective at helping employees develop the skills needed to move up…half acknowledged that their organizations did not effectively map clear career paths for ambitious employees,” it makes Gen-Y employees sound like big babies that need a bottle. All we need is a crappy long-term economic downturn to give them an attitude adjustment for the better.
Companies don’t need to do anything. Just let the nature of the economy take its course.
Clearly what’s needed is more companies to hire Big Four firms (or is it Big Three now?) as consultants, and for a retail industry group to lobby for federal funds on the grounds that (yet another) “crisis” has been found.
Or maybe not. The problem of a “lack of good help nowadays” is of course no surprise to anyone who reads these boards; nor is the cause: the increasing number of career paths open to women has diminished the supply (of potential workers), and the increased tendency to emphasize price or brands or…anything but quality service has caused a reduction in training. What’s needed are more Nordstroms or Van Maurs (i.e. companies that show people are willing to pay for service, and generate margins sufficient for thoughtful people to make a living selling); but there’s always a Wal-Mart wannabee or Wall Street analyst lurking in the background, showing that staff are expendable.
The challenge with the issue of hiring young people at retail today is that management, mostly boomers, came through the ranks of retail when the industry was in prime growth mode. But that’s not the case any more. It’s not about massive expansion; it’s about management of existing assets — MUCH more mundane in terms of opportunities and a much different way of thinking and recruiting, hence the miscalculations.
I personally remember thinking and maybe even saying, “Retail’s easy, just work very hard, wait on customers well and you’ll get a store manager’s job soon enough.” Today, the same principles won’t go anywhere near as far, especially with those same boomers still in cherry management positions. So, what are young people being promised? Good insurance? Good hours? It’s tough…for both sides.
Having said that, the solution today is just as obvious as it was 30 years ago: get with a hot brand. Don’t worry about size. The stronger the brand, the easier it will be to recruit and show career paths. I’ll bet Apple’s problems in terms of recruiting are a lot different than, say, a department store or Big Box. I’ll bet they have ‘good problems,’ lots of them.
So, to retailers, I’d say, “Strengthen your brand perception and recruiting and rewarding will change.” To Gen-Y, I’d say, “Go with the best brands and your retail career will be much more fulfilling.” And to weak brands, I’d say, “Start a new one,” the ’80s are over.
If you can find talent in Gen-Y, one that wants to put in the hours, continue their education, work more than 40 hours a week, come to work with they may have had one too many beers the night before–YOU SHOULD PAY THEM AND KEEP THEM. Yet there are not many of those around. It is a very unique group, very, very ENTITLED.
The issue of recruiting, managing and retaining Gen Y / Millennials is not a challenge that is unique to retailers. We recently completed a similar, in-depth, study designed to assess the challenges facing CPG manufacturers, and specifically sales organizations relative to the Millennial Generation. The issues between retailers and manufacturers are similar and include a desire for:
Financial rewards
Career advancement/personal growth opportunities
Quality of life balance
To meet these and other challenges, both retailers and manufacturers must change their core culture to ensure they are effectively recruiting and working with a generation that will be the future of their company. This includes a different work environment, different interaction between “boss and sub-ordinate,” providing meaningful responsibility at earlier ages than Boomers saw and an acceptance of a workforce that balances work and personal life 24/7 (no more “do that after hours”–there are no “after hours”).
And, importantly, Boomers will need to “get over it” and stop whining about “how we did it” and learn how to build their company (be it a retailer or a manufacturer) in a way that will let Millennials flourish. That’s the future.