Most retail companies consider employee turnover to be a part of doing business. Hourly workers are typically paid quite low and do not hold much more responsibility than to ensure the cash amount in their register matches their transactions. The industry average for retail turnover perpetually hovers around 65%. However, there are lessons to be learned from some of the unicorns, such as Costco. Shockingly, their first-year employee turnover rate is only 6%!
While the exact number could be contested, Costco does indeed set the standard for retail employee retention and they do it by utilizing strategies that most retailers do not, or cannot. And while it is plain impossible to copy Costco’s business model and hope for the same results, there are important lessons to take away from Costco’s model. Below are the top 3 reasons as to why your turnover rate is more towards the industry average than the ideal.
#3 Your Employees do not Share your Company’s Values
Many managers and high-level executives seem to misunderstand what it really means to have an employee that share the values of a company. It might seem strange to consider “What are the values of a company that sells household products?” We’re not talking about things like family and political affiliation. Employees see a company’s values in how it treats its employees and, especially, the customer. Your front-line employees interact with the customers and help them with purchases and returns. In every interaction, retail employees can see themselves in the customer’s shoes and judge their employer based on the policies set out by the company at the highest level.
The Houston Chronicle tells us of Len Lewis, author of the book “Trader Joe’s Adventure”, who attributes part of Trader Joe’s Market’s success to the synergy between the company’s values and how it matches the values of their employees. “Hiring employees that share the company’s values – devotion to customer service, a love of food, and an ability to convey a sense of fun to the customer – is invaluable in employee and customer retention.” If you have the right employees that embody the company’s values, you can sleep easy knowing that they work in a place where they fit the company, and the company fits them.
#2 Hourly Wage
Many would think the elephant in the room is the #1 reason employees leave, but actually, no. However, it is definitely a huge consideration in why your employees are walking out the door. The Harvard Business Review examined the stark differences in wages between two giants, Walmart and Costco. What they discovered is that Walmart is paying an average of $10.11/hr while Costco pays an average of $17.00/hr. When you consider that every $1/hr works out to $3,000/yr, Costco is paying their retail associates a whopping $18,000/yr more than Walmart!
These 2 giants can be considered opposite ends of the spectrum, but you must consider where you fall along that line. If the average cost of hiring a new employee is $4000, and the cost of giving an existing employee a $1/hr raise is $3000, which would you prefer? Any manager that knows the value of retaining their existing employees will always choose the latter.
#1 Your Employees Feel Unappreciated
The bond between an employee and an employer is a relationship. And in every relationship, there are ups and downs. However, at the end of the day, every employee from the janitor to the manager, wants to know they are wanted and valued. If an average employee works 8 hours/day, 5 days/week, they are spending about 30% of their lives at work. If they spend all that time daily with an unappreciative boss, unmotivated coworkers, and monotonous tasks, can you really expect to keep your employees for any amount of time?
Feeling valued starts at the top. You need engaged managers, to have engaged employees. An engaged manager that sincerely appreciates their employees acknowledges employee achievements and successes in front of all staff and on the spot, not in a drawling speech at the Christmas party. As well, a good manager knows the value of providing scheduling flexibility because their employees have lives, too. The impact a manager can have by knowing their employees as more than lines on a roster sheet and treating them like fellow human beings are immeasurable, like a good coach.
Draft Better Team Players
There are many strategies that any company could introduce to reduce turnover. However, the most important aspect of building a great team that sticks together is to draft the right players. And that starts with having the right process to hire the best. Are your job postings placed on the right websites? Do you use behavioural assessments to discover the best-fit candidates? Do your managers even have the time to do a second interview to get a better picture of who seems the best candidate? Is it time to hire a better manager?
If you value hiring the best available, it’s time to talk to Mindfield. We offer the most comprehensive recruiting solutions available in the market that are backed by innovative technology to help you find, interview, and hire the best. Contact us now to get started on the journey to building a great team that sticks together.
About Mindfield
Mindfield is a Recruitment Outsourcing solutions provider that partners with companies to create powerful hourly workforces. Our solutions combine a recruitment team, simple to use technology and a data-driven hiring strategy that promises to improve the quality of your hourly workforce. This approach focuses on tying business outcomes such as sales performance, tenure, and engagement to the selection, hiring and measurement of quality candidates.
