Retail turnover – and over and over

[fa icon="calendar'] April 27, 2017 / by Eric Sink

retail-turnover.jpg

 

In retail, turnover is a part of doing business – but one that has a big impact on your bottom line and customer experience. Associates aren’t afraid to switch jobs quickly – for a more convenient location, better hours, more lax dress code, new employee discount, or because of a bad manager.  When they go, they take along the training you’ve invested in them and leave you with a hole in your schedule.


According to the U.S. Bureau of Labor Statistics, annual retail turnover at the end of 2016 was 4 percent – lower than only three other industries. A Center for American Progress compilation and analysis of 11 relevant research papers on turnover found that about one-fifth of workers leave their job voluntarily each year and another one-sixth are “fired or otherwise let go involuntarily.”


A study by the Society for Human Resource Management found that on average, employers spend the equivalent of six to nine months of an employee’s wages finding and training their replacement. David Blanchflower, an economics professor at Dartmouth University, puts the importance of retention into a more relatable, short-term scenario: "Let's say it costs you two days to train people and they stay for six weeks. If they stay for 12 weeks, you’ve halved the cost of training.”


The cost of retail turnover is more than just the cost of training and onboarding new associates – Julie Kantor outlines six other ways in which losing an employee costs so much: interview expenses, advertising costs, lowered engagement, productivity of new hires (or lack thereof – she cites business expert Josh Bersin, who says it can take up to two years for a new employee to reach the productivity level of an existing one), impact on team morale, and effectiveness of customer service. New hires are also more likely to make errors than seasoned employees, potentially leading to lost time and money.


So how can retailers convince their employees to stick around, as well as minimize the impact of those whom they’re forced to let go? The Center for American Progress states that “high quit rates are often due to workplace policies,” so don’t pin high turnover all on your employees or management. By thinking about what drives loyalty in your staff, you can keep them happier and more content where they are.


Harvard Business School professor Zeynep Ton says “Highly successful retail chains ... have demonstrated that ... bad jobs are not a cost-driven necessity but a choice. And they have proven that the key to breaking the trade-off is a combination of investment in the workforce and operational practices that benefit employees, customers, and the company.”


Those investments might mean making choices that cost you up front. For example, when Walmart raised wages for its lowest-paid employees to a minimum of $9 an hour in 2015, years ahead of federal and state mandates to do so, the additional $1 billion annually they planned to pay these employees seemed worth it in order to help keep them around.  


Bloomberg cites Costco, where workers make anywhere from $11.50 to upward of $20 an hour. “This is not altruistic,” Costco co-founder Jim Sinegal said of his company's pay practices. “This is good business.”


No, higher hourly wages won’t stop employee turnover – but perhaps it can help reduce it and reduce the large associated costs. If increasing hourly wages across the board isn’t realistic for your operation in the near future, you can “spend your energy focused on the next level of Maslow’s hierarchy of employee happiness,” says Jack Altman, CEO of Lattice. “Opportunities for growth, the ability to have impact towards a purpose, and a caring environment that makes them feel valued.”


Retail turnover is inevitable no matter how you work to avoid it – lessen its impact on your bottom line by making sure you aren’t self-imposing turnover troubles and following these three tips to tighten up your training policies and practices.

 

Transform bad stores with better currency management

 

Image: iStock

Eric Sink
Eric Sink

Eric has worked in banking and finance and now spends his time helping Balance Innovations customers find and implement the right solutions for their challenges.