$3,306. That's the average cost of recruiting and training a new hire for a job that pays $5.50 an hour in grocery retailing. And replacing a nonunion store manager is estimated to cost $35,000, according to research conducted by Barney Frank, an industrial psychologist and professor at the University of Dallas whose findings were reported in the National Grocers Magazine.
Those costs include extra labor for people to fill in, advertising, interviewing, payroll administration, orientation, training, errors made by the new hire in change making, product damage or shrink, not to mention the wear and tear on the manager and owner, said Joyce Gioia, president and strategic futurist for the Greensboro, N.C.-based Herman Group, consultants for The Workforce Stability Institute.
Those figures don't take into account the special training staff in natural foods and supplements stores need, or the loss of sales to customers who leave the store because they can't find what they want or don't know that what you have is what they need, she added.
And as tempting as it may be to "chain them to the check stands"—the tongue-in-cheek advice offered by Bob Davis, manager of Greenbelt Co-op in Greenbelt, Md.—retailers need sound strategies to keep the staff they've trained.
Aside from pay, Gioia has four tips for retail managers who want to keep employees:
- Make it fun
- Be flexible to the degree that you can
- Make work meaningful
- Reinforce for your employees how valuable they are
Hard, Cold Cash
"Salary is a whole lot less important than you might think," Gioia said. It's more meaningful to natural products retail employees that they make a difference, and that the work experience be positive, she said.
"It's got to be more than pay [at our store], because pay isn't it," said Carolyn McIntyre, president of Radiance Herbs and Massage in Olympia, Wash. "The challenge that we have is that we sell lots and lots of little tiny things. We focus on natural body care, nutritional supplements, herbal medicine and bulk herbs. That constitutes 50 percent of our business." Radiance employees need to have knowledge about the many products they sell, and if they don't, it takes a year or two to train them, she says. "The main issue is that for every $15 or $20 sale we're spending quite a bit of time with each person. The wage-to-sale ratio is much higher than it is in most retail businesses. That means we have to have more people on the floor to attend to our customers, which means that I can't pay them a living wage.
"For us, pay is an issue because people have specialized knowledge and they're not getting paid for it. It's one of the most frustrating things for me as a small business owner," she said.
Judith "Doc" Sedlow, vice president and co-owner of the MarketPlace Natural Grocery Store in Santa Fe, N.M., said she and co-owner Jill Markstein have two key pay-based incentives. First, the MarketPlace pay scale starts at a higher rate than other local businesses. Second, good employees may get merit raises soon after they start.
"If they're here a week and are doing a bang-up job right away, have caught on, have been trained very little and just picked it all up and are working real hard, we'll give them a merit raise within a week. Certainly within two," Sedlow said. "It's about a 25-cents-an-hour raise. You know, you can pat someone on the back, but money really talks, so we do that. People are grateful and they're frequently surprised: 'Huh—you're going to do what?' 'Take it and don't complain,' I tell them."
Conventional co-op Greenbelt pays competitively compared to small independent retailers, Davis said, admitting, "Retail tends not to be the best-paying job."
Both Davis and Sedlow give bonuses based on profitability. Sedlow said employees get a Christmas bonus based on the length of time worked and their responsibility level. Davis said Greenbelt gives bonuses twice a year if the co-op meets the board of directors' expectations and if the store has met budget and general performance goals.
"I've been here 18 years now, and we have paid a bonus every six months, with two exceptions," Davis said, adding that the bonuses have been as high as 7.5 percent and as low as 2 percent of an employees salary. "Bonuses are passed out at meetings that we hold after store hours. We have free food and drink, and we pass out money—so it's kind of a nice occasion for everybody."
As Good As Money
Both Greenbelt and MarketPlace pay employee health benefits.
"We pay 75 percent of the cost of a full-time employee's insurance—whether it's single or family—and we pay 25 percent of the cost of the part timers," Davis said. "In addition to that, we offer fully paid life insurance and fully paid disability insurance." Other benefits include paid vacations and holidays and a 10 percent merchandise discount.
MarketPlace offers health and dental insurance. "We pay 75 percent of the premium after eight months," Sedlow said. "After a year people get a week paid vacation. When they've been here five years we pay their whole premium. It cuts into our profits, but that's OK because we really do put our people first."
