Sticky Srategies for Retention

Recruiting employees to work in retail stores is the easy part; it’s convincing them to stay that can be grueling.

Turnover in the retail industry is notoriously high. For myriad reasons — everything from long hours and tedious tasks to the chance to earn a dime more per hour at the shop across the mall — retail employees suffer from a collective case of retention deficit disorder. Statistics reported earlier this year by the National Retail Federation estimate industry turnover at 58 percent for full-time associates and 114 percent for part-time employees.

Given the cost of recruiting, hiring, onboarding and training, retailers are understandably frustrated when an employee who has been with the company just a few short weeks or months decides to move on. The prospect of investing in an employee who departs before the season changes is unsettling at best, but return on investment is not the only concern: Customer service suffers when there are not enough associates to assist shoppers, process transactions or provide the knowledgeable insight that a seasoned employee can offer.

What can retailers do to increase the likelihood of employees sticking around for awhile? Some provide flexible scheduling or job sharing; others offer affordable health care, online training — even free snacks in the break room.

In this report, STORES looks at the approaches three retail companies have taken to keep employee turnover low.

Company: BURGERVILLE
Headquarters: Vancouver, Wash.
Employees: 1,400
Retention Strategy: Affordable Health Care

A 2005 employee survey spelled it out in black and white: The No. 1 concern of Burgerville workers was affordable health care.

“We bet that if we could find a way to make health care affordable for all our employees — most of whom are hourly employees — we could alleviate a huge concern and win their loyalty,” chief cultural officer Jack Graves says.

It was a sizeable bet — approximately $1.5 million — but it has paid off handsomely. Since it began offering an extended and improved health insurance plan, Burgerville has achieved a dramatic increase in employee retention and loyalty.

Prior to implementing the new plan, turnover rates hovered around 128 percent. In 2006, the first full year of the health care initiative, turnover dropped to 54 percent; today the rate is holding steady at 52 percent. Productivity and employee confidence are up, absenteeism is down and, by reducing turnover, Burgerville has conservatively saved more than $500,000 — capital the quick-serve chain would have had to invest in recruiting, training and onboarding.

Under Burgerville’s plan, employees who have been with the company for at least six months and work 20 hours a week are eligible for health insurance; it costs each employee $15 per month, or $90 monthly for family coverage. Burgerville’s parent company, The Holland, pays more than 90 percent of the premium for employees and their dependents.

The package, put together in partnership with Kaiser Permanente, has no deductible — a tipping point for employee acceptance, according to Graves. High school and college students, retirees and young moms working part time “are often on a tight budget,” Graves says. “What we learned, however, was that these employees were less likely to go to the doctor — even if they had some insurance — because they couldn’t afford the deductible.

“Offering affordable health care with a zero deductible was a game changer,” he says.

It didn’t happen overnight, however. “The program was so outside the box that people didn’t believe it at first,” Graves says. “We actually set up a field trip of sorts to a Kaiser clinic to demonstrate how it worked.”

Employee retention isn’t the only metric Burgerville uses to measure its return on investment. “With more skilled employees, our restaurants are running better and they look better,” Graves says. “The food is hotter and it’s served faster, too. There’s a renewed sense of pride and commitment.”

The changes are having a healthy effect on the bottom line, too; Burgerville reports a year-over-year increase in guest counts and a lift in sales.

“Being a local company, word spread quickly of our commitment to providing health care, and guests have rewarded us for that,” Graves says. The company has received substantial feedback from guests indicating that the care showed to its employees separates Burgerville from the pack.

“Many guests have written to us saying that it is this sort of program that keeps them committed to the Burgerville brand,” Graves says. “I’ve got the e-mails to prove it.”

Company: FINISH LINE
Headquarters: Indianapolis
Employees: 13,000
Retention Strategy: Hire Efficiently

Finish Line executives know a thing or two about winning. When it comes to hiring associates, the game plan is simple: pick the right people and give them the tools they need to learn.

Still, there’s a secret to the company’s winning ways that’s not so simple: Executives have a keen understanding of Generation Y, and they’ve developed recruiting and training initiatives that are in step with the values and expectations of this youthful demographic.

“You have to understand the generation you’re looking to recruit,” says Mike Marchetti, executive vice president of store operations. “If you’re waiting for today’s young people to come into the store and fill out an application, you’ll be waiting for a long time. Close to 90 percent of our applications come by way of the Internet.” The footwear retailer also maintains relationships with student organizations at both high school and college levels, including DECA, Students in Free Enterprise and Delta Epsilon Chi.

