Managing Today’s Retail Workforce

As major shifts in the economy have created unparalleled effects on the labor market, CSD has partnered with Humetrics to help c-store operators benchmark their hiring practices and employee costs.

By Mel Kleiman, Contributing Editor.

In an ongoing effort to support the convenience store and petroleum industry’s forecasting and planning responsibilities, Convenience Store Decisions and Humetrics have collaborated on the fourth annual Human Resources Benchmarking survey. The goal of this survey is to provide industry-wide insight into the human resources strategies currently being deployed by respondents, as well as to detail the actions industry retailers are planning to take in 2012. This year, we also took a look at 2011’s actual results versus the forecasts respondents made back in February 2011.

Survey Demographics
The summarized survey results include some interesting surprises, as well as some insights gleaned from reading between the lines. Given the level of concern about the floundering economy of late, the survey results paint a very different picture for the convenience store industry.

This year’s survey asked 31 questions relating to human resources (HR) issues affecting operations and collected responses from mid-February through early March.

Of the nearly 100 convenience store chains to participate in the 2012 benchmarking survey, respondents ranged in size anywhere from 25 or fewer employees with less than $1 million in annual revenues, up to more than 500 employees and more than $500 million in annual revenues. This year, most respondents were in the 101–500 employee range (50.6%) and the $1 million–$10 million annual revenues category (34.1%).

The average number of inside transactions per day per store varied heavily, from 200 to 5,000. Thirty-five percent of participating retailers averaged between the 501–1,000 transactions per day and 28.2% reported between 1,000-1,500 daily transactions. The average number of employees per store ranged from four to 36 with an overall average of nine.

Staffing the Stores
All the different human resource responsibilities, such as recruiting, pre-screen, applicant testing, interviewing, orientation and training, for the most part fall on the shoulders of the store managers with the exception of drug testing, which more often is handled by a corporate HR manager or a third-party vendor.

While more than one-third (37%) of last year’s respondents expected to increase staffing in 2011, only 18.5% of this year’s respondents said they actually did. This year, the great majority (64.8%) reported staffing levels stayed about the same in 2011 and they expect that this will not change much in 2012. While 25.9% do expect to add to staff this year, 16.7% are anticipating a decrease in staffing levels.

According to our results, employee turnover is apparently at historically low levels for the industry. No matter the job title, most respondents said turnover has dropped considerably, most likely due to a weak job market. When it came to full-time employees, only 13.7% reported turnover at what used to be typical rates of between 75–150%, and only slightly more (14%) experienced part-time turnover rates above 75% as well.

Most respondents (51.1%) reported recruiting activities/levels are expected to be about the same this year as last, but, unlike last year, no one has a hiring freeze in effect.

When queried about the recruiting methods used to attract both hourly and salaried employees, the tools most used for both were the company Website and employee referrals. For hourly employees specifically, in-store ads and outdoor signage are the most used, while those recruiting salaried employees still rely more on local newspapers than Internet job boards, Craigslist or social media sites.

Probably the biggest shake up to this year’s survey is in the area of employee recruiting. Over our three previous surveys, the most effective recruiting sources for new, frontline, hourly employees remained pretty consistent. This year, however, the top two positions were reversed and the company Website and Craigslist finished in a tie to replace the traditional, third-place holder: walk ins.

When it comes to the three most effective sources for recruiting managers, the company Website pulled ahead of the pack for the first time in four years, followed closely by employee referrals and Internet job boards. No one reported any success with Twitter or LinkedIn and only 6% are seeing any positive results from Facebook advertising.

When asked about the tools employers use to screen in the best job applicants, the reporting trends indicate that more employers are using more pre-screening tools. Those most widely in use are: (1) criminal records checks, (2) reference/background checks and (3) drug testing. Each successive year, we also find more employers report the use of pre-employment testing (for capacities, IQ, skills, attitudes, etc.).

Training Programs
Last year, 95.9% of respondents said they planned to increase their training activities and budgets in 2011. This year, just 35% of participating chains reported that they actually did so. Most companies (57%) reported that training programs stayed about the same in 2011 and more than half (52%) expect them to stay about the same in 2012. No one plans any training cutbacks and, of those who will increase their investment in training (about 48%), the greatest emphasis is on customer service skills again this year (81.8%), followed by foodservice safety/sanitation, teamwork and overall store safety, all at 60.6%.

Back in 2009, 58% of respondents were committed to increased manager/district manager training versus 38% in 2010. Last year, that number rose slightly to 43.3% and this year it climbed again to 51.5%, which could be an indication that stores are getting more serious about foodservice operations and the need to stay competitive with drug stores and supermarkets.

Labor Costs
Survey respondents indicated that even though the economy remains weak, salaries and operating costs continue to escalate.

Managers’ salaries ranged from $17,800 to $68,000 per year with an average of $38,711, which is only slightly higher than last year’s $38,256. Assistant managers’ ranged from $12,000 to $42,000 per year with an average of $24,000. The hourly rate for a full-time employee ranged from $8 to $14.50 per hour, up moderately from $7.50 to $13 in 2011, with an average of $9.26. Part-time hourly wages ranged from $7.50 – $13.25 with an average of $8.57.

