COVID-19 caused a shakeup in the U.S. retail industry, with brick-and mortar operations experiencing some of the most significant operational changes ever. The changes have been particularly hard on sales associates, who have had to take risks and continue their careers while we have all enjoyed the safety and convenience of shopping online.
When we ordered our daily supply sweetgreen, Shake Shack and Drizzly, frontline workers were asked for more work, but they were also required to risk their health in return for the same wages. 15 months later, they are no longer motivated enough to stay the course by earning $13 an hour.
They can’t be blamed. It was only natural that something would have to go. Our industry is currently dealing with “The Great Receipt” — the millions of workers who have left their dangerous in-person jobs to take the safer, more flexible, and more convenient work-from-home jobs.
The Washington Post reports that the mass exodus began last April when almost 649,000 retail workers said “no thanks” to being notified. This is the largest exodus of retail workers since the Labor Department started tracking such data over 20 years ago. Retailers aren’t facing a labor shortage in many ways. They’re facing a near lack of labor, which is a signal that the retail worker model must change.
Retail workers felt marginalized before the Pandemic
It has led to the marginalization of hourly workers, which has created a perception that they are less valuable than their white-collar counterparts. This is not a new perception. This is not a new sentiment. According to The Atlantic one in seven essential workers does not have health insurance and one in three households earns less than $40,000 per year. Millions of frontline workers depend on food stamps to supplement their income. They are essential for our daily lives and make our lives easier. But we don’t pay them.
Pandemic unemployment benefits provided retail workers with an opportunity to lower their virus exposure and to avoid high personal childcare costs that arose when schools and daycares shut down. I advise retailers to not believe the myth that retail workers left because of unemployment checks.
Retailers will be held back if they place the burden on unemployment checks. Retailers need to admit that the current way of compensating hourly workers is not working for some time. Once that is done, we can move on and create a compensation program that is rewarding enough to encourage workers to return to work.
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Change the way you think about compensation
So, how do we do it? Recognizing the importance of retail workers is key to our business’s success.
Retailers have begun to raise hourly wages in an effort to get workers back on the sales floor. The big brands are also spending a lot of money. Walgreens announced recently that it will raise its minimum wage to $15 per hour by November 2022. CVS Health plans to do so by July 2022. It also plans to reduce its education requirements for new employees. Lululemon will raise wages for workers to $15 or $17 per hour this year, and expand its employee benefits program. Naturally, other retailers will follow their lead.
Wage increases may be one way to improve the reward system for retail workers. However, they are still not compensated in a manner that is comparable to their white-collar counterparts. Retail workers desire greater control over their earnings potential. Employees in other industries are rewarded for their efforts, which is why they want that opportunity.
To improve quality of life, reward excellence in work
The concepts of “gamification” and sales incentive programs are not new. Retailers don’t often run incentive campaigns or games because of the complexity involved in running them. Although employees enjoy the chance to win sales contests with their colleagues, they aren’t done often enough or reliable that they can be considered part of their overall compensation.
Andrew Duffy, my co-founder, and I had the idea to develop a better employee rewards delivery system. We knew it needed to be sustainable in order for both workers and employers. It needed to be easy enough for retailers to use as part of their daily sales strategy and not just for occasional promotions. Consumer brands also wanted to be able to create and fund rewards campaigns so that they could reward workers with less investment.
SparkPlug was built for two reasons. First, retailers experience 31% lower employee turnover when they provide feedback on performance and establish transparent, formalized goals. The average 28% increase in monthly revenue for retailers that offer sales incentives is also a result. Second, we wanted to make workers who were historically underserved feel worthy and deserving more financial opportunities.
Recognizing frontline workers for their hard work is a way to increase revenues and raise worker compensation. This, in turn addresses the problem of labor retention and acquisition.
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Although the current labor shortage can be extremely difficult for retailers, it can also serve as a catalyst for positive change. With a new approach to worker pay, retailers who come out of the hiring crisis will be seen as industry leaders. By showing that they don’t take profits at the expense for their workers’ welfare, they’ll be able to earn brand loyalty. Retailers should and can work in the best interest of both their employees and their company. Retailers can increase revenue and retention, while also making it easier for employees to keep their doors open.
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