Retail staff turnover is one of the aspects of our industry that appears to be a constant. I talk to retailers and the attitude is consistently one of, “well that is just the way it is in this industry”. My concern is that often there appears to be little done to fix the problem. There are a few factors that need to be considered when trying to address staff turnover. Are you recruiting people based on their existing skills or on the basis of their underlying character?
Nearly all retailers recruit, whether looking at selling staff, store management or head office staff, on the basis of needing to get someone into the job and running at full capacity as quickly as possible. This inevitably leads to recruiting on the basis of skills. Let’s look at a couple of other factors.
Retail staff turnover in Australia runs at somewhere between 50 and 70 per cent, depending on who you ask and how you calculate it, buying/merchandising staff turnover at about 35 – 40 per cent. Of course there are exceptions to this rule, but even the best companies consistently lose good people. The cost of replacing those people is huge - up to five or six per cent to the bottom line. The longer it takes to replace them, the higher the costs go.
Shrinkage
What has shrinkage got to do with staff turnover? Shrinkage is about a $2,000,000 per year problem in Australia - and Australia is a bit of an anomaly when it comes to the make-up of shrinkage. According to the Global Retail Theft Barometer, for the rest of the world the largest component of shrinkage is customer theft. In Australia this is not the case. Here the largest element of shrink is staff theft. The table below gives the global, Asia Pacific and Australian figures.
There are only two real conclusions you can draw from these figures – either our customers are much more honest or our staff are much less honest than the counterparts in the region and globally. So for the global retail market, customer theft is 23.4 per cent more of the problem than staff theft. In Australia, staff theft is 10.3 per cent more than customer theft. That is a variation of 33.7 per cent!
Why do staff members steal from their employers? The answer is twofold. Firstly, they feel undervalued and under appreciated. Secondly, because they can. The safeguards are not there to prevent them awarding themselves a ‘bonus.’
So what is the solution?
The prize on offer here is higher profitability. Higher profitability as a result of reduced shrinkage, higher profitability as a result of reduced staff turnover and higher profitability as a result of greater staff productivity.
The solution needs to be executed on several fronts:
1. Invest in your staff – create a development plan for staff to take them to the next level. Intentionally groom them for promotion. This will also help to make you an employer of choice. You will get more and better candidates coming to you because you will build a reputation for growing your staff.
2. Recruit new staff on the basis of character rather than skills. Hire someone who is teachable and has integrity and invest in training them and the results will follow. If you keep hiring just on the basis of existing skills, then character flaws will continue to eventually erode your bottom line.
3. If you have store and/or area managers, make staff turnover a measureable KPI. Set benchmarks in the short-term to account for the staff turnover that comes from performance managing people, but remember that if these managers are responsible for hiring people they need to be assessed on how well they are completing this task. If they are not responsible for hiring staff develop that capability in your managers also.
Andrew Cavanagh is a former researcher at the Australian Centre for Retail Studies and now operates retail training business Retail Education Services Pty Ltd. www.retail-education.com
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