Power Plays

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We’ve heard it, seen it, and are experiencing it as a customer or retail management. The employee is calling the shots. There’s a great power shift that’s giving employees the upper hand. Workers are leveraging their power to choose employers that meet their needs – professionally and personally. Which means it’s a buyer’s market when it comes to employment options. This should put retail management on alert. The old rules don’t apply anymore, and if you’re asleep at the wheel you’re going to miss out on top talent that can make or break your brand.

Dissatisfied and disgruntled customers tend to treat workers in public-facing jobs harshly. In turn, the employees who are already overburdened but haven’t yet quit are becoming discouraged, therefore delivering a lower level of service and are quicker to say what’s on their mind – usually not positive.

The shift started well before the pandemic, but Covid accelerated employment quit rates (the percentage of employees that quit compared to the number of jobs). In fact, the quit rate for retail grew from 3.6 percent in November 2020 to 4.4 percent in November of this year, and this was even prior to the Omicron variant hitting U.S. markets in December. What’s more, the number of employees who quit their jobs in November 2021 was up 27 percent across all industries compared to the same period last year. Resignation in the retail trade was up 21 percent and wholesale was up 43 percent. Okay, so those are the numbers. But look deeper and you will realize that things have to change systemically to make entry level and mid-management jobs relevant and meaningful.

Take This Job and Shove It

The Great Resignation was kickstarted by the U.S. government’s stimulus package, extended unemployment benefits from last year and continuation of child tax credits. All these programs have afforded workers the opportunity to reevaluate their current jobs, work status and sense of satisfaction with career choices. The pandemic itself has left countless families prioritizing health and wellness over working in jobs that do not bring a sense of fulfillment correlated to the time and energy expended. Consider this:

  • The move to remote work over the past 18 months forced employees to reevaluate their work/life balance.
  • In a trend to up their game, many people are upskilling and reentering the workforce at a higher level than when they left their jobs.
  • Parents of younger children who became the home-school teacher last year when schools went remote figured out that working smarter, not longer, might be better overall for the family.
  • Full-time workers found that during the pandemic they could focus more on family and still get the job done

New Employment Pressures

Let’s look at these numbers. Employment in the U.S. market was down in 2020 by 6.2 percent, and while this number is expected to increase for 2021 by 3.3 percent (according to the Bureau of Labor Statistics), employment will not return to pre-pandemic levels until the end of 2022. The shortage of workers across America, especially in the service industries like retail, accommodations, and food/dining, is taking a toll on the workers who are left to pick up the slack. Fewer workers, more job openings and high quit rates are undoubtably problematic in any industry.

Predictions of positive growth of 7.7 percent in the number of jobs through 2030 as compared to 2020 is not evenly distributed. The retail sector is expected to have 4 percent fewer jobs in 2030 with food and beverage down 8.3 percent, general merchandise stores (discount, department and warehouse clubs) down 7.7 percent, and all other retail down 2.5 percent. On the other hand, wholesale is projected to have an increase of 2.5 percent and transportation and warehousing up 11.4 percent. If you believe the trends, start planning now to retain the best talent you have to lead you into the next eight years.

Customer Service at Risk

In terms of retail, fewer workers, more job openings and higher quit rates are a recipe for disaster especially when you add to this mix the lack of stock during the peak holiday season. The result is a customer experience that can sour even the most loyal patrons. When retailers can’t replenish stock, there are longer customer lines; and when stores don’t have the resources to maintain cleanliness standards, the combination is a huge problem as the Omicron variant sweeps across the U.S.

Dissatisfied and disgruntled customers tend to treat workers in public-facing jobs harshly. In turn, the employees who are already overburdened but haven’t yet quit are becoming discouraged, therefore delivering a lower level of service and are quicker to say what’s on their mind – usually not positive.

The Power of the People

The bottom line in this conversation is that employees have had enough. What’s wrong with this picture: Employees are being forced to work longer hours or more days, pick up the slack for open positions, are bullied by management and taking verbal abuse from customers. So, they are literally saying, I quit; I’m done. I’m not going to take this anymore. And do you blame them? Quitting gives employees a sense of empowerment.

With pressure on employers to retain workers and recruit new employees, retailers are pressured by an existing workforce demanding higher wages, better benefits and working conditions. There is a price to be paid for this dysfunctional situation. Retail employment costs, which include wages and benefits, are up 1.6 percent in September with wholesale up 0.9 percent. These increases come on top of the other hits to a company’s income statement over the past year, including the rising cost of goods. Selling, general and administrative expenses (SG&A) are increasing and impacting operating costs. Unlike a rise in cost of goods that can be offset by raising prices, operating costs do not have a direct return on investment that is immediately tangible. Another major impact with rising employment costs is that small businesses simply cannot continue to lift wages or add incremental benefits. Unfortunately, widespread resignation can have a very dire impact on local mom-and-pop businesses.

Better working conditions yield benefits for companies in terms of higher employee engagement, less turnover and a stronger employee culture. These benefits, while important, are not financially reflected for several years out. But taking a short-term approach will cause more headaches. Long-term, having a highly engaged workforce is a sustainable competitive advantage and allows companies to be viewed as an employer of choice, not a default.

Workforce in Transition

​​The current higher quit rates are only the tip of the iceberg. A whopping 38 to 56 percent of today’s workers are “thinking about quitting” in the next year. Another survey reports that 65 percent of workers are looking for a new job — and this was before Omicron. Last year, only 22 percent were looking to quit, according to the same survey. The numbers don’t lie. This year over 21 million people quit their jobs from July through November. The mass exodus is having a consequential impact on the industry. CEO’s have enough to think about with supply chain issues, customer and worker safety, staying ahead of competition, and remaining innovative all while delivering the financial results. Worrying about open jobs and retaining top talent becomes another pressing concern on an already full plate. This will lead to talent searches for top human capital officers who can build programs for mutual commitment with employees and strong retention initiatives.

Emerging from the Ashes

Let’s take the long view. Yes, the resignation statistics are dramatic, but the retail and wholesale industries have always been resilient. Vibrant, innovative, intelligent, and agile are the adjectives that often describe the talented managers that lead these complex businesses. From the chaos and misfortune caused by the ongoing pandemic, forward-thinking companies led by strong management teams have emerged more resilient, innovative, and better prepared to compete in the current marketplace. Prior to the pandemic, the retail industry had become complacent and resistant to new technologies and business models. Because of the pandemic, many companies have had to transform their workplace cultures, products, services, systems, and processes to move forward.

All operations and strategies must be balanced with the human factor. If you don’t have strong teams, any strategy is irrelevant. Since frontline workers are your best natural resource and first point of contact with customers — and can become your talent pool of future managers — only the shortsighted would ignore creating a compassionate and empathetic workplace. The future power of employers should be in balance with employees in a collective approach to empower the organization to exceed the expectations of its most important stakeholder: the customer.

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