Will reducing seasonal hires pose a big risk for Target?

Discussion
Photo: Target
Sep 27, 2021

Target plans to reduce seasonal hires and give more hours to existing employees as it navigates a tight labor market.

Many associates had been requesting additional hours, which in some cases qualifies them for health insurance. Target’s tactical shift is said to be part of a broader push to attract and retain quality workers.

Hourly employees are working an average of nearly 15 percent more than they were a year ago. Associates taking on order pickup and drive-up roles can earn an additional four to eight hours a week.

“We are offering more hours to team members who want them and continuing our important investment in training and development,” said Melissa Kremer, chief human resources officer, Target, in a statement. “When we invest in and care for our team we know that guest service improves, turnover goes down and team members can more easily build rewarding careers at Target.”

Target’s turnover has fallen to a five-year low over the last two years.

The retailer’s current store staff of about 300,000 will work five million more hours during the holiday season, costing more than $75 million of additional pay. Target plans to bring on 100,000 seasonal hires, down from more than 130,000 in each of the past two holiday seasons.

Target’s moves to support staffing requirements have included raising the minimum wage of all hourly employees to at least $15 an hour starting in July of 2020, five pandemic-recognition bonuses, the August launch of a debt-free education assistance program and additional scheduling flexibility.

Other retailers have been enhancing wages and perks to entice workers and are ramping up seasonal hires as a number of upbeat holiday forecasts have arrived. Seasonal hires, however, are expected to be harder to secure than full-time workers.

Macy’s plans to add 76,000 seasonal workers in a return to pre-pandemic levels of seasonal hires. Kohl’s is offering a bonus of between $100 and $400 as it seeks 90,000 seasonal workers.

Joel Bines, global co-leader of the retail practice at AlixPartners, believes over-relying on current staff to support holiday needs risks burnout. “You will absolutely exhaust your existing workforce if you don’t prepare,” he told CNBC. “The holidays are an eight- to 12-week season.”

DISCUSSION QUESTIONS: Do you see more benefits than risks in Target’s move to hire less seasonal help and give those hours to current associates? What adjustments to seasonal hires should be made given the tight labor market and ongoing pandemic?

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Braintrust
"Providing more hours to employees (without overworking them) for predictable pay and so they can achieve full-time status to access benefits may provide the stability needed."

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16 Comments on "Will reducing seasonal hires pose a big risk for Target?"


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Ray Riley
BrainTrust

Based on Target’s 2020 Q4 metrics, they’ve likely right-sized their bet on where they will need support (in-store digital fulfillment), and can best leverage those capabilities with trained and seasoned existing staff.

Neil Saunders
BrainTrust

Moving more willing associates into full-time employment, with all of the related benefits, is a good thing. As well as improving the employment benefits for those workers, it also means Target has a pool of talented, experienced employees who will be able to deliver great service to consumers and solid skills to the company. Of course, temporary hires will always be needed over the holiday season and this year retailers face an uphill struggle to get talent. Better wages and more flexibility in shifts are key to winning this battle.

Steve Montgomery
BrainTrust

Target’s approach has benefits for both its employees and the company. The extra hours will help many secure access to the company’s health insurance which is likely one of its most sought after benefits (especially in these times) and an increase in their paycheck which is another.

The company benefits from having employees who won’t require onboarding and training. Shoppers also will likely experience better customer service.

Gary Sankary
BrainTrust

From the article: “When we invest in and care for our team we know that guest service improves, turnover goes down…”

Their competition has also noticeably increased full-time positions with benefits. Target has enjoyed historic low turnover during a time when most companies in this space have experienced the opposite. At the end of the day, the inability to find workers is less tied to the “lazy workers” sitting home cashing checks and more about companies needing to take care of workers and provide them with benefits they need. Good for Target for recognizing this and acting accordingly.

David Leibowitz
BrainTrust

One of the reasons cited for employee exits has been a lack of predictability when it comes to hours worked and weekly pay. In addition, workers may only be eligible for benefits like health insurance and paid leave after a minimum number of hours.

Providing more hours to employees (without overworking them) for predictable pay and so they can achieve full-time status to access benefits may provide the stability needed to retain associates.

Ken Lonyai
BrainTrust

This is a good move. Initially, there may be staff shortages and scheduling snafus, but it’s a great opportunity to learn and invest in the future. This is a fundamental recognition of a problem retail faces that we’ve discussed many times: retaining employees. By giving regular staff more earning potential and job satisfaction, it instills brand ownership that won’t happen with seasonal employees.

