Keep Them Hanging on

It's no secret that employee turnover is a chronic problem for CPG retailers. According to the July 2013 Payscale report, "Companies with the Most & Least Loyal Employees," retail companies are among those with the highest turnover rate. And that can cause ripple effects throughout the entire organization.

First, there is the financial hit stores take when they have to hire and train a replacement employee. But there are hidden costs as well. When you consider lost productivity, customer satisfaction, the store's reputation as an employer, and the morale of employees left behind, the importance of retaining good workers at all levels becomes clear.

Understanding why employees leave, then instituting policies, programs and procedures to deter defection, can help grocery stores turn the tide on employee turnover and reap the rewards as well–a trained, dedicated, loyal staff can deliver.

WHY EMPLOYEES DEPART

Industry experts say several factors contribute to the low retention rates in the grocery industry, including the age, experience level and expectations of hourly staff.

"The primary pool of candidates for entry-level positions is for high school or college individuals, or for folks with less breadth of experience and a smaller skill set than those with greater earning potential," says Bob Baxley, a partner with The Partnering Group in Ponte Vedra Beach, Fla. "Some people also get into the grocery business and are unclear about how hard the business is, about the physical labor that is required. And some just aren't cut out for a job that involves customer service and customer interaction."

In addition, says Jean Forney, managing partner of Samuel J. Associates in Boca Raton, Fla., many stores are cutting hours, which can affect employee morale. "A lot of retailers are going to a higher part-time ratio, part of that due to health care costs," Forney says. "Stores also look at labor percentage in terms of store sales, so they are constantly cutting hours in-store, and service departments are usually the first to get hit. That makes employees think, 'What's this job worth if I'm cut back to 20 hours per week?'"

All of these issues set the stage for an unmotivated workforce, making the grocery industry ripe for problems with employee retention.

TRAINING IS KEY

The quality of employee training programs can significantly impact the way new hires not only adapt to their jobs but also the way they view their future with the company. How they start out can have a lot to do with how they progress, industry experts say.

"Some of the best retailers have done a good job of preparing employees for the full level of customer service activities, and give them more time to train, time to build up to a full level of productivity," Baxley says. "They're not putting them out on the floor right out of the chute, but are giving them a 'growing-in' period. Other companies let new hires learn on the job so they're able to get as much productivity as possible."

"Some companies consider you an expense, so the sooner you get into the actual function of the job the better," says Forney, who notes that Wegmans–her former employer–looked at things differently. "At Wegmans," she says, "training was your function."

Whatever the approach, ensuring that employees thoroughly understand their responsibilities and are prepared to become part of a team is key, Baxley stresses.

"If someone is hiring new employees who are entering the business for the first time, the very first thing a manager should do is a thorough orientation throughout the store and explain what occurs in each department," Baxley says. That includes everything from showing them the location of the employee parking area and the break room, to how to punch in and out, to in-store sampling policies. "The manager also should outline what is expected of them, line by line, in moving through the ranks. All positions have a skill set to master and need orientation and feedback," Baxley adds.

FOCUS ON THE CUSTOMER

Mackenthun's, a family-owned supermarket in Waconia, Minn., follows the training approach Baxley and Forney espouse.

According to store manager Ed Gardeski, the company tries to cross-train workers so they are prepared to work in multiple departments. Front-of-store duties are a big focus.

"Our front end is critical," Gardeski says. "Statistics show 73 percent of customers dislike the checkout process. It is the No. 1 pain point for consumers. Our front-end employees are a key touchpoint for those customers."

That emphasis on customer contact benefits more than the shoppers, says Mark Lukens, founding partner of Method3, a global management consulting firm.

"A recent survey by Bain & Company found that engagement was lowest in the lower tiers of the company where people have less control but more customer contact. Employees at the front line collectively have the best knowledge of what customers want and what bothers them," Lukens says. "If they can satisfy those customers, then they will be satisfied in their jobs, feeling like they're achieving something."

Lukens suggests talking with front-end workers about what customers want and the obstacles to their satisfaction, then empowering them to solve these problems whenever possible. "As they feel more successful and deal with happier customers, they'll also feel more engaged," he adds.

Mackenthun's holds a series of meetings with employees to introduce them, via PowerPoint presentation, to the kinds of customers that comprise the store's predominant demographic group. "We explain [things like] how they shop and when they shop," Gardeski says. "Customers are changing, and we have to keep up with them and stay ahead."

MORE THAN THE MONEY

With the debate over the minimum wage raging, it might seem that increasing compensation is the only way to attract and retain quality employees. Money is important; as "How Much Employee Turnover Really Costs You" at inc.com says, "...consider your pay scales for your good employees and give raises and bonuses when appropriate because it will cost you more to lose that good employee than the raise you refused to give." But it isn't the only way–or even necessarily the best way–to reduce turnover.

"When I first started, people hung onto a job as tightly as they could. If the boss said jump, you jumped. Now employees say why? They want to know the reason or they are not engaged," Gardeski says. "Obviously money is important, but the younger generation wants more out of it. They want to work for companies that stand for something."

Explaining the importance of the role they play is one way to motivate employees and engender loyalty.

"Let employees understand how what they do contributes to the corporate goal–why they stock this way, why it matters if boxes are miscounted, why it matters if they came in today," Forney says. "It will make them feel better about the company and their role in it."

And don't stop with simply explaining why their contributions are important; solicit their input in the decision-making process, no matter what their position, Lukens says.

"Don't get a bunch of consultants to define your strategy, and don't let it be dictated by management: consult with your employees. They know your company, its customers and its workings better than anybody else," Lukens says.

Stressing the importance of teamwork is another must. "The job becomes an extension of who you are, so it is important [for employees] to understand how they function together," Forney says.

Forney says learning about employees' lives outside of work is also vital to maintaining a motivated workforce.

"At ShopRite out of Connecticut, half of the interview is about an employee's skills for the job, half about what they do when they're not working," Forney reports. "They want to know there is a work-home life balance because they are afraid if they hire employees who don't have that they will get someone who hits the stress ceiling way too fast."

CONSIDER SOME 'EXTRAS'

Giving employees access to scholarships, continuing education classes, and industry conferences and events also helps keep employees motivated and loyal, Forney notes.

Wegmans, for example, offers the Wegmans Employee Scholarship Program that recently awarded college tuition assistance to 1,766 new recipients for the 2014-2015 academic year.

"Full- and part-timers are eligible to receive up to $2,200 per year for four years, and there are no restrictions by our company on a student's course of study," Mary Ellen Burris, senior vice president for consumer affairs, writes in a blog post about the scholarships. "Recipients may choose any area of study, any accredited college, and go into any field they desire upon graduation. Many scholarship winners do stay with us after college."

Other "extras" include flexible scheduling and stretch assignments that help young employees grow within the company, where almost half of the employees are 25 or younger and 66 percent of jobs are filled through internal promotions.

Mackenthun's, too, puts a premium on education. The company requires every employee to take two classes annually. According to Gardeski, the courses can be industry-specific or something they feel will help with their future career. Popular topics include store safety, business ethics, intro to food and health, customer service and professionalism, and food retailing today. "It's all about engaging them," he says.

Ultimately, turning the tide on employee turnover is an ever-changing balancing act with customers at one end, employees on the other, as Mackenthun's has found.

"We are in tune with who our customers are and who are employees are. That is the culture we've created, but it is continuously evolving–we have to continue to keep working on it," Gardeski concludes. "We focus on our vision of creating an exceptional experience for our customers, and that turns into an exceptional time for our employees, too."