Recruitment is only the first step; finding associates who will be a good fit is vital to lifting retention rates, too. Using Kronos’ Workforce Acquisition tool, executives at the 700-store chain are able to identify the most suitable applicants. The software relies on a series of questions to assess key behavioral traits. The most important for Finish Line is productivity. “People who are productive tend to be happier and stay longer,” Marchetti says.

Every employee who applies for a job goes through this assessment. Each application is scored according to numerous criteria, and store managers are notified of pre-qualified candidates. “The software provides our managers with a more structured way to go through the interview and hiring processes,“ Marchetti says. “By scoring applications according to scientifically proven criteria refined over several years, we’re able to eliminate applications that don’t measure up before we’ve made any sort of investment in hiring or training. It saves store managers hundreds of hours previously spent on interviewing and onboarding candidates who are not a good fit.”

Marchetti won’t reveal the company’s actual retention rates, but he notes that Finish Line continues to see improvement annually — no small feat considering they’ve partnered with Kronos (and its predecessor, Unicru) for more than seven years. “Internal studies have shown that our relationship with the student groups is a boost,” he says. “Employees that are recruited from those groups are more productive and remain with the company longer than those recruited elsewhere.”

Training initiatives for hourly employees also reflect Finish Line’s understanding of Gen Y. “Paper-based programs are old fashioned,” Marchetti says, so the company developed an e-learning solution called Shoe University. Using a POS terminal set up in the stockroom, associates learn the finer points of service and selling via a module-based interactive program.

Others criticize Gen Y, but not Marchetti. “This is an extremely bright group,” he insists. “They don’t just accept things at face value; they challenge everything and we’re better off for it.”

Company: DUANE READE
Headquarters: New York City
Employees: 5,000
Retention Strategy: Synchronize Scheduling

Adopting a healthier lifestyle requires a certain amount of discipline, and that — as anyone who’s ever tried can attest — takes time. Still, the rewards are sweet for those who can stay the course. That’s what David Sparks is hoping as he writes a prescription for improving employee retention rates at Duane Reade, the feisty metropolitan drug store chain that is battling industry Goliaths for market share.

Formerly of Albertsons, Sparks joined Duane Reade 20 months ago as director of store operations. One of the company’s long-range goals is to lift retention rates, but as Sparks quickly realized upon arrival, getting there would require some fundamental changes. The company undertook an essential one earlier this year with the deployment of a workforce management application from RedPrairie.

“Having the right number of employees to staff the stores, the right caliber of associates to provide assistance and the right balance of workers to shoppers during peak times makes for shorter lines at checkout,” Sparks says. “Shorter lines equal happier customers, and happier customers equal happier employees.”

A desire to improve customer service is what initially prompted Duane Reade to deploy the workforce management application. Sparks acknowledges that it can be difficult to draw a straight line from the introduction of the new application to improved employee retention rates. Still, he anticipates that the scheduling improvements yielded by the new software are having a positive impact on both sides of the counter.

“When an employer can be responsive to employee requests for flexible scheduling or time off, that can lift retention,” Sparks says. “Still, first and foremost, the spotlight is on the customer.”

RedPrairie’s workforce application is a far cry from the handwritten schedules that many store managers were using or the makeshift Excel spreadsheets that others created. Duane Reade has now standardized schedules across its 241 stores, making the job of scheduling labor more efficient and more accurate.

The newfound scheduling features are a good fit for Duane Reade for several reasons. Unlike competitors in this space, Duane Reade’s urban locations result in the drug store operator’s having more full-time employees than average; in most instances, employees commute from a distance and therefore expect to work eight-hour shifts.

In addition, many associates work in multiple stores. “A store manager can ‘lend’ an employee to another store on the basis of need,” Sparks says. “Using the scheduling application allows them to keep close tabs on the amount of hours each employee works in their ‘home’ store and exactly how many hours they’re putting in at the ‘borrowing’ store.”

Though still in the early phase of rollout, efficiencies have already been realized. The software can be configured to generate a schedule from a forecast and to assign the best-performing employees to work during peak selling times. RedPrairie reports that the application has the potential to provide employees with the ability to access the schedule from a webpage or — eventually — from a mobile phone.