What Can Retailers Do About Employee Turnover?
By David Saxby

Is the cost of employee turnover having a negative impact on your store's bottom line? Do you even know how many dollars you're losing because of turnover in your staff?

Calculating the cost of employee turnover can be quite involved and intimidating. Here are some items for consideration that clearly demonstrate how involved this matter is:

Cost of recruiting new employees

• The time involved to create an advertisement
• The time involved to place an advertisement
• The cost to run the advertisement

Cost of candidate selection and interview costs

• How many job candidates are screened and/or interviewed before a final decision is made?
• What is the hourly rate of the employee responsible for candidate selections and the interview process?
• It takes about 2.5 hours of preparation, interviewing and screening time per candidate

Cost of training new employees

• What is the hourly rate of the trainer's time?
• How many hours of formal training for new employees?
• How long is the learning curve of new employees?

Cost of customer impact

• What is the impact on customer service and company sales during a new employee's learning curve?
• Do you lose out on repeat business because a customer has a bad experience? Lack of customer service could cost you more in lost sales and referrals from one customer than all the cost related to hiring.

If you can place a dollar value on the above costs, you are ahead of most retailers! The American Management Association states that employee turnover costs 30 percent of an employee's annual salary. Calculate the annual salary of those employees turned over in the past 12 months and multiply by 30 percent. If you are like most of your peers, you will be saying "OUCH!"

So how does one reduce employee turnover?

The top two reasons employees stay with a company are (1) they feel the company cares about them and (2) they feel their work efforts are important to the growth of the company.

A study by the National Association of Colleges and Employers revealed that college graduates entering the workplace ranked benefits fifth and salary ninth on their list of items to consider with a new employer. Employees at every level want to feel like what they do matters and that the company truly cares about them.

There are countless ways retailers can let their employees know they care. Simple conversations can be as impactful and motivating as full-blown incentive programs.

It's critical to the life of your organization to measure the perception of your internal customers. That's right - internal. Your employees are every bit as important as your external customers. Most organizations fail to see that employees are internal customers - and they deserve the same respect and concern that you show for customers who walk through the door to buy your products.

A simply designed employee survey can provide you with invaluable information as well as a means to measure your staff's level of satisfaction. Take care to design such a survey with questions structured to be as objective as possible. Simple scoring systems (1-5) help accomplish this. Areas to solicit their feedback should cover:

• Available benefits - determine if they are aware of the benefits you provide and ask them to rank each benefit's value. Oftentimes employers spend time and money to deliver benefits that employees either are not aware of or don't perceive as having any value.
• Training programs - do they feel that the training provided is adequate and provides them with the proper skills for their job functions? Do they feel they're getting training for additional opportunities?
• Understanding company philosophy - do they know your corporate beliefs and values?
• Clear understanding of professional standards - do they understand what levels of service you expect and the behaviors/actions that will accomplish this?
• Likes and dislikes - give them the opportunity to tell you what they like and dislike about your company.
• Motivators - ask them what would motivate them.

The most effective surveys are those that are anonymous. Most people will not give you honest feedback if they believe there is any opportunity for backlash or a negative consequence. So allow them to give you information freely. Take this information and use it as a means for improvement.

Oftentimes the best source for new ideas comes from within. Your employees see things every day that could be improved, changed or done differently. Let their experiences and observations become your funnel of knowledge.

In one year, Toyota employees submitted 860,00 suggestions for improvement. In Japan, 61 percent of employees regularly generate ideas while only 8 percent of American employees do. Why such a huge difference? The average Japanese manager uses four out of five suggestions. Employees are far more perceptive than most employers realize.

Facilitate a weekly or monthly brainstorming session and encourage your employees to participate. Create an event where everyone looks forward to sharing his or her ideas. Focus each brainstorming session on one area where you are looking for improvement. Ask each employee to come with at least one idea to improve that part of the company. Hand out dollar bills, movie tickets or inexpensive rewards to say "thank you" for their ideas.

Here are two very important ground rules: (1) Before the brainstorming session, acknowledge that there are no bad ideas. Negativity will destroy the enthusiasm for unique and different suggestions. (2) Respond to all the ideas submitted in a timely fashion (3-4 days maximum). It's easy to grow weary of providing ideas and suggestions without some form of feedback. In your response, make certain that you thank them again for submitting their ideas.

