Why poor staff retention is killing your business
Your staff are the lifeblood of your retail and hospitality business. Without them, you can’t serve your customers and keep them happy. That is why it is important to always maintain a trained group of staff at all your locations. The better the group of employees you have, the better performance you can expect from that location. But one problem is constantly standing in your organisation’s way: staff retention.
Within both the retail and hospitality industries, staff retention is low. According to studies, part-time retail turnover can be as high as 67%. In hospitality, staff retention can be as low as 70%. The average statistics in the UK are staff retention at 85% and turnover at 15%.
Why is the retail and hospitality industry so bad at keeping staff?
There are many complex reasons why both the retail and hospitality industries struggle to retain trained staff. In surveys, staff leaving posts in these industries have stated they can find better pay and benefits elsewhere in addition to better career prospects. Though more than half of employees have stated that lack of control over their work life with limited guarantees of income and shifts was another key factor in leaving.
For many years, it seems that both industries have accepted that this is just a fact of business in these industries. Yet this mentality can be harmful to your business’ long term success. Here are several ways that poor staff retention is killing your business.
- Costs to replace staff
The biggest area where poor staff retention is harming your business’ success is the cost to replace staff. You first need to advertise for the position. This often requires time in creating and publishing the advert online, reading CVs, conducting interviews and setting up the new employee. This is all time that could be spent on other more productive tasks.
In addition, there are actual costs to the recruitment process including paying for adverts, training the new staff member and outsourcing some recruitment functions. These costs can mount up and be a drain on financial resources that could be spent better on other investments.
- Costs to cover staff posts
When a staff member quits, sometimes you’ve not got enough warning to ensure all the shifts are covered with the rest of the staff. This often means paying others overtime to cover those times. This can get expensive as some staff might be on contracts that offer them more pay or higher pay for overtime.
In addition, employees who have to cover for lack of staff can become tired and less productive. The quality of their work can lessen and that will impact customer service. Lower levels of customer service can be linked to lower order values and customer retention.
- Low staff morale
One of the biggest challenges for businesses with higher staff turnover is the positivity around the organisation. Staff coming and going can create a negative environment and this only encourages other staff to leave and leads to poorer customer service. Other negative emotions have also been reported with retail and hospitality staff including stress, anxiety and depression.
Having your business operate a rotating door when it comes to staff, hinders your organisation’s ability to create a positive culture. A unified culture helps to improve productivity and directs staff efforts into singular goals to help the business attain milestones.
- Loss of skills
It takes time for an employee to become efficient in their work. Those who have been at an organisation a long time will often have the best way of doing things. Their knowledge should be passed down to the next generation of workers within the organisation, to improve overall team efficiency and ensure the store is unified in its approach.
But what happens if there is high turnover is that even the best of staff, who have remained fairly loyal, will leave the organisation at some point. When that happens, all their knowledge and experience is lost to the site. The loss in value to your business can be extraordinarily high.
- Poor reputation
You might have been a good employer and offered the best benefits to employees. But news will get out about how many people you are losing at particular sites or within your organisation. Sometimes people will assume the worst and you could lose out on some good potential employees who avoid applying for jobs because they have a negative opinion of you.
In addition, former employees who were dissatisfied about their working experience could tell others and this could lead to customers not spending their time with you. A bad reputation is hard and expensive to repair.
So, if you’re in the retail and hospitality industry, check out your staff retention rate and see what you can do about improving it. It might help your business perform better.