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Rethinking Pay Norms: How Retailers Can Attract Exceptional Talent

Rethinking Pay Norms: How Retailers Can Attract Exceptional Talent

The month of September 2021 saw 4.4 million U.S. workers quit their jobs — an astonishing three percent of the entire workforce. Fueling these resignations are long-standing worker complaints of low pay and stressful working conditions in entry-level positions.

Many industries have been able to increase hourly wages by passing on extra costs to consumers, but retail has historically been an exception. While diners and other service consumers may be willing to shell out more for an experience, the nature of retail purchases mean consumers know of price hikes before even selecting an item.

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Reducing Employee Turnover

Yet, the costs of doing nothing to address employee turnover are catastrophic. Between lost productivity, rehiring costs, onboarding, and training requirements, employee turnover quickly eats into margins. Turnover across the retail industry is at 4.4 percent, significantly higher than the national average (2.7 percent).

So, what’s driving workers away from the retail industry? Most research into the phenomenon points back to one factor — pay. Roughly two-thirds of global companies are raising pay, improving flexibility, and offering better benefits to attract talent. Companies able to pivot to worker desires like this will be able to attract and retain the employees needed to run the show.

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It’s Not So Simple

While independent retailers have free reign to increase hourly wages and improve offerings, managers and GMs at corporate outlets often lack the power to unilaterally make these types of decisions. For corporate retailers struggling to attract talent, waiting for the central office to give the ok can seem like an eternity.

Even once approved, retailers often struggle to offset rising labor costs through price hikes. After all, the common refrain is shoppers are price sensitive and will therefore buy less or shop elsewhere for a better deal. However, with current employees in danger of burning out and potential ones in danger of rejecting a job posting with underwhelming wages, retailers must find ways to increase salaries while maintaining profits. More on this in a minute.

So, what can retailers offer to help entice new workers while working around any temporary corporate policy handcuffs? Employee referrals, signing bonuses, and workplace culture improvements shouldn’t create long-term expenses, but a successful talent acquisition strategy will require a comprehensive approach beyond these that addresses pay.

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Making Employees Advocates

Whether corporate or independent, retailers able to increase hourly wages don’t have to just increase inventory prices and leave it at that. Communicating new initiatives with customers and employees builds trust and loyalty that pay off over the long run.

As mentioned, higher pay boosts employee morale. A worker more able to meet the costs of living will feel less of a need to pursue better opportunities and more importantly, be able to handle the challenges of their position with less risk of burning out.

In addition to potential increasing hourly wages, retailers need to reevaluate the types of pay offered. Commission sales may not be right for your organization if it only adds stress and causes salespeople to cut corners. Moving these positions to competitive hourly rates ensures customers receive top-quality, honest care while continuing to incentivize sales personnel. The opportunity for a hybrid hourly-commission compensation package can encourage healthy competition while still rewarding top performers.

Crucially, boosting pay increases the quality of labor. When all factors are equal, workers will take jobs that offer the most money. Therefore, higher wages give employers a larger pool of talent interested in their postings, i.e., higher-quality workers will be interested in positions paying their (perceived) market value. The downstream effects of this talent boost include more efficient operations, a more talented sales teams, and a more positive workplace culture.

Customers will notice a change as well. These more bought-in employees provide more satisfactory customer service and contribute to higher, more positive online reviews. Customers who have positive in-store experiences are more likely to return, so a motivated workforce able to provide these experiences creates a differentiating factor in the consumer’s mind.

If customer weariness to rising prices is still a concern, go on the offensive with a well-crafted social media and public relations campaign to announce pay raises. Not only will this attract more talent to apply, but consumers don’t seem to care that much about price hikes. Inflation and increasing hourly wages have caused companies across America like Nestle and Krispy Kreme to raise prices on goods, yet both report these price hikes have had little effect on consumer demand.

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Going Beyond Pay

The Great Resignation is shaping the U.S. workforce beyond salary and benefits. Workers are updating their priorities, and retailers who overlook the more minor desires may still lose out on quality talent.

To help with retention, know that employees want a modern scheduling experience. Investing in intuitive tech that provides easy and transparent communications makes scheduling smooth and employees satisfied. Universally, workers want their wages paid on time and accurately. Retailers need a modern time and attendance solution that verifies employee clock-ins while ensuring managers can monitor hours to prevent unplanned overtime.

On the hiring front, understand employees want the easiest application experience possible — gone should be the days of uploading a resume just to have to type it all out two pages later. Having a comprehensive ATS designed for mobile functionality (applicant and manager) sets your brand above the competition while ensuring managers can conveniently find top talent.

The pandemic has created a new workforce with different priorities, but you don’t have to see this as a drawback. By deftly creating the conditions for a passionate and motivated workforce, you can set a long-term competitive advantage through superior talent, efficiency, and customer experiences.

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