419 — Reduce Turnover, Improve Retention, in Retail

Strengthening relationships improves retention and improves all performance measures.

Employees will leave if they imagine that the grass is greener on the other side. Your grass is the greenest if it meets people’s needs. Perks can’t do this, they only touch the surface. What people want is a workplace where they are treated with respect as equals, where they feel appreciated — that is, the kind of workplace we all like.

For decades employee surveys show that people stay because of these things, and more or less in this order:

1. Feel valued
2. Recognition
3. Challenging job
4. Career opportunities
5. Relationships with managers
6. Friendships with colleagues
7. Money
8. Benefits

The Cost of Turnover

Turnover is very expensive. HR managers generally agree that it costs at least half of an employee’s annual earnings (including benefits), to replace that employee. For high-level managers it may be twice the annual salary.

With today’s high unemployment, the churning turnover rates of the .com years is a distant memory. But many companies still have high turnover, with the same high price tag it has always had. This is acute in retail and service sectors. Wages are low, and many employees see little difference between a job in Walmart and one in McDonald’s or Safeway.

The Uninviting Workplace

Retail companies, expecting high turnover and low commitment from new employees, sometimes cut their financial commitment to the new hire. For example they may sit the prospective employee in front of a self-paced computer-training program, to minimize expensive person-to-person time. The low expectation is reinforced on both sides. Some potential employees walk out of the training at mid point, not even making it through day-one on the job. Once on the job, the new employee may face a supervisor who thinks, “I’ll minimize my time with you, because you won’t be here long.” The result is just what you would expect — high turnover.

Example —Build Relationships with Customers and Employees

A regional retailer knew that it should improve customer relations. Senior management agreed on a goal; create the kind of in-store experience that customers would want to repeat and hopefully repeat often. Focusing on the customer’s experience redefined the store employee’s job. For example, the check out clerk’s job had been, “Check-out the customer.” Now it became, “Create a satisfying customer experience by how you check them out.”

One Conversation at a Time

At a monthly meeting with 12 of this company’s store managers, we helped them discuss the relationship between the employee’s experience and the customer’s experience. The managers saw a connection between satisfied customers and satisfied employees. “How do we create satisfied employees, so they create satisfied customers?”  The managers came up with many ideas to improve relationships with employees. One way was to get to know their employees better — sit down and have a conversation, mostly not about work. See “The Cultural Interview”

The Results

Four weeks later, the same group of store managers met to discuss what they had done. We heard from each manager. One said he’d had four new hires after our last meeting. He talked with each one on their first day, for about 40 minutes, and got to know each of them personally. He met again with each individually the next week, for about ten minutes, and did the same each of the following two weeks.

I was amazed at the response of the other managers in the room. Leaning forward in their chairs, listening intently, they were obviously hearing more than was being said. I eventually asked, “What am I missing?” A manager replied, “After four weeks he still has the four new employees.” I asked, “Would you have less?” “Yeah, like none or maybe one.” Around the room they all nodded.

It was obvious that those other managers saw the “Interview” as an idea they would use. They agreed that not only would it increase retention, but would improve the new employee’s attitude, and probably the attitude of other employees as well. Certainly the customer would experience the benefits of happy, satisfied, and committed employees. As they say, “You care for me and I’ll care for you.”

Build That Special Company

Building better personal relationships, and a more satisfying workplace, can distinguish you from other companies. It is good for morale and turnover. Proud employees are wonderful sales people. Customers like companies where employees enjoy their work. They come back — often.

Exit interviews reveal that the single biggest reason employees leave is a poor relationship with their immediate supervisor. A simple conversation can change that.

cc 419 — © Barry Phegan, Ph.D.

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Posted in: Topics and Issues — People

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