Retail Rundown: Labor Shortages and the War for Talent | Nikki Baird & Jack Bennett

Paul Lewis:
Hello, and welcome to the Retail Rundown podcast. I’m your host, Paul Lewis. And today we’re going to dive deep into the labor and workforce challenges currently impacting retail and numerous other industries, both in the United States and abroad. Joining me today are my guests, Nikki Baird and Jack Bennett. Nikki Baird is a well-known former retail industry analyst and the vice president of retail innovation at Aptos, a retail enterprise solution provider. Jack Bennett is the senior director of solution experience at Ceridian, a global human capital management software company. Nikki and Jack, thanks for joining the show.

Nikki Baird:
Thanks. Excited to be here.

Jack Bennett:
Yeah. Thank you so much for having us.

Paul Lewis:
Well, let’s dive right in. By now we’ve all heard the news reports that despite there being millions of jobs available, there’s a real shortage of workers. What are your thoughts on that?

Nikki Baird:
I mean, from my perspective, it definitely is true. See it on the front lines, hear it from the retailers that we work with. It is a large chunk of that millions of jobs, our retail jobs that they are having a very difficult time hiring for.

Jack Bennett:
Yeah, I would agree. I think even driving down the street, you’re seeing gas stations, posting signs that say, “Offering $500 signing bonuses.” So the war for talent is, is still very much alive. And I think a lot of ways for retailers to combat that is to retain your top talent and have a true focus on a people-first mentality.

Paul Lewis:
Yeah. I think the numbers back up what we’re saying. The US department of labor released their job openings and labor turnover survey just last week. And it showed there were 10.4 million job openings in August, whereas the number of people leaving their jobs rose to 4.3 million. So some people are calling this the great resignation. We hear that term a lot, while others have referred to the rising quit rate as the great reevaluation. Let’s start with a high-level overview. What the heck is going on with this?

Nikki Baird:
Yeah. But I think it’s definitely a little bit of both. I mean, it’s a reevaluation in terms of… Especially when we’re talking about frontline jobs, it’s been a really tough last 18 months for anybody working a frontline job, either with them getting laid off or furloughed or being effectively an essential worker and in some cases having to risk their lives to show up, having to deal with a really stressed public that is taking out their own frustrations on them, having to suddenly be COVID regulation enforcers and things like that. I think from a retailer perspective, that frontline workforce has been really challenged in over the last year and a half. And those that have stuck with it, even through all of that time are looking around and saying, am I really going to continue with this? Or is there something else that I could do?

Paul Lewis:
Jack, what are you seeing in terms of both the frontline workers and does that extend beyond the frontline from your perspective?

Jack Bennett:
Yes, I would agree. In addition to frontline workers, we’re seeing a decline and a resignation of people all throughout retail. According to the Bureau of Labor of Statistics, retail is expected to lose an additional 500,000 jobs by 2030. So it’s compounding the problem even more. I think one thing the pandemic has allowed individual to do is have a much higher focus on what’s important in their life outside of their work responsibilities. So we have the traditional retail employee, whether that’s frontline within a store or from corporate looking at other organizations or other verticals to share their talents with that may offer a more flexible work life balance.

Paul Lewis:
Yeah. I think companies across the globe have got to rethink how they’re approaching their workforce. What is the value proposition to them? And that may be about wages, but it’s also about work-life balance. Can people work remotely? Can they have more time off? How do you make that job become part of their life and not just something that they’re dreading going to? One of the things I want to understand is, a lot of the news that I’m looking at tends to be a bit US centric. Do you guys have any insights into how best is impacting things in the UK and the rest of Europe?

Nikki Baird:
Yeah, I know from my perspective, it’s similar but different. So, most of it comes down to the differences that governments took in how they responded to the pandemic from an employee perspective. So in the US, most of the response was direct to the end employee, whereas in Europe, a lot more of the response was focused on subsidizing the employer so that they could keep employees on the payroll, even if they weren’t working. And so it’s been interesting to see, like in Germany, for example, I think they found that workers are able to come back faster because they technically never left, but they’re still going through that same reevaluation of questioning their life choices. And is this really what I want to do? And now maybe I have an opportunity to do something else. So it’s fascinating to see, there’s definitely a component of this that is purely economic or purely government policy, but there’s also this definite pandemic reevaluate your life kind of thing happening as well.

