Even in High-Turnover Industries, Not Everyone's a Quitter
That's the recruitment challenge in retail. Imagine designing the retention strategy.
That, of course, is HR's job. Now that record low unemployment has made retention a pivotal business issue, the retail industry, with its famously high rates of turnover normally calculated in days, not years, competes fiercely for skilled sales associates. HR's best retention strategy is hiring the right person in the first place, but that's only the beginning.
And with sales booming, retail needs retention strategies. Retail sales increased from 8.9 percent to 12 percent, depending on region, from spring 1999 to spring 2000, according to the National Retail Federation in Washington, D.C.
Yet employers cannot take advantage of the healthy sales climate unless they have enough skilled employees. HR has its hands full in retail.
For several years, Beverly Kaye of Career Systems International in Sherman Oaks, California, and Sharon Jordan-Evans of the Jordan Evans Group in Woodland Hills, California, have studied what makes people stay in their jobs. Their report, "What Keeps 'Em? A Report of Retention Drivers," released in April, reflects responses from employees in 20 industries who were asked to list the top five reasons for staying with an organization. Respondents from retail revealed their top three "retention drivers":
- Working with great people.
- Having challenging assignments.
- Having opportunities for career growth and development.
What does a "retention-driven" retail company look like? Company culture is the determining factor, and that's why every retail company's retention program has to be tailor-made. There are great examples among retailers. Macy's West, headquartered in San Francisco, began designing its retention strategy late in the 1990s and rolled it out last fall, says Laurie Winthrop, HR's group vice president for stores. Macy's started with executive development.
Since early this year, Macy's executives have been accountable for retention among the employees who directly report to them. But Macy's didn't just add accountability to executives' already-full plates. The new accountability is part of restructured management jobs that are designed to be more "doable."
Then Macy's focused on orienting new managers. As a major employer in all its marketplaces, Macy's wants to retain the great people culled from its applicants. With obvious pride,Winthrop describes the tool that coaches new managers through their first three months. "Lights, Camera, Action: A New Store Executive's Guide to Stardom" advises the executive on running meetings, doing performance evaluations, and interviewing associates -- all the skills that set the tone early in someone's Macy's career.
Retention permeates the Macy's culture now. You can't chat for more than a minute with an employee without hearing a retention strategy. The new strategies have already begun to reduce Macy's turnover.
"We couldn't afford for our turnover to get any higher at the same time we were enjoying good business," Winthrop says. She quotes Macy's CEO, Jim Zimmerman: "Sales and profit are our number one objective, but retention is our number one priority." Support from the top seems to be a major factor in Macy's success.
Gaye Mitchell, DKNY specialist at Macy's Walnut Creek store in California, has worked there for 11 years. "I love my department and my manager," she explains. "They accommodate my schedule. This working environment is like a family. I'm planning on staying, even though I'm not that far off from retirement age. I look at this as a learning experience for me."
She served as one of the first Team Angels (volunteer mentors) and has volunteered for the Star Council, which does fund-raisers for charities and plans events for employees.
Kaye and Jordan-Evans would nod knowingly at everything she says. In a short conversation, she demonstrates a manager's mastery of what they advise in their new book about retention, Love 'Em or Lose 'Em: Getting Good People to Stay. For example: Link people to each other at work. Be flexible. Be family friendly. Enrich jobs.
Mitchell's manager, Jennifer Caron, group sales manager for ready-to-wear, apparently builds a retention culture. Caron's comments also reflect that she lives in that culture herself. "Why do I stay? I have a terrific store manager. Macy's is very accommodating about work and home life. We have a family atmosphere in the store. The relationships I've built also keep me. We've instituted (growth and motivation for) our associates through classes. The more we can teach, the more we can empower associates." All three of the top retention drivers -- great co-workers, challenging assignments, and opportunities for growth -- are there.
And there's Caron's most telling comment: "The associates are the ones driving to meet their goals, so I can focus on recognition." If you removed the last word of her sentence and asked your managers to fill in the blank, what would they say? Meeting sales goals?
