Managing Employees in Tough Economic Times

In order to support the convenience store industry’s forecasting and planning responsibilities for the new year, Convenience Store Decisions and Kleiman HR collaborated on their second annual human resources survey in order to provide some industry-wide insight into the actions others are taking—or planning to take—in the new year.

The 2010 survey results include some interesting surprises as well as some key takeaways we gleaned from reading between the lines.

The survey asked 45 questions relating to major staffing issues affecting operations across the country. Responses were collected from mid-November through early December. Replies were an accurate representation of the diverse companies operating in the industry, from large chain operators to those with as few as two stores.

Of the more than 100 participants, respondents ranged in size from more than 500 employees (18.5%) with in excess of $500 million in annual revenues (10.4%) to 25 or fewer employees (31.5%) with less than $1 million in annual revenues (12.5%).

Economic Concerns
Once again, given the continuing level of concern about the economy, the survey results paint a very different picture for the convenience retailing industry. Looking at the next 12 months, more than half (57%) of the respondents expect staffing levels to remain the same and about another one-third (32%) expect to actually increase staffing. Only 11% predicted staffing levels would decrease. These results are almost exactly the same as those in the 2009 survey we conducted and indicate a steady level of confidence.

So, while ours might not be an “industry of choice” for many job seekers, for those of you in a recruiting mode, it would be wise to capitalize on the industry’s stability and security.

Of the respondents who are in a hiring mode (74%), most are looking to add part-time hourly associates (85%), while 33% are adding full-time hourly workers and 28% and 13% respectively need frontline managers and multi-unit level managers. Again, these results are similar to the those in the 2009 survey with one exception. Those predicting a need for full-time hourly employees fell from 58% to 33%. This change may be a response to increased applicant flow and the concurrent opportunity to manage hours and costs more effectively.

Of the 26% of respondents who are predicting decreased staffing in 2010, the cuts are expected to mainly affect full-time hourly workers (47%) and corporate/office staff (37%). Because the corporate/office staff number was 53% in the last survey, it would appear this employee category has pretty much been cut to the bone in the meantime.

Training Day
In another surprise given the economy, 95% plan to increase their training activities and budgets or at least remain at the same expenditure levels as 2009. Of those who will increase their investment in training, the greatest emphasis (76%) is on customer service skills, followed by safety at 60% and foodservice safety/sanitation at 54%.

A puzzling discrepancy in the survey is the predicted reduced investment in manager/district manager training. While 58% were committed to this investment in the earlier survey, that number now is only 38%. This seems shortsighted at best, as these are the people who have the most impact on profitability and operational efficiency.

When it comes to the industry’s notoriously high employee turnover rates, in our last survey turnover was reported to be “about the same.” The participants in the 2010 survey reported a notable improvement—56% now say turnover has decreased. Perhaps a silver lining in the economic reversal of fortune?

In spite of all the attention given to job boards, Web sites, Facebook, Twitter and others, the best recruiting sources for new frontline, hourly employees continue to be: employee referrals, in-store advertisements and walk-ins.

In view of the fact that the question was worded: “What has been your one best source for recruiting frontline employees,” we’re dismayed that so many hiring managers appear to be satisfied with the next warm body who walks in the door and asks for a job.

When it comes to recruiting managers, 22% of respondents promote only from within. Referrals, want ads, and Internet job boards were a three-way tie at 18% each.

As in our last survey, the most popular tools in use to screen in the best job applicants are: testing for skills, attitude, personality, IQ, etc. (50%); police records search (48%), and online background search (46%). Because drug abuse and dishonesty are prone to go hand-in-hand, we’re surprised that only 33% of respondents do any type of drug testing.

In 2010, 36% of respondents plan to add a check of social media sites and 21% will add testing and online background searches to their screening tools.

Only 31% are filing for and collecting Work Opportunity Tax Credits while 42% don’t know what they are and another 27% know about them, but don’t file. Determining why 69% of these employers are not claiming these tax credits is outside the scope of this survey, but with one out of every eight adults in American now using food stamps, there’s a lot of money being left on the table.

The Cost of Benefits
In response to our query about healthcare reform, the prevailing opinion is that it will negatively affect the cost of benefits (72%) as well as negatively affect the organization’s ability to compete (52%).

When asked: “Which statement best describes your current pay policies for hourly employees and managers?” the most frequent response for both types of employees was, “We have a pay-for-performance program and give raises based on productivity.”

Followed closely by, “We are giving selective raises.” When asked if there will be pressure to increase wages in 2010, the jury was evenly split; 37% thought “yes” and 37% thought not.

Slightly more than 72% of respondents said that the July 2009 rise in the minimum wage did not affect their operations.

Interestingly, while employee-related lawsuits and worker’s compensation claims are up nationwide this past year, our respondents reported that both “were about the same” as 2008 and 2009.

When asked about investments in systems or technologies designed to manage labor costs, improve the hiring process or improve productivity, 48% reported making no new technology investments at this time. Perhaps, this is where the economic slowdown is having an effect.

For those who are investing, most plan to add new training technology (21%); scheduling or payroll systems (15% each).

When asked: “What is your labor cost as a percentage of sales?” the answers ranged from 2% to 40% with the average falling at 15.39%.

Labor cost as a percentage of overall expenses ranged from 4% to 60% with an average of 31%. Cost of benefits as a percentage of payroll ranged from as low as 3% to as high as 80% with an average of 16.9%.

In describing employee benefits, approximately 80% of respondents said they made no changes in 2009 and 80% expect to stay at the same levels in 2010. The chart on the right summarizes benefits now offered. Nearly 90% of respondents offer both medical benefits and paid vacation or sick leave.

Gap in Salaries
The average number of inside transactions per day/per store that employees are responsible for were all over the map, ranging from 250-8,000. The average was 1,123 and the median was 800.

Likewise for the average number of employees per store. The range was from 3-43 with an average of 12. The number of employees per shift ran
ged from 1-20 with an average of 4.25.

Manager’s salaries varied from as low as $20,000 annually to slightly more than $80,000 per year with an average of $37,000.

Assistant manager’s wages ranged from $15,000 to $55,000 per year with an average of $25,600.

The hourly rate for a full-time employee ranged from $7.25 to $14 per hour with an average of $9.

Survey participants were offered a more detailed report for their participation. CSD and Kleiman HR will continue to focus on the industry’s human resources efforts and publish reports to help the industry improve, reduce costs and operate more efficiently in these challenging times. Visit csdecisions.com or kleimanhr.com for information on how to participate in future surveys. CSD

7ads6x98ycss.php