CMT In Depth

Retaining Your Best Retail Employees (It’s About More Than Just Money)

Retail of any kind is a uniquely challenging place for employers with regards to employee retention. Earlier this year, a study by LinkedIn found that Canada ranks fourth-highest in the world in employee turnover, with an average turnover rate of 16 per cent, and the retail industry ranks near the top of that, with an average turnover rate of 16.5 per cent.

That’s partly inherent to the industry, as any that employs a lot of part-time young people, especially students, expects turnover as they move on for school, professional careers, or other life opportunities. Nonetheless, losing your best employees – the ones who could become managers, purchasers, etc. – doesn’t have to be inevitable.

“There is a saying that, ‘People don’t leave jobs; they leave bad managers,’ and that’s oftentimes true. So if you have a retention issue, I would start looking at the common cause of that retention issue,” says Chris Coopman, a business leadership consultant currently completing her PhD in industrial and organizational psychology with a focus in small business leadership, and professor of organizational leadership at Southern New Hampshire University. “Is there a department manager that seems to have a lot of people leaving? Or, heaven forbid, it’s the store owner and they have a lot of people leaving – why is that? What’s happening? You really have to focus on internal reasons of why you’re not retaining good employees, not external reasons. Two-thirds of the time, it’s an internal problem. We don’t always like to do that and it’s tough to have some of those conversations, but really, that’s what [good retention] amounts to. You have to be very objective with yourself and why you’re having those problems.”

When most people think about employee retention strategies, the first thing that comes to mind is pay raises – and for obvious reasons. But Coopman says that, yes, if an employee is underpaid by industry standards, they are more likely to leave, but pay raises aren’t necessarily the most effective tool for keeping employees. “Each person is different and some people may find that if you give them flexibility, you’ll retain them. Other people may want autonomy and others may want to train for management roles. So I think the key to retaining employees is to really understand what each person needs on an individual level and work with them to help them in the way that they want to grow or give them the things that really motivate them.”

According to Coopman, studies on employee retention indicate that retail companies will retain the best employees if they have a strong perceived organizational support. “It’s really a fancy way of saying, if they think the company supports them then they’ll stay,” she adds. “That’s really what it is in a lot of industries. I would say over 50 per cent of businesses have trouble retaining good employees and it really falls into internal factors. Those internal factors are usually the support that the people feel they have within the company.”

Strong support begins with good training. That sets the foundation for the employee’s experience in the job and their ability to grow within the company. “You need to have a really solid training plan and remember that people learn differently. Some people may do better listening and other people may do better visually or with on-the-job training. So you really want to have different types of training to help accommodate all of those different learning styles. In addition, you really want to have good, solid follow-up to make sure that the employees understand things the way that you intended them to be understood. When you’re new, you get a little nervous and you don’t want to tell someone that you don’t understand, so check in with them to make sure they truly understand what they’re learning.”

With that, it’s important for any owner or manager to remember that everyone makes mistakes, especially when learning new tasks, and those mistakes are a part of the learning process. On this, Coopman is fond of a quote from Thomas Watson, the former CEO of IBM. “Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000,” Watson said. “’No’, I replied, ‘I just spent $600,000 training him. Why would I want somebody to hire his experience?’”

“Obviously we don’t want to have $600,000 mistakes in our companies; however, if you’re not allowing your employees to make mistakes, then they’re not growing and you’re not growing, either,” says Coopman. “I like to say, as long as you can tell the mistake was made acting in the best interest of the company, then there is no reason to be mad at them. You should support them in making those mistakes because then they’re going to feel empowered to try to continue doing better things for the company.” The key is to use mistakes as a learning tool and, to return to the first point, an opportunity to show the employee they’re supported by the company.

As an employee grows more comfortable in the job and demonstrates long-term potential (i.e. someone you want to retain), it’s important for managers and owners to get to know them. This doesn’t mean becoming their best friend, but rather, find out their longer-term aspirations. “If you look at the research on transformational leadership theory, that is exactly what they talk about – sitting down with that employee and helping them develop the best way that they can. So finding out what their goals are and where they want to be in five years and helping them reach that goal.”

Does the employee see themselves as a potential manager or department head down the road? If so, how can you make them feel invested in reaching that goal? Part of that process is gradually giving the employee more autonomy and trusting them to make decisions, as long as they’re comfortable with it and have shown that they can be trusted.

“When it comes to autonomy, if you can trust them to do things without you breathing down their neck, then it’s probably a good idea to let them do those things,” says Coopman. “When it comes to decision making, I think that the employees really need to be aware of the important decisions within the company or organization and they should have their opinions heard. I think one of the biggest frustrations from employees is not feeling heard. Whether or not you go with what they’re saying, as long as they know you’ve heard them and you’ve respected their opinion, they can usually be onboard with any changes or anything that will come with the decision. It’s not really about them having the decision-making authority; it’s more about them knowing that you respect them and you’ve listened to them.”

For those with the desire and potential to be future managers, involving them in the decision-making process is most important. “Start allowing them to make those decisions while you’re still close by and you can help them grow. Don’t send them off on their own without any support while they’re making decisions; that’s a good way to lose employees, too, because they’ll quickly feel overwhelmed and not know what to do, or they’ll feel like a failure or whatever else goes through their head,” explains Coopman. “But if they have the ability to make those decisions and it’s not going to be a detriment to the company, then allow them to do that and be there when they need you.”

Lastly, as an owner or manager, remember that you have something to learn from your employees, too. This goes back to the point about employees needing to feel respected and heard. Every employee brings a unique perspective and experience and this could be valuable to the company. If you capitalize on those resources, the employee will feel respected, valued, and encouraged to personally invest in the company’s success.

As Coopman says, employee retention is not complicated. Provide employees with a respectful work environment and help them reach their goals and they’re more likely to stick around, even if someone else is offering the modest raise.

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Michael Raine is the Senior Editor of Canadian Music Trade.