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Small Operators Hold an Advantage in Tight Labor Market

Leaning into strengths, including a sense of community and belonging, works well for smaller businesses.
Two co-workers in a retail store

NATIONAL REPORT — You don't need a big human resources (HR) department to win over employees. Granted, running a small business in an industry with thin margins and high overhead can be tougher without the backing of a large parent company, but experts say smaller operators should focus on their local advantages in today's dynamic labor market.

"Small businesses might not be able to offer as high of pay or as rich of benefits as chain stores, but what they do offer is the ability for employees' voices to be heard and more autonomy," said Heather Whitney, HR services senior advisor at Paychex Inc., a provider of integrated solutions for payroll, benefits, human resources and insurance services. "Employees have a greater sense of belonging at small stores where they know each of their coworkers vs. in chains where they may never see or know who upper management is."

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Additionally, single-store and small operators should realize they are often viewed with a certain sentimentality and contribute meaningfully to the character of the community, according to Whitney. "As a result, employees at these types of establishments often see more meaning in their work than their counterparts at national chains, contributing not just to the business' revenue, but to the community as a whole," she said.

[Read more: Three Trends Shaping Employee Retention in 2024]

Smaller retailers would do well to know who they are — and who they are not. 

"This is about focusing on the fundamentals, using your resources and not trying to compete with the bigger players in ways you cannot win," said Aaron Sorensen, partner, chief behavioral scientist and head of transformation at Lotis Blue Consulting.

Based on his company's recently released "Future of Retail Workforce" study, there are three major factors that are among the top drivers of engagement and retention:

  • Interesting and meaningful work;
  • Relationships and camaraderie with coworkers, or a sense of team; and
  • A high-quality manager/managers.

"Winning on these aspects of the work experience doesn't require big budgets or large corporate HR departments," Sorensen told Convenience Store News.

[Read more: Small Operators Face 2024 With Tempered Optimism]

Labor experts offer the following tips for small operators looking to wow their workforce:

Pay sufficiently. Whitney believes that cost of living raises and merit-based adjustments aren't just for corporate roles. The way she sees it, if smaller retailers want to keep good people around for the long haul, they must reward tenure with some level of increased wages.

"Pay sufficiently by scanning local pay practices, but recognize that pay isn't everything. Specifically, competitive pay matters, but paying the most doesn't lead to attracting more talent and lower turnover," Sorensen added, noting that it would be best for small operators to focus on the aspects of their employee value proposition that are more desirable.

Make sure you have great store leaders. Hiring and developing store managers is the single greatest opportunity for small operators, according to Sorensen, because great managers create great experiences. He suggests that when hiring, small operators look for leadership experience in sports, military or previous (perhaps competitive) companies.

Emphasize flexibility and accommodation. Small businesses are inherently more flexible than large corporations, which means small operators have a unique advantage to prioritize employee input and communication regarding aspects about the job that really matter to them. "Consider letting employees weigh in on decisions around scheduling, opening on holidays and other [things]," Whitney said. "This helps them feel more connected to the business' success and more valued in the workplace."

Along with that, small operators should recognize that circumstances are always changing for employees and if they want to keep them on board, it will help to roll with those personal life punches. "Accommodating changing employee needs — whether long- or short-term — by allowing flexible schedules, adjusted responsibilities or other shifts in their work arrangements can help keep the team strong," Whitney explained.

Provide a strong sense of safety. Small operators have a good opportunity to maintain strong relationships with local law enforcement, both by bringing them in-store with discounted or free food and beverages and by doing outreach to community organizations, law enforcement and civic groups to strengthen connections and collaboration.

A recent study conducted by the NACS/Coca-Cola Retailing Research Council (CCRRC) found that maintaining strong community ties allows individual retailers to access police, first responder and social resources more effectively and can serve as a natural deterrent to safety incidents, while bringing peace of mind to employees.

Promote "good news" community stories. The NACS/CCRRC study also found that smaller operators have an excellent opportunity through social media and local media to promote community angles and celebrate local employees as heroes. Individual retailers can — and should — make a more concentrated effort to tell their own stories to improve customer interactions and establish a sense of pride with employees.

Plan to invest in labor management technology/services. This can help significantly as it allows the small operator to outsource administration, payroll and compliance-related tasks to experts, according to Whitney. "That gives them what everyone needs: more time in the day. Small operators who use that time to focus on the things that make their store special — to employees and patrons — will see their labor challenges become more manageable."

In the coming years, success will be all about playing to strengths and focusing on what makes your local business attractive to customers, Whitney concluded.

"A small business that is more active in the community and knows itself as a company is more likely to attract and retain the right employees," she said. "Sometimes, it is as simple as acknowledging your employees' needs within their communities and figuring out how the company can take part in growing that."

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