Employee turnover is an issue that any business must regularly address. Even if your business doesn’t have a problem with high turnover, it’s important to make sure your business is set up to continue to operate well.
Unless you have a seasonal retail business, high rates of employee turnover are never a good sign. It might mean that employees are unhappy due to their pay, future in the company, or working conditions.
So take a look at these strategies to reduce employee turnover at your small business
How to Calculate Your Retail Turnover Rate
If you’re wondering exactly how bad your employee turnover rate is, first take the time to use one of these simple ways of calculating it:
Overall Retention Rate – Decide on a period of time to measure (could be a few months, a year, or even several years). Then simply divide the total number of employees who are still there at the end of the period by the total number who were present at the beginning. Multiply this by 100 to get the percentage figure. For instance, if you have 100 employees and 72 of them are still there at the end of the time period being measured, then you have a retention rate of 72. Pretty simple.
Overall Turnover Rate – Similarly, take a determined period of time to measure. Then find the total number of employees who have left over the given period and divide that by the total number of employees at your business. Again, multiple by 100 to get the percentage.
Calculate Average Tenure – It might also be wise to measure how long an average employee stays at your store. Simply add the length that each employee has been at your business and then divide by the number of employees you have on staff.
Look at each of these and identify trends at your business in order to determine how big your problem is to begin with.
Why High Employee Turnover Is So Bad for Retail Businesses
While it’s clear that employee turnover for retail (or any business) is detrimental, it’s important to remind yourself just how bad it is for business.
- There are several direct costs that might come with a termination or layoff. If an employee was fired, you might need to offer severance pay or pay a portion of any unemployment pay.
- It also costs to hire new staff. Perhaps your business pays a recruiter or other hiring agency that may charge a lot. Other costs for hiring might include software fees, recruitment advertising, and interviewing.
- It’s also expensive to bring new staff on board. Training, orientation, and H.R. work all add up. You have to pay the new employee for their training period while also pay an existing team member to train them.
- Additionally, you’ll need to to fill the position while you’re completing the new hiring process. This often means that some staff members will have to work overtime, mean higher pay, lower productivity, and more unhappy team members.
- New staff members will also generally offer lower productivity for the first several months. This means that you’re getting less value for every dollar of pay. This might also frustrate some of your better existing staff.
High turnover rates costs you a lot. Plus, you’re losing all the time and investment you’ve put into the person who left. So now that we’ve established how important retention is among your staff, let’s look at how to maximize it.
- Weed Out Poor Candidates in the Hiring Process
- Pay Competitive Salaries, Bonuses, and Commission
- Offer Great Benefits to Reduce Staff Turnover
- Make Sure the Workload Is Fair
- Implement Team Building Activities and a Strong Culture
- Train and Onboard Each Member Well
- Increase Retention with a High Ceiling for Growth
Hiring the right people from the get go is the most important place to start. Even if you’re desperate to fill positions, filling them with the right people is the more critical. The vacant spot might be temporarily costing your business money, but the future costs of having to rehire for the position will far outweigh that.
For most retail businesses it’s wise to implement some sort of screening process before conducting interviews. Many small businesses have dozens of applicants coming all the time and few can afford the time to interview all of them.
On any online listings, clearly define the role that you’re hiring for. Make sure that all expectations for any prior experience and for the position itself are laid out.
There’s no better strategy to reduce employee turnover than by hiring better candidates for your business right from the beginning.
While you always need to make sure that your margins are adequate to keep business afloat, you also should never skimp on employee pay to pad the bottom line. Remember, you only have a successful business if your employees are happy and productive. Fair pay is certainly a part of maintaining that.
Check out Glass Door if you need a ballpark range of pay for specific positions. You can also speak with other small business owners or retail stores to find some comparison.
The structure can be flexible. Many retail stores offer sales associates commission-based pay. This is common among higher-end retail sales since it protects the business from paying a higher hourly wage for unproductive salespeople. There are various ways of structuring commission in retail to consider before choosing this route.
More and more businesses are offering their employees comprehensive benefits. Of course, not all retail businesses can afford to do this, but benefits are a great way to attractive the best candidates for the job and build a successful team. The best part is that some of them can provide you with tax deductions or credits.
Benefits are no longer two-weeks vacation and mediocre health insurance. More modern benefits might include life insurance, disability pay, maternity/paternity leave, remote work, matching 401(k), and general wellness perks, like gym memberships or public transport compensation.
Millennials might request a lot, but they’re working more than ever. You’re not going to attract a great team of employees without offering the right benefits.
This doesn’t mean that you can’t expect your employees to work hard. Instead, just make sure you’re clear with all expectations and to set consistent production across the board.
Start by setting goals to see how various individuals respond. Some people take longer for certain tasks than others and you might find that one person is faster at one thing but slower on another. Use this as a way to personalize delegation and keep people happy and feeling valued. There’s no better way of retaining employees than by making sure they feel like an important part of the team.
Healthy competition is fine as long as it doesn’t stir up any resentment. Reevaluate after set periods to make sure that everyone is happy and performing up to their abilities. Meetings aren’t be overdone, but they do still serve a purpose.
It’s not just important that you get to know each of your employees well, it’s also important to build camaraderie among your staff.
Start by making sure that all team members are on board with the mission of your store and what you care about. More retailers are focusing on some sort of community engagement. It might mean that you give back to a charitable organization with each sale, embrace a more environmentally-friendly production, or involved in making your community and neighborhood a better place.
A good way to get your whole team on board is to involve everyone in team-building activities and events. Whether it’s a trip to the bowling alley or a community event, take advantage of the opportunity to grow a healthy company culture.
Getting each person started off on the right foot is critical to reducing quick turnover. A poor training program can leave new staff members with unrealistic expectations, no direction, or frustration with the direction of the business. Build a thorough training manual and program for each new staff member.
It’s important that existing team members are an integral part of the training period, too. No one can train a new employee better than someone who has been performing the job well for a long time. Plus, it’s an opportunity to reward your top employees with added responsibilities and pay. Your loyal employees will enjoy sharing what they’ve learned and how they’ve found success at your store. And training new staff should come with added pay or some other perk since it saves you the time from doing so yourself.
Make the onboarding process simple and effective, too. Make sure that each new member is efficiently brought on to your team so that they feel welcome and taken care of.
Make sure that there is always room for each position to grow within your company. One of the most common reasons for leaving a retail business is due to a lack of future opportunity. Remember that paying existing staff a bit more and expanding their productivity will serve a far better use of money than using it to bring on a brand new employee.
Figure out an internal structure of promotions and raises for the first year or two for any new associate. From there, think about ways that you can continue to add responsibility and pay to your longest tenured employees. Managerial positions or similar titles are a good place to start.