It seems that this strategy coupled with the other efforts Target is making, in my view, puts Target far ahead of competitors and retailers in other verticals that complain about staffing, then continue with business as usual.

Melissa Minkow
BrainTrust

In typical Target fashion, this counter-industry move is strategic and differentiating. Investing in your existing workforce is a great way to build morale and ensure long-term staffing success. Focusing on current employees versus seasonal allows Target to demonstrate loyalty to its workforce and to provide better benefits and resources to those that plan to be there over time.

Zach Zalowitz
BrainTrust

One of the more successful retailers in the U.S. makes a calculated decision, and that decision benefits their associates and the retailer has low attrition with employees. What’s the “risk” we’re asking about? The alternative is to re-hire the same amount of seasonal hires (they’ve dropped it around 23 percent and shifted those hours to current employees), and impact existing associates’ morale and well-being (which in the non-peak months they’ll have to rectify potentially). I’m not seeing the downside in terms of “risk.”

Bob Amster
BrainTrust

The upside of extending hours for those full-time employees that want them is that they are already more familiar with their jobs than a part-timer would be, ergo, less training required. The cost of onboarding is partially eliminated. The full-time employee is already vested in his/her job and will probably perform with more enthusiasm than a part-timer. The downside is that the full-time employee costs more in discrete dollars per hour to employ. Therefore, Target and all other retailers will have to weigh the two sides and determine how many hours can be allocated to full-time employees, and how many part-timers need to be hired. Not a simple challenge, but doable.

DeAnn Campbell
BrainTrust

Target is right to cultivate and invest in their full time staff. This move incentivizes staff retention, improves the quality of customer service and reduces the operational overhead of onboarding temporary workers.

Shep Hyken
BrainTrust

If any company wants to hire and keep good people in today’s world, they have to ensure their best people have incentive to stay. If current associates at Target want more hours, and they are available, then let them have them. Giving them to a part-timer for lower wages could send a negative message that could cost more in the future as the current associates leave.

Ricardo Belmar
BrainTrust

Happy employees deliver better customer service, and better customer service results in increased sales. It’s a basic formula that Target understand well, so if employees are asking for more hours, they are wise to provide those hours so long as they stop short of overworking their frontline workforce. For the employees, if this brings them into full-time status with all the benefits that brings, Target will exit the holiday season with a happier, more experienced workforce that will allow them to deliver even better service to customers in the long-term. This is particularly important given the difficult labor situation retailers are finding themselves in this holiday season. Coupled with all the other improvements for employees Target has introduced this year, I see much more upside to both employees and the retailer than any risk that might be introduced.

Patricia Vekich Waldron
Staff

Giving permanent employees the additional hours they are requesting should improve morale, service and experience during the holiday season.

Mel Kleiman
BrainTrust

This is a smart move for a number of reasons.
1. They talk about 5,000,000 more hours for present staff. If you take that number and divide it by 300,000 workers it comes to less than 20 hours per employee over the entire holiday season.
2. Need to spend less money in recruiting and training these new hires.
3. But more money in the pockets of the employees who want to work more hours.
4. Better trained staff to serve the customers equals great customer satisfaction.

Ananda Chakravarty
BrainTrust

This Target initiative is solid. Limited downside beyond cost. The only aspect that might have been an issue is increased payout to current employees. Benefits are a sunk cost, and employee turnover is decreased. That alone can probably justify the cost, but there’s increased morale, less new management hassles on-boarding seasonal workers and a more reliable worker pool. Surprised this isn’t the defacto standard for most retailers — except those surviving by the seat of their pants. Added factors will include setting the stage properly for safety-as the workforce isn’t standard and different protocol for Covid will mean different trainings.

Nicola Kinsella
Guest

Pose a risk? Sounds more like a great risk mitigation strategy. There’s a massive labour shortage across retail and distribution at the moment. This is a smart move. Many retailers are going to struggle with fulfillment this holiday season due to lack of labor both in stores and DCs. What’s more, existing store staff don’t have to be trained, so chances are they’ll have a lower order error rate. Employee benefits sound like a good investment to ensure customer promises are kept during the holidays in a way that will differentiate Target from competitors.

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Braintrust
"Providing more hours to employees (without overworking them) for predictable pay and so they can achieve full-time status to access benefits may provide the stability needed."

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