The reasons behind the retail staff high turnover rate

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Let’s first start with defining what a staff turnover rate is: The turnover rate is the % of your total staff Vs the % of people leaving your organization. So if your turnover rate is 10%, it means that 10% of your staff leaves your organization and needs to be replaced.

The retail sector is one of the most world high turnover rates. It depends on the country and the organization by most of the time, the rate in the retail sector is higher than 60%. This Key Performance Indicator is an important element and it must be looked at very carefully:

For HR management:

A high turnover rate means more pressure on the recruitment team which leads to either direct internal cost if the retail organization is using internal recruitment specialists or indirect cost if the organization is using an external recruitment agency. The other direct cost is the cost of staff development. When you hire a retail Rep, you invest time, efforts and money to put them up to speed and move them from contributors to performers. This period may vary depending on the retail sector but it takes usually 1 to 6 months to get a retail rep trained, coached and up to performing in his role.

For Retail Management:

A high turnover rate means a direct impact on sales performance by either having stores understaffed or with a high percentage of incompetent Reps. The pressure will be mainly applied on experienced retail staff to drive the business sales forecast as the retail management can’t count much on newly hired staff. This approach most of the time leads to more experienced staff resignations if the payout scheme isn’t there to bring up the motivation. They will feel that they have to do more work with no additional added value to them. The sales pressure from the top management can lead to that as well. This is where the management appreciation should take place financially or morally while communicating perfectly and frankly with the organization latter.

So what are the reasons behind this high turnover rate?

The etiquette: or the reputation that this sector has been gaining more negative thoughts for many years. The fact that this sector was opened to temp staff, young university students and people with low education background has created this reputation that in retail you can’t do a life career but you try to gain some more money to cover expenses while looking for the right opportunity in another sector or finishing your study to a higher position within your field. A strong communication is needed to clarify the important of retail and how it can be a real career for life. Each company should emphasize on internal success stories to encourage people to join and stay. If you have a success story in your organization like a manager that started at the lowest level of the structure, make sure to include him in the communication, at the interview phase or the induction program. It will create a vision and hope in your structure.

Lack of human capital investment: most of retail organization with a higher turnover rate will minimize their spending on motivating and retail staff development. They think that they will develop someone that in couple of weeks will leave the organization. This is absolutely wrong; people will leave you when they feel no appreciation or efforts from your organization and when they feel no human values inside your workplace. By having a clear career path defined from the beginning at each role of your retail organization can give hope to your newly hired staff. They will feel that there is a life career for them at your company.

The work place culture in your organization is crucial. We say that people don’t leave companies but they mainly leave bosses. Make sure that you have a clear communication from top management all the way down to your retail staff and understanding how they are being treated by their line managers (Store managers). You need to assess very carefully at the exit reviews with the leaving staff the main reason of their resignation. It will help you diagnose the right cause of their departure (Salary, working hours, pressure from their actual manager, no respect from colleagues.etc). Those are elements that can be easily investigated and corrected to improve your turnover rate.

Most of your staff didn’t get a chance in life to success with their studies and you can be their second hope to achieve something in life. Some organization offer vocational training to their retail staff that can lead to a professional certification or a diploma. A study has shown that the cost of hiring a new person with the impact on business sales is away more than investing in developing your actual retail staff and keeping them in your organization. The retail staff will never leave a place that first treats them well, pays them what they deserve based on their efforts and performance and of course investing in their development to move higher within the latter.

You take care of them, they will stay and they will take care of your customers.

Author: Jalal JIHAZI
(Global Retail TV Director)

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2 thoughts on “The reasons behind the retail staff high turnover rate

  1. Retail Sales Ops strategies says:

    Interesting outlook, very helpful to understand the importance of quality human resources in a successful retail setup.

    We are also in the same domain and sharing resourceful content to help and educate retailers across the domain. Let’s connect and share some backlinks. our website address is below and pl feel free to browse.

  2. Really it was very useful article and I think every Retail organisation should look into this since iam from retail background

    Thank you sir

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