Retention Drives Success
By Bill Bishop
Employee turnover affects the bottom line, diminishes customer service and is just plain bad for business. While high unemployment creates an ample source of qualified applicants these days, an “easy come, easy go” philosophy is not a sound management strategy. Frequently replacing convenience store workers is not a viable long-term solution to staffing your stores — retaining employees is the path to profitability.
When some of the nation’s leading convenience retailers recently gathered to discuss critical management issues, this subject became the primary topic of discussion. During an era when purse strings are tight, turnover has tremendous influence on the balance sheet — and customer service. The group’s consensus: Retaining valued employees is more essential than ever.
For solutions, the members of this group, the NACS/Coca-Cola Retailing Research Council (NACS/CCRRC), did not have to search far. They merely dipped into a rich collection of 60 research initiatives by retailers for retailers, created by this Council and others. As part of its commitment to help retailers drive their businesses forward and to expand knowledge in the retail community, The Coca-Cola Company sponsors several retailing research councils worldwide; the NACS/CCRRC is composed of leading c-store executives who oversee investigations conducted by independent third parties.
One of these studies, “New Ideas for Retaining Store-Level Employees,” shares recommendations that may be even more relevant now than when conceived a decade ago. A companion piece, “Increasing Employee Retention in Convenience Stores,” provides specific guidelines for convenience store executives.
Retention Can Be Simple
“The most effective ways to retain hourly workers are surprisingly simple,” said Blake Frank, an industrial psychologist who oversaw the original retention study (today, he’s associate professor of management at the University of Dallas). “Clear directions, proper maintenance of equipment and supplies, and performance of immediate supervisors are the primary keys to employee satisfaction.”
In support, the research indicated that companies that provided functioning equipment and easy access to supplies retained workers as much as two months longer than those that did not.
Frank recalls how a store clerk, who participated in a focus group related to the research, illustrated this point. One of his responsibilities was to wipe down shelves with a specially prepared formula; a sponge was not provided nor was the “recipe” for the cleaning solution. The worker did not have the resources needed to complete the task, yet was later “yelled at” for not performing his duties.
“Employees often get blamed when something goes wrong,” explained Frank, “but if you deeply examine the issue, sometimes there’s a system breakdown that the worker cannot fix. Managers tend to underestimate the impact these situations have on retaining members of their workforce.” Complicating the matter: Businesses rarely calculate the cost of turnover because it doesn’t show up on the P&L statement.
Turnover Costs
Direct costs of replacing employees include advertising, training, interviewer time, employee testing, background checks and processing new hires into the system. More difficult to factor are opportunity costs that occur as part of the learning curve. These encompass errors — making incorrect change at the cash register or mistakes in paperwork — product damage, inventory shrinkage and improper use of equipment.
Beyond this, customer service also suffers — with consequences that are nearly impossible to measure. Highly trained individuals familiar with the organization’s mission and a store’s customers can have a huge effect on attracting and retaining shoppers.
Here’s one story that demonstrates the tremendous value of customer service and serves as a powerful testament to the value seasoned employees bring to retailers: A woman moved into a new home, but her physician called in a prescription to her old pharmacy several miles out of the way. When she arrived at the counter of her former neighborhood store, the clerk recognized her, greeting her by name. Heartened by the personal service, she switched her business back to the old pharmacy, even though the location was more inconvenient. If that employee had been new, the shopper’s positive — and motivating — experience would never have happened.Experienced Employees Enhance Service
“It’s expensive to replace employees and it’s costly to attract and retain customers,” said Roy Strasburger, president of the international division of Strasburger Enterprises, a Texas-based company operating thousands of convenience stores. “We believe the best way to create a loyal customer is for our personnel to establish a relationship with them. We want to build a sense of familiarity — convey to the shopper that this is their store. If we have a lot of turnover, we can’t do that.”
Strasburger’s organization developed a multi-faceted action plan to keep employees on board as long as possible. It includes making them feel like part of a team; properly equipping staff to do their jobs with tools, knowledge, education and training; and enabling workers to see the results of their efforts, for example, through bonus programs for managers based on store performance.
The First 90 Days
Frank applauds such efforts and says the first 90 days of employment offer a crucial window for these endeavors. As the study demonstrates, like skiing down a dangerously steep slope, tenure rapidly plummets during the first few months of employment, then begins to level off. “The longer you keep employees,” he said, “the longer they tend to stay.” He also suggests that you can change corporate mindset and strategy by reframing discussions about “turnover” into conversations about “driving retention.”
It’s a topic on the mind of Stewart Spinks, founder and CEO of the Spinx Company, which operates 65 Southeastern convenience stores. His business uses a workforce labor planner, which optimizes staffing with daily workflow at each outlet. While the company formerly employed full-time associates, most hourly employees have been converted to part-time status.
“While this system better meets the needs of our business and workers who want flexible schedules, it’s a challenge to keep those who want full-time employment.” As part of an effort to retain valued individuals, Spinks instituted a bonus system that rewards general managers for performance tied to controllable gross margins. This includes soliciting extra sales, emphasizing promotions and monitoring specific expenses.
Take Action
When seeking methods to keep employees, focus on identified retention drivers. While the NACS/CCRRC report provides a comprehensive list, some key factors include:
- Organizational Direction: How the company does business and overall satisfaction with the organization.
- Immediate Supervision: An evaluation of how an employee’s immediate supervisor executes his/her supervisory duties and responsibilities.
- Providing Directions: How well the company provides employees with directions (generally written) necessary to do the job.
- Providing Feedback: The quality of performance feedback.
- Equipment and Supplies: The quality and availability of equipment and supplies required to do the job.
Then to launch a retention initiative for your company, use the list of retention drivers to target key issues. Base the selection on management’s knowledge of the issue or collect additional data. Then assign a team to work on the issue, having it focus on a part of the organization with an identifiable retention challenge over which the team can exert influence and control.
Analyze results and identify related management and organizational practices. And finally, create and implement a plan with specific actions and timeframes. Assign individuals to be accountable for the implementation and progress measures as well as creating consequences for failure and success.
A disciplined plan of attack for greater employee retention, based on sound research, will lead to greater customer loyalty, higher profitability and cost savings.
Bill Bishop, chairman of Willard Bishop and chief architect of brickmeetsclick.com, serves as research director for the NACS/Coca-Cola Retailing Research Council.
***
A Treasure Trove of Information
“NACS/CCRRC was established in 2000 and conducts studies on issues important to convenience retailers,” said Joe Burke, vice president of retail industry affairs for Coca-Cola Refreshments, The Coca-Cola Company, which sponsors six different international retailing research councils. “We partnered with NACS to create the NACS/CCRRC to support our convenience retail customers. Together, we generate ideas and solutions that have a meaningful impact on the c-store industry.”
“I’ve seen the value of the Council from its inception,” said Hank Armour, president and CEO of NACS and one of the group’s first members. “I’m pleased that The Coca-Cola Company is finding ways to bring the broader learnings of the Council to NACS members and ensure the long-term viability and integrity of our businesses.”
NACS/CCRRC is composed of 17 members serving limited terms, representing both large and small companies, different store formats, geographies and levels of involvement with gasoline. Since it was established, the Council has overseen development of four major studies. All Council research, including “New Ideas for Retaining Store-Level Employees” (originally commissioned by a separate Council focused on supermarkets) and “Increasing Employee Retention in Convenience Stores,” is available online at ccrrc.org. To participate in an ongoing dialogue about topics of interest, visit the Council’s blog at ccrrc.wordpress.com.