Jack Bennett:
I would agree with Nikki. A recent Exonify survey of frontline retail workers found that half in the US, and UK, and Australia were planning to leave their jobs. And 58% of them cited burnout as the top reason. I think we’ve talked about a couple of the, the potential solutions for resolving that, both in the short and long-term perspective. Short term is obviously income work, life balance. And long term, there needs to be a much stronger focus on meaningful and relevant career pathing. Of course, there will always the employees that just need a job, but with millennials being in their 30s now, they are looking for managerial experience and Gen Z employees want to see a path forward with an organization that they trust.

Nikki Baird:
Yeah. And I would just build on that, from the retailer perspective, it’s really tough because there’s so much disruption. It used to be that you would rise through the retail ranks through store operations. And even a managerial position in-store operations can be a tough job. I know several retailers who implement programs, where they’re rotating people through a management track in-store operations, but they’re going from state to state to state every six months. So if you have a family that’s a really tough objective to take on that you’re going to relocate your family basically every six months for a couple of years, while you’re getting that managerial training. And now we’re in an environment where the store ops is not necessarily the growth part of the retail business. So, the management opportunities that you typically would see in a large store operations division, they’re not as readily available any longer. So I think retailers are challenged on a lot of fronts, in terms of that work life balance and providing the kinds of jobs that really help people actually effectively balance their work life.

Jack Bennett:
Yeah, Nikki, you summarized my retail career. I started off as a frontline worker, as an employee, then moved up to a key holder, then assistant manager, then store manager, and then ultimately into store operations, which led to my career here at Ceridian. And that’s the traditional model within retail of that very vertical approach to career progression. And I think it’s an excellent opportunity for retailers now to look at a holistic, more horizontal approach with people within college, depending on what their field of interest is, graphic design, or web design, or any areas that you can leverage talent within an organization. Without the traditional route of moving vertically, I think is an excellent way to retain top talent.

Paul Lewis:
Yeah. I think you both have had some excellent points, and I’d like to double-click on a few things. So one of the things you mentioned, Jack, was different age categories and that people who are just coming out of high or just entering the workforce have different expectations than maybe in the past. And they do have an expectation that they may not have to go through that vertical, slow climb, but rather that there are a variety of paths, career paths ahead of them, and that they can see the career paths clearly, which I think a lot of companies have not done a good job at telling them where the next step is. And then I think we have workers who have been in the workplace for a while. They’re a little bit older, but now there are some lifestyle changes.

Paul Lewis:
They want to start a family, they want to have more time, so they may need more variable schedules or other things. And then I think we have older workers who have a lot of experience. We’d hate to lose them out of the workforce.

Paul Lewis:
What I’d like to explore a little bit with you is how do retailers assess where they’re at? How do they know where their problem and challenges are and what are the constructive things that if they’re planning their 2022 strategy right now, what are the things that they need to keep in mind to transform how they create these opportunities for their workforce?

Jack Bennett:
The first thing I would say is soliciting feedback employee pulse surveys or engagement surveys are the best opportunity to get feedback directly from all of your employees. But the important thing with it is in the traditional retail mindset is there’s a delineation between home office employees and everybody else. And segmenting that data out to make sure that you’re summarizing what the employees are asking for by field, by people in the distribution centers, by workers in the home office to really understand what’s most important to them because it’s going to be drastically different. I read an article a little bit ago about millennials and what they really want from the workforce. And a lot of people are saying, “I don’t want a nap pod or free avocado toast with breakfast. I just want a respectable wage.”

Jack Bennett:
Now, those options aren’t available to frontline workers. And if they were, that’s a retailer I definitely would go to. But it’s understanding really what’s at the forefront of the minds of all of your employees. And you can use that information to set your 2022 and beyond goals so that you are retaining the people you’ve got today and you’re like-minded individuals.

Nikki Baird:
Yeah. And I think there’s a component as well of meaningful work. One of the challenges, especially at the front line of stores, but even in warehouse as well is a lot of this work has been either automated or reduced and minimized to where as an employee, it’s easy to feel like a cog in the wheel, as opposed to someone who’s delivering something meaningful to customers. And I think that’s an area that retailers would be well served to reexamine how meaningful is the work that you’re providing?

