Employee retention and motivation remain a constant problem for retailers and franchises. Here are the reasons why churn is so common in retail - and steps businesses can take to prevent it.
Mitigating High Turnover in Retail Businesses
Low employee retention among front-line staff in retail businesses is prevalent - according to a study by Hay Group, retailers reported a median turnover rate of 67 per cent in 2012.There are a number of reasons why retailers need to make a concerted effort to reduce high turnover among their front-line staff.
Why is high turnover so damaging to retail businesses?
For retail employees earning $10 per hour, it costs upwards of $3,000 to locate, hire and train a replacement, according to the Center for American Progress. Replacing several employees at once is costly financially, and dedicating resources to recruit new staff is a time burden that can lead to a disruption in day-to-day operations.
A 2015 Bloomberg article breaking down the tactics big box retailers are using to attract and keep front-line staff cites that new hires aren’t as productive as seasoned employees, “creating an efficiency cost that goes beyond the expense of finding and training a rookie.”
As illustrated both qualitatively and quantitatively, the repercussions of a front-line employee base with a high rate of churn are dire.
The causes of employee turnover in retail businesses
Here are some of the most common or most-talked about factors that lead to low employee retention rates in retail businesses:
- Lack of recognition: Failing to acknowledge strong performance can lead to dissatisfied employees that are likely to quit. Coordinating a benefits program that rewards number of sales or revenue netted from upsells is a good place to start.
- There’s a major disconnect between employee tasks and business objectives: Instilling a sense of ownership in front-line staff and conveying the importance of their role is essential. Retailers should give their front-line staff a clear picture of how their duties relate to overall goals.If a store is planning to promote a discount or special, it can be explained that the success of the campaign (which front-line staff are responsible for) is directly linked to meeting important quarterly or monthly revenue benchmarks.
- There’s no variety in tasks: Employees who are assigned the same duty at each shift may get bored of the routine over time. Varying up training or responsibilities can prevent monotony and a feeling of stagnation.
- Inadequate training may hinder an employee’s progress: If front-line staff don’t fully understand the nuances of a business, they may be unable to succeed at helping customers or effectively selling products.Writing about retail employee turnover, Bob Phibbs notes, “Just because an employee has previous experience does not mean they will understand what makes your store different.” It’s on the onus of an employer to properly and thoroughly train any incoming employees.
- Lack of security or predictability: The nature of scheduling employees in the retail business can be volatile, but creating some sort of routine for employees can instill in them a sense of security. This could be a competitive edge among businesses that rely on employees calling in to be notified if they have a shift.
Retailers who take preventative measures to improve employee retention will enjoy less upheaval and consistent productivity.