Employment Down, Turnover And Pay Slightly Up
The average number of workers per store falls even as economy rebounds
When NACS retail members went to Capitol Hill in March in order to lobby lawmakers to resist big banks' efforts in delaying and repealing the Durbin swipe fee reform amendment, one of their talking points was how the humongous credit- and debit-card transaction fees — which hit a record $9 billion last year for convenience stores — were contributing to the nation's stubbornly high unemployment rate.
"The money I pay to the credit card companies in transaction fees could be used to hire an additional worker or at least prevent the layoff of at least one employee per store," one retailer told a Congressman. "The impact on local economies is staggering."
Now, research proves the truth of that statement. According to the just released Convenience Store News 2011 HR & Labor Study, the average number of store associates per store decreased by one, from 9.2 to 8.3 last year. That figure buttresses the argument of several retailers who have said that the rising expense of credit and debit card transaction fees essentially resulted in their employing fewer workers per store.
Turnover rates are slightly higher this year compared to a year ago, but well below the more-than-100 percent store level turnover c-store retailers faced in 2000. Convenience retailers also reported stiffer competition for good workers from other businesses, and noted they've increased salaries and benefits for their store level workers, according to the study.
Fig. 1
Number of Employees Per Store/Length of Stay
Fig. 2
Problems with Quality and Integrity of Work Force
Fig. 3
Turnover Rates
Highlights of the study include:
• Shrink and theft continue to be the No. 1 concern cited by retailers about the quality and integrity of their employees. However, "attitude and customer service skills" moved up last year from fourth to second among retailers' concerns about their workforce. Meanwhile, "basic skills" dropped from second to fourth among retailers' list of most serious workforce problems.
• Store level employee turnover rates were slightly higher in 2011 than in 2010, but nowhere near as high as in 2000 when the nation's unemployment rate was much lower.
• Meanwhile, turnover rates among store managers, assistant manager and field managers continued to decline in 2011.
• As the economy improves, it appears competition from other businesses is again becoming a bigger factor influencing turnover. Competition from other businesses moved up from fifth to third among reasons for causing turnover among employees. Wages and dismissal for cause continue to be the top two reasons for turnover, according to convenience store retailers.
Fig. 4
What Factors Impact Turnover Rates?
Fig. 5
Actions Taken to Reduce Turnover Rate at Stores
• Offering flex time and attractive scheduling is not being used as much this year to reduce turnover. Last year, flexible scheduling was the No. 1 tactic used by c-stores to reduce turnover among store employees, but it dropped to fourth this year. Improving the in-store atmosphere and the company's corporate culture moved up from second to first among turnover reduction tactics, followed by enhanced training and higher salaries. Creating career opportunities and providing or adding benefits are the other two tactics most often used to reduce store turnover.
• In terms of benefits, or "goodies," as they are called by Sheetz CEO Stan Sheetz, health insurance and cash bonuses are the two most pervasive forms of incentives offered by c-store retailers. For store level employees, a 401k plan and health insurance are the most popular benefits. More than half of store managers get a cash bonus for meeting goals, while a third of store employees also receive cash bonuses. Almost one in five store managers also gettuition reimbursement of some kind. A little less than 15 percent of c-stores offer tuition reimbursement to store employees. About 80 percent of companies in the c-store industry make matching contributions to employees' 401k plans.
Fig. 6
Incentives Offered
• Despite the difficult national economy, only 3 percent of c-store retailers said they've eliminated health care insurance coverage for their employees. However, about 12 percent cut back on coverage and another 24 percent required employees to increase their contribution toward insurance premiums. Almost six out of 10 companies, though, said they made no changes in the health care insurance plans in the past year.
• Starting salaries in the convenience store industry for store-level associates rose 2.9 percent in the past year, to a mean average of $8.01 per hour (up 23 cents per hour). About 6 percent of retailers, however, now start their store employees at $10 per hour or higher, an increase from 4.1 percent in 2010.
• Meanwhile, the amount of time between hiring and receivingtheir first merit increase remained about six months for store employees. The amount of that increase declined by 10 cents to 36 cents per hour.
Fig. 7
Employee Insurance Changes in Past Year
• Approximately 60 percent of convenience store retailers conduct formalized performance reviews. Among chains, that figure is higher at 73 percent.
• In the 12 months since the previous survey, convenience retailers feel that their pay scales now compare better with comparable businesses in their market. Slightly more than 31 percent of c-store retailers said they pay more than competing businesses, an increase from about 25 percent who said that a year ago.