As we found last year, when asked: “Which statement best describes your current pay policies for hourly employees and managers?” more than one-third of all responses for both exempt and non-exempt employees were: “We have a pay-for-performance program and give raises based on productivity.”

Probably the most interesting finding here concerns the response choice: “Giving across-the-board raises.” Only 1.9% did so in the past year with hourly employees and no one reported doing so with salaried people. However, 5.85% of respondents reported that they plan to give across-the board raises to both exempt and non-exempt staff in 2012.

Last year, 42.6% of participants  said that they believed benefit costs would increase in 2011 and 53.3% of this year’s respondents confirmed that their costs had increased. The same percentage believes costs will rise again in 2012.

In terms of benefits for full-time employees, survey participants indicated increases are planned for 2012 in the areas of educational benefits, company-matched IRA’s, paid vacations, medical and dental coverage and bonuses. Life insurance coverage and profit sharing are expected to decrease in 2012.

Interesting to note that while profit sharing showed one of the biggest increases last year, this year it posted the largest decrease for 2012 suggesting that operators are cutting back as profits and margins are squeezed.

When asked: “What is your labor cost as a percentage of sales?” the answers ranged from 3% to 35%, with the average falling at 15.04%. This number has remained consistent versus 2011 when retailers reported labor cost was 15.03% and down from 17.75% in 2010.

Labor cost as a percentage of overall expenses ranged from 10% to 62% with an average of 33.9% (versus 39.8% in 2011). The cost of benefits as a percentage of overall company payroll ranged from as low as 2% to as high as 30% with an average of 11.62%. It was 9.8% last year.

When asked about investments in systems or technologies designed to manage labor costs, improve the hiring process or improve productivity, only 11% responded affirmatively. Among the top improvements cited by survey participants for 2012 included: training retreats, e-learning, Webinars, smartphone seminars, investments in iPad tablets and faster computer systems, and one amusing aside: “None. We are primitive.”

Tax Credits
In another change we’re glad to see this year, even more respondents indicated they either are filing for and collecting Work Opportunity Tax Credits (WOTC) or will be doing so soon. In addition, the percentage of those who said they didn’t know what WOTCs are dropped from 21.7% to just 2% this year.

Approximately 65% said both employee-related lawsuits and worker’s compensation claims “were about the same” in 2011 and expected them to stay at about the same frequency in 2012.

CSD and Humetrics would like to thank all those who took time to participate in this critical industry benchmarking survey. Watch for additional survey results in the coming weeks on www.cstoredecisions.com.

Giving HR a Technology Boost

Hiring doesn’t stop with an offer letter and neither should your talent management. Increasingly, convenience store chains are partnering with technology companies to add a talent management system that can manage all of their people processes from one integrated platform.

Top quartile chains, such as Ricker Oil Co., The Parker Cos. and Flash Foods, are among the operators to partner with PeopleMatter and its online suite of automated HR tools to optimize their recruiting and onboarding processes and boost overall employee retention.

The results, said Karen Mitchener, director of human resources for Ricker’s, has not only yielded a stronger pool of qualified job candidates, but has dramatically reduced the time spent on vetting candidates that submitted paper applications. Using PeopleMatter’s online solution, employees answer a series of questions set up by each company that paints an accurate picture of their skills, experience and reliability as an employee. Since the company programs in its minimum acceptable standards for employment, it doesn’t have to waste time reviewing applicants that are not qualified.

The 51-store chain in Indiana, which employs more than 600 people, deployed HIRE in 2010 and LEARN in June 2011. With its former applicant tracking system, Ricker’s had little control and efficiency in its hiring processes. In switching to HIRE’s Web-based platform, the company gained mobile flexibility. Hiring managers can now add a store location, complete an I-9 or tweak an application question anytime, anywhere via the Internet. In addition, Ricker’s uses LEARN to train their employees via a centralized, online system to develop skilled, passionate team members.

“I can not begin to express the depth of my appreciation to PeopleMatter, because they listen—to both criticism and ideas—on how I would make the PeopleMatter Platform better,” said Mitchener. “You can’t put a price tag on a vendor that truly listens to its users.”

Similarly, Parker’s Convenience Stores, a 24-chain in Savanaha, Ga., began screening applicants with HIRE in 2010. Before implementing PeopleMatter, Parker’s hiring process averaged seven days. Pre-screening candidates using HIRE’s automated assessments, background checks and tax credits components condensed the process to three days, reducing time-to-hire by 57.14%.

Hiring assessments helped cut Parker’s turnover rate in half reaching a record-low of 16.59%.

“With PeopleMatter, we are hiring better quality employees and keeping them longer,” said Beth Harn, Parker’s human resources manager. “The biggest benefit we’ve experience is through the tax credits we collect. We’ve found 60-67% of our new hires qualify for hiring incentives thanks to the HIRE system.”

  • Leonard Vice

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