Nikki Baird:
If you’re expecting somebody to come in and basically be completely directed by a mobile device, telling them what to do and where to go, and you’re measuring every little movement that they’re making and all of that stuff that sort of sucks the life out of the job, it might be time to rethink, how can I make this employee feel like an active part in delivering a superior customer experience because that can be done as part of a warehouse job, and it can be done as part of a frontline job. And most of the retailers’ response to the rise of eCommerce has been from a store perspective to cut, cut, cut. And it’s definitely an opportunity to rethink that.

Paul Lewis:
I love that sentiment. If we don’t see value in the work that we’re doing or we’re not valued for the work that we’re doing, of course, engagement is going to be lower. And the impact on the customer is going to be lower too. Really valuing your employees’ work is key.

Jack Bennett:
Yeah, I know that I have Disney world in my backyard. And one of the things that I learned about their process is they never have an employee at a particular ride for more than, I think it’s like an hour or two hours or some short period of time because they know that they get bored, that gets very repetitive. And so they have different jobs that they rotate to different locations within the park. It’s all part of this process where they did a deep analysis of how do you keep people more engaged. And while that doesn’t apply directly necessarily to the retail positions we’re talking about, I think that idea of trying to create the work to be more engaging, more fulfilling, having hopefully some variety and for them to feel like they have a purpose and they’re part of the company.

Nikki Baird:
Yeah. And I think building on something Jack said earlier as well, that whole vertical up or out kind of mentality, I think is also one that’s right for revisiting in the environment that we’re in now because it should be possible for a store associate, especially when you’re talking about selling high margin, high lifestyle kinds of products like fashion, for example, it should be possible for somebody to basically make a great career being a salesperson in a store. If you model the job right, and, and structure the incentives right, then that store associate could make a killing, but there’s always this mentality of either that store associate is churn and burn. I can just replace them with another or, oh, if they’re a really great sales associate, then I’m going to promote them to store manager, and then I’m going to promote them to district manager, and so on and so forth. And not everybody wants that kind of job.

Nikki Baird:
So I think building career paths for individual contributors and making them actual careers, I think is something that retailers really should consider much more. Outside of the old days of commissioned sales associates in jewelry stores or suits or things like that, I don’t think we’ve seen that in a long time.

Paul Lewis:
Yeah. And I think the macro takeaway is that any resource, when it’s cheap and plentiful, there’s not a lot of time spent figuring out how to optimally manage it. But I think what we’ve seen in this time is that employees are definitely not cheap or plentiful, then you have to treasure them and value them and invest the time to create an environment that nurtures them and gives them the opportunities and the expectations that they’re looking for. I wanted to shift to a question. So I was on with the National Retail Federation on a podcast last week. And they mentioned that this holiday will be the single largest percentage growth in retail sales for probably the past 20 years. And even larger than last year, which in spite of the pandemic was larger than the year before.

Paul Lewis:
So there’s going to be a huge crunch, and that’s everything across frontline retail and people jamming into the stores, which is starting earlier due to supply chain issues and other factors. But all the way back into warehouses, and people taking orders, and processing things, how do retailers need to think about the supply of people for this extra demand over the next couple of months and, and what are some of the impacts that you see for everyone’s Christmas holidays?

Nikki Baird:
From my perspective, if you haven’t hired your holiday team yet, I’m not sure you’re going to get much chance of hiring a holiday team. And in fact, actually this summer, we saw retailers taking what I would classify as extraordinary measures to recruit in advance of the need for holiday hiring. So, I actually saw… My daughter is a teenager. She was working for a fashion retailer and they were offering bonuses in July if you would commit to as little as four weeks of work during November or December. So basically, they were trying to lock them in. They said, “Look, if you have to go away for school, we understand, but if you can come back and work even four weeks in December, then we’ll give you this extra bonus,” which was substantial on top of it. So they were pulling out all the stops even this summer to try to keep people in the game for the holidays.

