Study: Retail employee turnover increasing

Philadelphia -- Management consulting firm Hay Group reported Tuesday that employee turnover levels in the retail industry are on the rise.



According to a new survey from Hay Group, an improving job market and solid first quarter sales are impacting turnover. Retailers report a median turnover rate of 67% for part-time store workers, a 33% increase over 2011. One in five retailers report that they have experienced more turnover in the first part of 2012.



“Higher employee turnover is a double-edged sword,” said Maryam Morse, national reward practice leader of Hay Group’s Retail practice. “On one hand, it’s a harbinger of an improving economy, but on the other it’s a significant challenge for retailers who will need to devote more time and resources to retention and recruiting. Retailers are very focused on profitability right now, which is likely leading to an increased demand for part-time workers, who can be scheduled to work at only the highest traffic times.”




For the remainder of 2012, 82% of retailers surveyed expect to see the most turnover among their store hourly workers. Nearly one-third of respondents say they expect to see high levels of turnover among hourly workers at distribution centers.




Hay Group’s survey analyzed responses from 54 major U.S. retailers including Ascena Retail, Carter's, Meijer, OfficeMax, Petco, PetSmart, Ross Stores, The Limited and Zale Corp. to determine the rate of turnover for key positions within retail organizations, and related retention strategies.




The survey also found that growth in e-commerce and mobile channels is escalating a talent challenge at both corporate offices and distribution centers. With more retail and technology companies competing for the same talent, turnover rates in corporate e-commerce positions are nearly double 2011 levels. E-commerce growth has led to the development of more online fulfillment centers, creating greater opportunities and turnover among both hourly workers and management positions at distribution centers.



Over the past year, the turnover rate for hourly workers at distribution centers increased by 29%.



When asked about key tactics for reducing turnover, 61% of retailers cite career pathing and 54% point to training. Only 30% cite changes to compensation plans.



Although compensation is not the top strategy for retaining employees overall, Hay Group’s March 2012 survey of retailers’ salary budgets found that it is one of the tools used to hold on to high performers. Retailers have budgeted an average of 3.6% in merit increases for top performers this year, up from 3.2% in 2011 and notably more than the 2.8% planned for employees overall this year.