Fig. 8
Screening Tools Used in Hiring
Fig. 9
Starting Hourly Wage for Store Associates
Fig. 10
When Store Associates Are Given Their First Increase
• In terms of training, c-store retailers appear to be spending less time but spending more money on instruction. This store associates will be trained an average of 41.3 hours each, at a cost of $584 per employee. A year ago, the training time average 43.8 hours at a cost of $519 per employee. About four out of 10 c-store retailers include upselling and suggestive selling within their training programs for store associates. For store managers, the training time now averages 210 hours at a cost of $3,678 per manager, compared with about 220 hours and $3,145 per manager a year ago.
• There wasn't much change in training methods from year to year. On-the-job training is still the most prevalent form of education, followed by classroom, although use of computer-based and DVD training videos declined somewhat from a year ago.
• About half of c-store retailers said they have formalized employee feedback programs in place. The most popular ways to garner feedback include district/headquarters meetings of all employees (14.9 percent), an employee hotline (11.9 percent) and electronic forums like a company Intranet (9 percent).
Fig. 11
Conduct Formalized Performance Reviews
Fig. 12
How Pay Scale Compares with Comparable Businesses in Market
• In the event that a new hire doesn't work out, most convenience store retailers (75 percent) have a process in place to handle dismissals. Three-quarters also have an employee manual and more than 90 percent of retailers require new employees to read and sign a form stating they've read the manual.
Fig. 13
Training
Fig. 14
Training Methods Employed by Company
Fig. 15
Is Upselling Training Provided to Employees?
Prepare for Employee Turnover, Disengagement
'Business will not simply return to their pre-recession turnover levels.' Bob Kelleher, The Employee Engagement Group
Convenience store retailers need to prepare for higher turnover and employee disengagement as the economy improves and the unemployment rate declines.
"We're entering the era of the disengaged as many employees seek alternatives elsewhere," said Bob Kelleher, CEO of The Employee Engagement Group. "Companies of all sizes will start hiring again soon, employees will again believe that it is okay to be someone's low man on the totem pole, and the musical chair aspect of job movement will take root."
Recent research from Glassdoor.com's employment confidence survey supports Kelleher's views. According to the survey, 73 percent of employees say they will leave their job in the future and more than one in three expect to do so within the next three years.
Additionally, MetLife's 9th annual study of employee benefits trends found that employees hope to land a new job in the next 12 months as employee loyalty wanes. "Very strong" employee loyalty, according to the study, plunged to 47 percent from 59 percent just three years ago.
Kelleher also projected that businesses will not simply return to their pre-recession turnover levels. For instance, if a company's traditional voluntary turnover dropped from 15 percent to 5 percent, the 10 percent of the workforce that didn't leave during the past year is now in queue, and will be in addition to the traditional 15 percent voluntary turnover.
In the convenience store industry, where turnover levels are currently running higher than 45 percent, what would happen if turnover increased five-fold? How would it impact employee engagement, customer satisfaction and the bottom line?
In his book, "Louder Than Words — 10 Practical Employee Engagement Steps … that Drive Results!" (www.BobKelleher.com) Kelleher lays out 10 engagement practices that will help companies focus on their retention strategies today to be prepared for tomorrow.
1. Link your engagement efforts to high performance: Employee engagement is not about employee satisfaction. The last thing you should want is a team of satisfied but underperforming employees. Kelleher defines engagement as "the unlocking of employee potential to drive high performance."
2. Engagement starts at the top: Leaders must demonstrate support for an engaged culture by personally living their company's values. In today's recessionary times, leaders have large shadows — and employees are watching everything you do!
3. Engage First Line Leaders: The key driver of engagement is the relationship with one's direct manager. Studies show that if one's line manager is disengaged, his/her employees are four times more likely to be disengaged themselves.
4. Focus on communication, the cornerstone of engagement: Successful leaders recognize the power of a robust communication plan, one built on clarity, consistency, and transparency.
5. Individualize your engagement: Today's leaders must tailor their communication approaches, rewards and recognition programs, and training and development investments to the unique motivational drivers of each employee.
6. Create a motivational culture: Kelleher believes leaders must create motivational cultures where employees can flourish. Leaders are more apt to get the discretionary effort of their employees when they think you care about them as people!
7. Create feedback mechanisms: Companies need to ask employees what they think, and employee engagement surveys are a great tool to check an organization's pulse. As we slowly recover from this deep recession, some enlightened companies are beginning to ask their employees "what do you think?" as they conduct employee engagement surveys.
8. Reinforce and reward the right behaviors: Employees are incredibly motivated by achievement, not money. Kelleher believes that money can disengage if employees perceive unfairness.
9. Track and communicate progress: Leaders need to reinforce "line of sight" by telling their employees where they're going, how they're performing, and where they fit in.
10. Hire and promote the right behaviors and traits for your culture: Kelleher often tells clients, "You don't have an engagement issue, you have a hiring issue — you're hiring the wrong behaviors and traits to succeed in your culture."