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Natural Foods Merchandiser

Knowledge is power in minimizing staff turnover

The Natural Employer

Employee turnover is expensive. It hurts your bottom line by increasing your labor costs in both obvious and hidden ways. Recruiting, screening, interviewing and training new workers to fill empty slots take paid staff hours. Time spent hiring and training a new employee takes away from other work that supervisors and coworkers could be doing. New employees can't usually work with the same speed and accuracy as more experienced employees. Customers miss those familiar faces and have to endure slower and less knowledgeable service. An ever-changing lineup can sap the productivity of a work team. If you could reduce staff turnover, it would save you time, money and stress.

The first step is to measure turnover and set goals. To calculate turnover, divide the number of separations during a time period by the average number of paychecks issued during that time period and multiply by 100. For example, if over the course of a year eight employees left out of a work force of 32, you'd have a turnover rate of 25 percent. If during that year you hired 36 people to fill those 32 positions, you'd have a turnover rate of 112.5 percent.

According to the Food Marketing Institute's "State of the Industry Report," the median turnover for conventional grocery stores in 2005 was 42.3 percent. At this point, no organization is measuring turnover for natural products retailers. But even without an industry benchmark, you can still use your own data to develop a turnover-reduction strategy and set targets for improvement.

The Food Co-op in Port Townsend, Wash., did just that. Starting from a high of 97 percent turnover in 2002, co-op management has succeeded in cutting that figure in half within four years.

"I also conduct exit interviews with staff to learn more about their employment experience and why they're moving on."
"I track and measure turnover on a quarterly basis," explains Robin Hake, human resources manager for this store with a work force of 90. "I also conduct exit interviews with staff to learn more about their employment experience and why they're moving on. I look for trends and themes."

People's Food Co-op in LaCrosse, Wis., with 120 employees, has also worked to bring down the turnover rate from 87 percent in 2001 to 28 percent three years later—though a recent expansion has pushed the figure up from that all-time low. "For a long time our turnover was so high that people thought that's just the way it was," says General Manager Michelle Schry. "They didn't look below the surface at the underlying causes. It was a management problem and it had to be solved on the management level."

Both stores put great emphasis on their hiring systems, using their human resources managers to prescreen candidates before sending them to department man?agers for the final hiring decision. People's Food Co-op trains supervisors in interviewing skills, helping them to identify red flags, and to follow up on responses to standardized interview questions to get more information.

"We also use our 60-day probation period," Schry says. "There's an evaluation at 30 days so people know if they're meeting our standards. We have a low tolerance for chronic lateness and no-shows for shifts."

Both stores also emphasize supervisor training. Hake says, "One of the top reasons employees resign is a poor working relationship with the supervisor. Hiring the right front-line supervisors is critical to employee retention. All new supervisors and managers at The Food Co-op participate in a six-week supervisor training program designed to provide foundational education in leadership and supervision."

Hake feels this investment has paid off. According to an employee survey, administered by an independent consultant in 2006, the highest-scoring topic was the quality of supervision. "It is telling that our second-highest-scoring question was, 'My team leader encourages team members to share their ideas, suggestions and concerns,' " Hake says. "Words used by our staff to describe their supervisors include 'fair,' 'not intimidating,' 'respectful,' 'honest,' 'compassionate,' 'open and creative.' The front-line supervisors at The Food Co-op deserve credit for our tremendous strides in employee retention."

Hake finds an interesting positive correlation between turnover and late performance evaluations. Generally speaking, departments at The Food Co-op where evaluations occur on time have lower turnover. Hake sees this as another testament to the importance of supervision in retaining staff.

In its turnover-reduction efforts, The Food Co-op has also improved its pay and benefits package. Over the past four years, management has added health and dental insurance and increased paid time off and holidays. This past year saw the introduction of a merit component to pay increases to recognize the contributions of exceptional performers. Recognition comes in nonmaterial forms, too, with the "Hearty Thank You" and "High Five" award programs honoring staff nominated by their peers.

Closer analysis of turnover data can help pinpoint your efforts. Try to determine when in an employee's career turnover is most likely to occur. During the first three months of employment? Between nine months and one year? After two years?

Losing a lot of employees early on points to the need to make better hiring choices and clarify expectations to applicants.
Losing a lot of employees early on points to the need to make better hiring choices and clarify expectations to applicants. It also shows that you are failing to recoup the investment you are putting into some of your new hires. Losing more of your employees at the one-year mark may indicate a perceived lack of opportunity for raises and advancement.

Your analysis might uncover a striking pattern similar to FMI's findings. The participating grocery stores reported that while the median turnover rate for their full-time staff was 16.2 percent, for part timers it was 97.1 percent.

In a retail store operating seven days a week, from early morning into the night, there is definitely a place for part-time work. However, if too high a proportion of your staff works part-time, you may be setting yourself up for higher turnover—and higher labor costs.

At The Food Co-op, Hake says, "We've moved away from hiring people to work just one or two days a week." When you consider training, meetings, general communications and processing payroll, a part-time employee takes as much supervision and administrative time as a full-timer, she points out. "Now, our supervisors have committed to hiring full-time." At The Food Co-op, full-time is defined as 32 hours a week; part-time as 12 to 31 hours.

Going further, look at the departments with the highest turnover. If you're like most naturals retailers, you probably have higher turnover in the front end and foodservice than in smaller, more cohesive departments like grocery or wellness. And your administrative and management staff are more likely to stay than your entry-level employees.

At both The Food Co-op and People's, the foodservice department was the greatest challenge, experiencing turnover of 100 percent or more. Both stores were able to cut that rate almost in half.

Hake attributes the success of her store's foodservice department to "the power of the supervisor." After a series of managers, the department finally found a leader in an internal hire who reversed slumping morale. While not as high to begin with as the deli's, the front end's turnover rate also decreased by half under a new supervisor.

While reducing the rate of staff turnover is desirable, the goal should never be zero. As Schry comments, "You don't want to hold on to poor performers just to avoid turnover."

Rather, the goal is managed turnover. Based on her experience, Hake believes, "When you raise your standards, it's good for morale. It's allowing mediocrity that breeds discontent."

Carolee Colter is the principal of Community Consulting Group. Contact her at

Natural Foods Merchandiser volume XXVIII/number 3/p. 64-65

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