Most people want to feel like they are part of something and that their contribution has a positive impact on the direction of the company. Give them the opportunity to create a mission statement they will support. Ask them to develop their own personal mission statement to support the company mission. We all feel more committed when we take ownership in creating our future.

Encourage your staff to increase their skills. Pay for educational classes that boost their customer service, sales, communication, leadership and management skills. Give them the opportunity to take non-business related classes. Classes on money management, raising a family, physical fitness and using a computer will help your employees improve the quality of their personal life, which in turn will be reflected in their job performance.

A recent study showed that more than 57 percent of hourly employees did not know their company's annual sales. More than 26 percent did not know if their company's financial position had changed in the last three years. Don't be afraid to share sales and expense numbers; teach everyone how to read a profit and loss statement. Get them involved in examining expenses in their departments. Invite them to come up with strategies on ways to increase sales and decrease costs. Convert these strategies into goals so that everyone clearly understands what needs to be accomplished. Update them weekly or monthly as to the progress on meeting the goals they set. We all see things more clearly when we can aim at a target.

Every person that applies for a job with your store has a variety of traits and skills and some of them will be a match for the position being offered. During the interview process, it is very difficult to objectively assess which of the desired skills and traits they possess. Employee candidates are, hopefully, putting their best foot forward, making it impossible for you to conduct an objective evaluation.

Invest in a personality profile for each candidate. These instruments are designed to give you a more concise picture of that candidate's skills and areas of strength. Doesn't it make sense to know all you can about an individual before you hire them? Make the investment before they become a part of your team. Are they really the person you want taking care of your customers? This will save you a lot of time, money and headache.

Is it fun to work at your store? We spend a good portion of our waking hours working. Wouldn't we all be more excited and motivated about doing the best we could at our job if we had more fun doing it? This is not to say that we don't take the responsibilities of our job and the customers we serve seriously. But wouldn't your people show up for work with more enthusiasm for their job if they knew they were going to a fun experience? Companies like Southwest Airlines practice the philosophy of making work fun for employees and customers.

A Wichita State University study of 1,500 employees from a variety of businesses revealed:

The most powerful motivator was personalized,
instant recognition from the owner or manager.

Don't wait until the next office meeting, the monthly company function or employee reviews to praise, recognize or reward an employee. Reward people immediately; let them know how important they are and how much you value them. Reinforce their positive actions and behaviors.

Be specific with your appraisals. Tell them exactly what they did right. It doesn't take but one minute to tell an employee how good you feel about what they did right and how it helped the company and their fellow employees.

Start every day with five dimes in your left pocket. Your goal is to identify five employees throughout your day that you can praise for something they did well. After you have given a one-minute appraisal, transfer a dime to your right pocket. This is a simple but effective method to keep you accountable.

While private recognition is important, public recognition holds an equal place. Create a special annual company event to recognize every one of your people for the things they do to improve the value of your store. If you have a company newsletter or newspaper, publish all their pictures to thank each and every one for their contribution to the growth of the company.

Develop your own "Hall of Fame" - wall space that can be easily viewed by both customers and employees. Create a plaque for the Best of the Best. Each month, add a plaque with the name of the person who suggested an innovative idea, who had the best attitude, the best customer service, the best whatever! Display letters and thank-you notes from customers praising employees. Post memos from management praising people for their part in helping the company.

Though most of us would not admit it, we do like that public recognition - even if it causes us to blush!

When you recognize an employee for a job well done or for going the extra mile for a customer, capitalize on this event and send a letter to the family of the staff member. Let them know what a great job their family member is doing and how proud you are to have them on your team!

Send a unique gift or card for special occasions. An employee's birthday, employment anniversary, promotion or other special event is the perfect opportunity for you to acknowledge their special day. Your acknowledgement tells your employees that they are significant.

Even a company that operates on slim margins needs no more than a minimal financial investment to demonstrate to their employees how much they care. A study done by the American Productivity Center in Houston revealed that it generally takes 5 to 8 percent of an employee's salary to change behavior if the reward is cash and 4 percent if the reward is non-cash.

It's the small things you do that will make your employees feel valued. Put those five dimes in your left pocket and start looking for opportunities to acknowledge and thank your employees. This fifty-cent investment will reap benefits a million times over!

David Saxby is president of Measure-X, a Phoenix, Ariz.-based measurement, training and recognition company that specializes in customer service skills and employee retention. He can be reached at 888-644-5499 or via e-mail at david@measure-x.com. Visit the Measure-X Web site at www.measure-x.com.