Jack Bennett:
Yeah, I would agree with Nikki. If you don’t have your holiday talent, I think you must be rushing for finding the right resources. And if you are, there are opportunities of leveraging the gig workforce, creating a talent pool with businesses that are within the same vicinity as yourselves. I think the biggest key though is ensuring that your entire organization is cross-trained so that you can leverage from any part of your business. Traditionally, we saw a very separate e-com model versus an in-store model versus say a curbside in-store model. And now, all three of those models essentially are operating by the same workforce. So, leveraging people across your entire organization to help out the holiday season is a great opportunity, not only to supplement your current staffing levels, but also to get that visibility of what it’s like working in stores from those people that might not necessarily have experience doing.

Nikki Baird:
I haven’t seen anybody say that they’re planning on doing this yet, but I will be very interested to see if we do see retailers shift warehouse workers into stores, especially as we get closer to shipping cutoffs for holidays because I think there’s more consciousness this year than ever, both because of supply chain issues, but all those supply chain issues, some of them are being caused by the lack of drivers. And so all of the parcel companies are giving guidance that the shipping cutoffs are going to come sooner than people are really used to expecting even in past years. And so I know retailers are thinking about strategies around inventory in terms of, at some point in December, I’m just going to move all this inventory into my stores because it’s the only place where people can go to get it because I can’t ship it to them in enough time. But it might make a lot of sense to ship some warehouse workers into stores at that point as well.

Paul Lewis:
Yeah, that’s a great thought, Nikki. And I think what both you and Jack brought up is that companies need to get creative. Whether it’s hiring people and giving bonuses in July to get people for the holidays or moving workers into different roles, they need to be rethinking. And I think we’ve used that term a few times in this conversation, but they need to be rethinking basically the entire way that they’re doing business and at least say reevaluating, as Jack said, doing the surveys, understanding what their competitors are potentially doing, what are the competitive offers? What are the bonuses and other offers that they’re being exposed to? What are the options to change how people work and do you have good career paths? And can you give them more work-life balance or more flexibility for the things that they love?

Paul Lewis:
And then obviously at anchored by all of that is a sense of purpose and interest in what they’re doing. As we’re wrapping up here, do either of you have some final thoughts that you would like the retailers to keep in mind, whether that is about holidays or about their larger approach as we go into next year?

Nikki Baird:
I’ll just say there was something that you commented around if you have to pay more, then you should really be investing and nurturing. I think there’s a flip side to it, which it’s not a negative, but it’s another way of thinking about it, which is that you’re paying this much, you should at least equip these employees with all the tools that they need in order to be effective at the rate that you’re paying them. So there are two sides to making sure that that employee has the training and, and has the skills that they need in order to do their job. But there’s also a huge component to the technology side of you have to empower them to be able to do that job. So you’ve got to think about both of those things.

Jack Bennett:
Yeah, I would, I would agree, Nikki, with what you said, and Paul, you were talking about organizations that are creative. And I think those that are adaptable and agile are the ones that not only survived so far, but in the coming year and in the holiday season, they’re going to continue to thrive. Organizations that didn’t need to be agile or were financially rewarded for operating the same way year over year or decade over decade, they’re now forced to rethink their operations and there’s now new motivation to adapt because of the risk of losing talent. Secondly, I would say, don’t be afraid of the incoming cost or spend that will come out of the holiday season and next year and beyond, no matter what is occurring, whether it is increasing wages, having a higher focus on development and retention of top talent, any model is, of course, going to have operating costs with it.

Jack Bennett:
And the one thing to keep in mind with payroll is, as your wages are increased and your labor demand is high, but your staffing levels are low, you’re going to have a lot of unscheduled overtime or unscheduled premiums not accounted for, and of course, those premiums are going to be higher because the wages went up too. So don’t be afraid to I don’t want to say, let payroll go to the wind but don’t be afraid to relax the reins that are traditionally held around the payroll spend within your workforce.

Paul Lewis:
Well said. I think that, again, as I mentioned, it’s just a time to really proactively look at your strategy, understand what your people want through surveys and other methods, and be ready to transform a bit to survive in this new age of employment. Well, I want to thank both of you for joining this show. It’s been really informative and we definitely appreciate your insight and wisdom on this.

Nikki Baird:
Thanks for having us.

Jack Bennett:
My pleasure. Great to be here.