How Macy’s Decreased Employee Turnover by 28%
Retail associates are the heart and soul of the enterprise. They are often the first and most meaningful interaction a customer has with the brand, and they have the power to make or break the path to purchase.
At the Retail Executive Summit (RES) Mike Zorn, senior VP, associate and labor relations, Macy’s, discussed how the department store giant has greatly reduced turnover and built meaningful employee engagement in his presentation entitled “Employee Engagement by Design.”
Building and retaining quality associate talent is the goal of every retailer, but few are able to do it successfully. In fact, hourly store employees have a turnover rate of over 65%, according to research conducted by the Hay Group division of Korn Ferry. With the cost of replacing a store associate hovering around $1,000, retaining quality talent has never been more vital.
Over the past decade, Macy’s has been on a journey to pinpoint the cause of disjunction among its retail teams and stores and has been working to build an engaged and satisfied retail workforce. The retailer’s hard work has been paying impressive dividends, with Zorn reporting that employee engagement has increased 11 points over the last four years, engagement in stores is up 16 points, and turnover is down 28%.
“Building informed and engaged associates is important for every retailer,” Zorn said. “Engaged associates help build consumer loyalty and bolster sales. In addition, they are less likely to quit.”
At RES, Zorn began his talk by laying out what he considers the four retail workforce truths:
- Consumer Expectations Are Changing. Customer experiences matter while at the same time retail is becoming more expensive to staff (increases in minimum wage and local regulations).
- Engaged Associates Produce Greater Results. Associates need to be shopper advocates and make the in-store experience more compelling.
- Constant Turnover. Over half of the retail workforce has one foot out the door. Unengaged associates take more sick days, give little effort, miss deadlines, have poor sales, etc.
- Dramatic Change. Workforce demographics are shifting. Baby Boomers, Gen X, Millennials and Gen Z are all working together.
To successfully operate in this new retail reality Zorn and his team instituted an open set of expectations for every Macy’s employee ― the first time the company has embarked on such an undertaking in its 100-plus year history. The new transparency let every employee know what is expected of them and helped Macy’s weed out its disengaged employees and begin to build an engaged and inspired workforce.
“Disengaged associates are the misfits,” Zorn said. “They don’t fit into our culture. But we write all our policies for these folks and we try to change them in some way. They were toxic to our employees. After the expectations were announced 85% of these disengaged associates left on their own. They didn’t want to be there.”
With the dissatisfied and disengaged employees off the payroll, Macy’s was free to shape its workforce to connect with shoppers in an increasingly omnichannel, customer-centric environment. To do so the retailer turned to employee engagement software that not only gives associates power over scheduling but simultaneously frees managers up to cultivate a customer-service culture in their stores.
Macy’s implemented a self-service scheduling application that allows associates to pick their own shifts, trade shifts, and request time off independently. The solution has empowered associates and increased their engagement with the brand by switching from being told when to work to being able to choose when to work.
“We merged technology and empowerment,” Zorn said. “We were able to free our supervisors up from those tasks that weren’t adding any value and they weren’t any good at. Their responsibility now is to be an approachable manager and grow and develop their team. People don’t leave companies, they leave supervisors. Now supervisors can focus on the things that count.”
In the fall, Macy’s will be adding a new wrinkle to its self-serve scheduling capabilities when it goes live with inter-store scheduling across the chain. Associates will be able to not only schedule themselves for shifts at their home store but also at nearby stores, giving them greater options and flexibility to keep a healthy work/life balance and further improve engagement.