What is the right amount of retail employee turnover?
As a whole, the retail industry gets knocked for its high level of employee turnover. According to the Bureau of Labor Statistics seasonally adjusted turnover can average on excess of 60%. For some retailers the number can exceed 100%!
The challenges with high employee turnover are well documented. This includes lost sales, lost margin, customer service challenges and higher recruiting costs. Therefore it makes sense to make efforts to retain qualified and productive team members.
The key words in that prior sentence are “qualified and productive.” Your retail manager will not always make the perfect hiring decision and good jobs, like the ones that many retailers offer, will attract applicants – both good and bad. Therefore some level of management-driven employee turnover is desirable.
Jack Welch, the former CEO if General Electric, is famous for implementing a system where the bottom 10% of all team members were terminated at the end of every fiscal year. This type of management-driven turnover is desirable because it infuses the organization with fresh blood and new ideas; while providing a motivation for team members to always be striving for improved performance.
Due to the seasonal nature of the retail industry, the lower average wage for the sector, and the average age of the workers it is likely that retail will never have the lowest turnover rates, but there is no doubt that turnover rates can be improved. When you factor in management –driven activity lower average turnover rates of 25%-40% should be attainable. The key is to provide sales associates with the retail trainingthey need, compensation plans that motivate them to succeed and management practices that old them accountable while challenging them to attain higher levels of performance.
Would you like assistance with increasing revenue while reducing employee turnover? If so, contact us today for a free one-hour consultation!
- David Goodwin is the Principal of the Retail Advocacy Group. As a 30 year veteran of the retail industry he has directed the activities of hundreds of retail locations and thousands of retail sales representatives and store managers. RAG offers consulting services, retail sales training and management training programs. You can learn more at www.retailertrainingservices.com.