Radiance's McIntyre said financial constraints have forced her to be creative with benefits. She offers a benefit system where employees accrue dollars that they can apply to insurance premiums or taxable income. Radiance offers paid vacation, but "we don't have a group health insurance plan because we haven't been able to find one that addresses the needs of our staff that is affordable," she said.
McIntyre said she also gives a generous staff discount. "[Employees] can explore products at a much lower price, which, if you use the products we sell, is an extremely tangible benefit." Radiance also employs 16 massage therapists. Employees get a one-hour massage every month.
Fun And Festive Perks
Some retailers provide extras—intangible benefits that simply make life nicer for employees.
Greenbelt has a corporate membership to a large health club that's just across the parking lot from the store. Employees can use the club at all times of the day and evening, Davis said.
Greenbelt also has a monthly employee appreciation day on the first Friday of every month. "We set out free food in the employee break room all day long so the employees can come up on their breaks or before work or after work. Or if they decide they want to bring their family up and have dinner on the co-op, they can do that too," Davis said. "Everybody knows when it is and they can plan their meals accordingly."
The co-op also hosts a picnic in conjunction with other area co-ops in the fall, and in the summer it gives employees tickets to Bowie Baysox minor league baseball games.
At MarketPlace, "we do the Commie thing," Sedlow said. "Every Labor Day we close and we get a group shelter up in the mountains. There's a volleyball court and a big barbecue pit and a covered space and we have a picnic. It's fun. It's the employee workers' holiday."
The MarketPlace provides pizza and beer to employees after they do inventory, "except when we do inventory on New Year's Day," Sedlow said. "Then we have a feast afterward. If we're going to ask people to come in on New Year's Day we better do something nice for them."
Be flexible to the degree that you can. "Give people the time off that they want," Gioia said, "so if your employee wants to attend their brother or sister's sports game or to be there for a sick parent, it's possible. That kind of flexibility pays great dividends to the owner or manager."
Davis agrees. He says Greenbelt has 56 employees, most full time. "We try to fashion schedules where people can maintain some semblance of a normal life outside of work. We try to work with folks as they take on college commitments or have to take a second job—those kinds of things. The scheduling is one of those things we try to be as flexible as possible with," he said.
Meaningful Work Means Learning
"People want challenging work to do. People want to learn new things; they want to grow," Gioia said.
The Radiance staff includes two herbalists and an esthetician, which is part of the appeal of working there, McIntyre said. "We have great resources and very knowledgeable people working for us. The staff learns a lot, not just about the products we sell and how to use them—they gain wisdom from the other people on the staff."
Sharing knowledge with customers also makes work meaningful. "Every time one of the salespeople gives advice to a customer, the customer really appreciates it," Gioia said. "The salespeople are not just clerks."
Sedlow said what sets MarketPlace apart from the bigger competitors is her knowledgeable staff. "They know the difference between organic and conventional and the benefits of eating whole foods. We're not just here to sell food. We're here to provide information," she said.
Challenges In Hiring
"People want good people to work with, so don't hire just anybody; hire people of the same caliber as the good people you already have," Gioia said. "If you don't, the good people will begin to wonder why they're there."
Greenbelt offers employees a $100 bonus if they recommend a new hire who stays with the co-op for six months. "It theoretically offers us an advantage because we're getting a bona fide endorsement from someone I know and trust," Davis said. "It gives that new hire a boost coming in. And it gives the employee an opportunity for a little bit of extra money and it gives them a chance to bring in a friend or family member that they would be comfortable working with."
Because of the low wages at Radiance, McIntyre said she talks with prospective employees about their financial situation. "We go to great pains in the interview process to let them know that if they are living alone and think they'll make enough to pay all the expenses of living they may not be able to do that," she said. "We kind of say, 'You have to be able to afford to work here' because we don't want to go six months down the road and have you say, 'I'm sorry, I can't pay the rent; I have to leave,' after we've spent all this time training you. And so, we're relatively successful with that. The thing that our staff really likes about the job is it's a great place to work.
"People literally stop me on the street and say 'Thank you for Radiance; thank you for what you do; thank you for all your wonderful workers; I love coming into Radiance.' We're really blessed to have a staff that's so committed to Radiance even though we can't pay very good wages."