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March 01, 2004
Retention headaches
By Dan Emerson
Turnover is up and training costs remain sky high. Need to start turning things around? Check out this HR top 10.
Over time, as economic and business trends come and go, one factor that remains constant is the value of reliable, dedicated employees. The high cost of recruiting and training new workers isn't going down anytime soon, either.
Some retailers estimate the cost of acquiring and training each new employee to be $1,000 or more. Meanwhile, the average annual turnover rate for part-time clerks stands at approximately 144%, according to the National Association of Convenience Stores (NACS).
"By nature we have a higher temporary workforce, so we are going to have higher turnover compared to other industries," says Pat Lewis, former CEO of Oasis Stop N Go (Twin Falls, ID), who last year became CEO of the company's Kickback Points customer loyalty program. "But we can't attribute all our turnover to that, and when turnover is high, we need to understand why—especially turnover related to violations of company policy and instances of employee theft."
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Many retention practices fall in the common sense category, but HR experts say it's still important to have a formal retention strategy in writing, evaluated for effectiveness on an ongoing basis and changed or augmented as needed. Here are 10 key strategies convenience retailers have used to recruit and retain quality employees.
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When hiring, test your perceptions. Rather than relying entirely on resumè content and subjective, "gut-level" impressions, a variety of psychological and aptitude testing instruments are available to use in making solid hiring decisions. "We make people jump through some hoops to get a job here," says Bob Holcomb, vice president of human resources for Spectrum Stores (West Point, GA). That includes background checks, drug tests and various screening instruments, such as HAPSS (Humetrics Automated Phone-Scoring System), an online "personality and attitude" evaluation tool developed by vendor Humetrics. Holcomb and Spectrum are also involved in beta testing of a new, NACS pre-employment screening instrument. "We spend a lot of money each year doing these things; as a result, we think we have better people in our stores than the guy down the street," Holcomb says.
Oasis Stop N Go's Lewis emphasizes the importance of checking references cited on job applications. "Sometimes you may just want a warm body in place, but if you want a long-term employee, take a good look at the application and resumè; call references and do your research."
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Money isn't everything. In considering retention issues, employers often overestimate the importance of compensation, according to Linda Henman, a St. Louisbased HR consultant. "Money is not a motivator as much as lack of money is a de-motivator," she says. "You have to pay a competitive salary to keep people from leaving, but money usually ranks about fourth on the list of reasons why employees decide to leave." Employees often place a higher priority on other factors, such as communication, the need to feel included and appreciated, and scheduling flexibility. Henman says an old saying still holds true: "People don't leave jobs; they leave bosses."
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Try mentoring. One of the hottest new techniques to help new hires get up to speed and turn them into reliable employees is co-worker mentoring. "Mentoring has become huge," says Henman, " especially for at-risk groups," such as those coping with socioeconomic obstacles. It's a slightly more structured form of informal mentoring. A designated mentor not only answers work-related questions, he or she can help a new employee learn the unwritten rules and implied norms, not only within the company, but in the micro-environment of a specific store. "It's a very lowcost or no-cost way of helping somebody who might not stay otherwise," she says. In return for helping out, the mentor can be rewarded with a small gift, such as a gift certificate.
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Don't forget to listen. "People talk about communication; two-way communication is even more important, and many bosses are lousy at it," says Henman. Two common employee complaints are that bosses don't provide enough positive feedback and constructive criticism, and that there's a lack of clarity regarding accountability and job responsibilities. "In many cases, bosses are either micro-managing or leaving employees alone too much," she contends. Giving managers feedback (from superiors and subordinates) can help identify personal strengths and pinpoint areas for improvement.
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Invest in your employees. Taking an interest in employees' professional and personal development can go a long way in eliciting a long-term commitment. According to Holcomb, Spectrum Stores has an ongoing training program at designated stores where each new hire (and employees added through the acquisition of competitive stores) receives a two-day orientation before starting work. "People need to know what is expected of them," Holcomb notes. Spectrum also evaluates employees and ranks supervisors using measures such as sales increases and mystery shopper evaluations.
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Promote from within. Employees given the opportunity to advance within an organization are less likely to leave. "For every management position that comes open we want to give our employees that opportunity," Lewis says. "Not many employees will view working at a c-store as a career path, but there are some, and we want to reach out to those people." Openings are posted via e-mail and in Oasis stores.
"Sometimes we get recommendations from store managers," adds Holcomb. "Also, if we collect applications from people who are overqualified for a store position we have a policy of forwarding those to the main office to be considered for other open positions."
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Share ownership. Inviting employees to become "co-owners" or stakeholders doesn't necessarily involve stock options. It may mean taking steps to make every employee feel engaged in achieving the company's customer-service mission. As part of Spectrum's corporate policy, every store receives a monthly profit-and-loss statement, according to Holcomb. It's a way of building trust and helping employees focus on company goals. For QMarkets Inc. (Richmond, VA), giving store managers the opportunity to "take more of an entrepreneurial role," with some financial stake in the success of their store, has been an effective retention strategy, according to founder and CEO Duncan Thomas. "The whole concept is to create opportunities for employees to think like owners," he explains.
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Build in flexibility. Given the growth in the number of families with two working parents, flexibility in work scheduling has become one of the most important workplace benefits for employees. Part-time hours and split schedules, in which employees divide their time between two or more nearby stores, can be used to add flexibility in scheduling.
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Measure and reward performance. Spectrum uses a structured performance evaluation and a uniform schedule of pay increases (assuming satisfactory performance) for each employee. "They know they can get three raises the first year," Holcomb says. As rewards for store performance, Spectrum managers can earn bonuses up to 30% of their quarterly salaries. In addition, at one-, three-and five-year (and every five years thereafter) employment anniversaries, Spectrum rewards employees with gifts. "After five years, they can pick what they want out of a catalog," Holcomb explains. "The longer they work here, the more valuable the gifts become." Last year, one 40-year employee received a $2,000 grandfather clock.
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When saying goodbye, ask why. When employees leave the company, conducting exit interviews can help understand their reasons. "When they were hired, most people believed it was a good job for them," Lewis says. "Many of them left us, and the question is always, why?"
While some of the benefits of improved employee retention may be intangible, they can also be measured in bottom-line savings. In Q-Markets' second year in business, after the chain developed and implemented written policies and procedures, its insurance premiums dropped from $100,000 to $30,000, according to Thomas. "And our unemployment insurance rate was very low," he says, "because we had no claims."
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