The Natural Employer
Do you remember the ?90s? Especially 1996 to 2000? If you were hiring to fill positions in natural foods retail, you may look back on those years as times of low unemployment, high staff turnover and constant hiring and training. In their desperation, some managers hired any warm body they could get, only to lose fickle employees to a job that paid more.
At Linden Hills Co-op in Minneapolis, with a work force of about 60 employees, ?It was hard to fill positions and it was hard to get people to stay even three months. They?d jump to another job for a 25 cent increase in pay,? recalls human resources manager Melanie Brunell.
But as the economy slowed in 2001, employees at the co-op tended to stay put, while the number of applicants increased. ?With people not leaving and a steady flow of applicants, it?s been the best of both worlds for an employer,? Brunell says now.
With the current state of the labor market, many employers are breathing a sigh of relief, thinking those nightmare hiring years are over. But ominous demographic clouds are gathering on the horizon. The slow economy of the past few years has masked a long-term trend that will inexorably affect retailers and others who depend on young people to fill their relatively low-paying, entry-level jobs.
It?s all about the baby boom and the baby bust. According to a study this year by RAND Corp., commissioned by the U.S. Department of Labor, the size of the work force will not keep pace with the rate of job creation. While the American work force will continue to grow, says the RAND report, its rate of increase will slow ?to a nearly static 0.4 percent by 2010 ? a sharp decline from the 1.1 percent annual increases seen in the 1990s and the 2.6 percent annual increases experienced during the 1970s? when baby boomers were entering the work force.
?As the economy expands,? the report continues, ?a tight labor market may arrive even faster than in the past. This is largely due to baby boomers moving into retirement. Those workers are being replaced, but at a much slower rate than previously.?
Now put this together with the Bureau of Labor Statistics? 2002 to 2012 employment projections, which predict the greatest concentration of growth in the service sector—which includes retail.
Traditionally in our industry, entry-level jobs have been filled by young people who aren?t yet supporting families. Some will stay and get promoted into positions with higher responsibility and pay, but most will eventually move on to other careers. That works well when you have a constant flow of applicants. But what if there are more and more low-wage, service-sector jobs competing for a nearly static pool of workers? It will look like the late ?90s all over again.
Although RAND recommends such long-term strategies as increasing immigration levels, encouraging older people not to retire or providing more support for working mothers, all of these require government initiatives. But you, as a retailer, can take some control of your own destiny in how you manage hiring, training and compensation.
Hiring for fit
At Linden Hills Co-op, the shrinking economy coincided with a long-term initiative to hire for ?motivational fit.? This is the term coined by social psychologists to describe the degree of alignment between what a person expects or wants from a job and what the job can actually offer. They say it is a primary component in determining whether a person will remain on the job.
Hiring for motivational fit at Linden Hills started with the management team defining the co-op?s culture, then designing interview questions to determine how well applicants fit the culture. ?We ask why they are interested in us. We?re looking for people who are passionate about what we are doing, not just wanting a paycheck,? explains Brunell. This might include people who already use the products and will enthusiastically promote them.
Focus on training
Besides more judicious hiring, Brunell attributes lower turnover to improved training. With breathing space from constant turnover, Linden Hills managers ?can focus more on the people we have,? she says. Employees now receive more extensive training in customer service and natural products, since trainers can give more individual attention.
Well-trained employees are less likely to fall into that dispirited ?no one tells me anything, I just work here? mindset. I?ve heard managers say they can?t afford to take the time to properly train employees who are probably just going to leave soon anyway. Talk about a self-fulfilling prophecy! The solution lies in more selective hiring, even if this means running short-handed while searching for the right applicant. Training is a good investment when you have an employee who really wants to learn.
Periods of low turnover are ideal times to work on documenting your training program with outlines and checklists. If the time comes when you have to deal with an influx of new hires, managers will have a well-established system to fall back on.
Pay a livable wage
Over the years, the entry-level wage at Linden Hills has risen to keep up with the labor market. In 2004, the average wage at the co-op for employees with one year of experience is $10.30 an hour. In addition, full-time employees receive medical and dental insurance, paid time off, disability insurance, a retirement plan, discounts on co-op products and profit sharing. This level of compensation seems to provide a sustainable standard of living for the two-thirds of the staff who have worked at the co-op for at least a year.
Consider the alternative. Elaine Deckelman, HABA department manager at Ashland Community Food Co-op in Ashland, Ore., describes her major competitor, a local discount crossover store. ?They tend to pick our best-selling products and then undercut us 10 percent to 20 percent. They do this in part by keeping labor costs very low—no benefits, low wages, very little customer service. Fortunately for us, they?ve had a lot of turnover in their HABA department this past year [in part because of their labor policies], with the result that the department is poorly stocked and disorganized. Their pricing is all over the map, and in some noticeable [cases] mistakes have been made.?
A store that can?t keep its buyers in hard economic times is not going to fare well if the RAND and Bureau of Labor Statistics projections come to pass.
And meanwhile, what about customer service? This brings us to the heart of our potential competitive advantage versus the mass market, the Internet and all the other channels that seek the natural consumer?s dollar. Due to their ways of doing business they generally lack the human touch, so they do not have the kind of friendly, dedicated, knowledgeable staff that a retail store can boast.
To hold on to a staff like that, you have to be selective in hiring, consistent in training and generous in compensation. That?s challenging enough now in this still shaky economy, but it?s going to get a lot harder as the labor market shrinks and service jobs expand. By developing your hiring, training and compensation systems now, you will be prepared to weather the coming demographic storm. It beats praying for an ongoing recession.
Natural Foods Merchandiser volume XXV/number 10/p. 64, 66