A comprehensive retention strategy can be equally powerful in a very different culture -- a speciality linen and home-decor retailer with an appreciation for the self-starting employee, for instance.
Strouds has 47 stores, 18 outlets, and a boutique store, Pure Linen. Director of training Pam Wooldridge explains that the company's founder set an entrepreneurial tone 20 years ago, and Strouds has kept that tradition going. For the past two years, retention also has been a focus for the company, which is based in City of Industry, California. Wooldridge, who has added retention to her training on recruiting, interviewing, and hiring, is in the middle of her retention-strategy rollout and can't report its effects yet, but she has brought down the costs per new hire.
And what keeps Wooldridge at Strouds? The chance to be entrepreneurial. Five years ago, she served as project manager for LEAD, Leadership Education and Development, a series of management-development modules. "I created the name, logo, and curriculum, did most of the training -- it was my greatest achievement. The culture here has encouraged that."
In the new Strouds plan, mentoring will be more formal. A new employee's first day will be spent with the store manager learning about expectations, and a training specialist will sign off on tasks. In general, more of a new hire's orientation and training will be documented.
Wooldridge sees new hires looking for job satisfaction, recognition, and the feeling that they're part of the effort, so retention strategies will reflect those values. She's been in retail more than 20 years, but this is the longest that Wooldridge has been at one company. How long will she stay? "As long as there's growth opportunity." Sound familiar?
The supermarket industry has been stocking its stores with retention strategies for a couple of years as well, based in part on a stunning study commissioned by the Coca-Cola Retailing Research Council. Employee turnover costs the typical supermarket $198,977 a year. That translates to $5.8 billion a year for the industry, says the study's author Blake Frank, a professor in the Graduate School of Management at the University of Dallas.
He estimates that "the annual cost of employee turnover in the supermarket industry exceeds the entire industry's annual profit by more than 40 percent." Frank calculates turnover as direct costs (advertising, training, interviewing, testing, new employee orientation) and "opportunity costs," which include "change-making errors, paperwork mistakes, damaging products, inventory shrinkage, and improper use of equipment."
The Coca-Cola study data showed that the median tenure for top supermarket companies was 148 days. The worst was 86 days, says Ken Sekella, who for eight years was senior vice president for HR at Vons, a large regional supermarket chain based in Arcadia, California.
Sekella now is senior vice president for TBG Financial, a Los Angeles company that designs and implements executive benefit plans. What could improve retention? As in retail, it depends on the kind of job.
Hourly and management employees have different needs and different retention drivers, the Coca-Cola study found. Hourly employees' top three wants are good direction, sufficient and appropriate supplies and equipment, and good immediate supervision. Store management employees want a clear sense of organizational direction, good training, and the opportunity for advancement.
Overall, there was a 72 percent difference between the median tenure and the worst retention -- on the basis of just the top three drivers. From that, Sekella concludes that the first week of a new employee's experience is the most vital factor in retention.
"It's so critical that you need to consciously manage it," Sekella says. "If the orientation is too traumatic, they're likely to say, "I really don't need this." You need to let them know what the company's values are. And it's measurable. Store managers need to be held accountable for retention. It needs to be built into their compensation as a component of their bonus."
He cites Seattle-based Nordstrom as a company that does an especially good job of "getting round pegs into round holes" by hiring and orienting employees carefully. Sounding less sarcastic than experienced, he suggests that creatively designed compensation plans can motivate people to "actually acknowledge customers." Imagine that.
Three tips resonate in the comments of all these successful retention strategists:
- Hire for company fit. Tell employees early on what your values are and live out those values in their training and orientation.
- Manage the first week intensively. Structure the new employee's experiences and let them "catch" other employees' enthusiasm for the company.
- Make sure they know that they can grow by staying with you. Every organization's approach to retention will reflect its own culture. Beyond that, Kaye and Jordan-Evans suggest taking the greatest, most creative risk of all in figuring out what will keep your talented workers: "Ask them."