The State of Labor in Retailing

DISCUSSION TOPIC

The State of Labor in Retailing 09-02-2011

Labor Day is almost here and the retail industry’s focus is on sales this weekend and not the original intention of the holiday — to celebrate American labor and its historic role in making the nation great.

So what is the state of labor in the retailing business?

The industry, like others, has its problems, with a workforce largely made up of part-timers who work terrible hours for low wages and few benefits. The combination of unmotivated and sometimes poorly-trained workers and managers under extreme pressure to succeed has created issues in some stores.

Retailing also suffers from an upper management disconnect. As covered many times on RetailWire, top executives often do not have a true understanding of what workers deal with in stores. Unlike in the past, many top execs are more likely to come from MBA programs than up from the ranks.

Like other industries, compensation of upper tier executives has grown at an exponentially faster rate than front line workers. A few businesses — Whole Foods comes to mind — have taken steps to tie executive compensation to what workers within the chain make, although even here the c-suite is growing at a faster rate than store employees.

In 2006, Whole Foods increased its the salary cap from 14 times the average pay of all full-time employees to 19. That number was nearly twice the cap (10x) Whole Foods had in place in 1999. The average hourly wage for full-timers at the chain between 1999 and 2006 grew from $12.36 to $15.38.

The debate over benefits and how to control health care costs remains contentious within the industry. Major grocery chains in Southern California and the United Food and Commercial Workers seem, almost unbelievably to outsiders, on the brink of another work stoppage. An employer lockout followed by a strike in 2003/2004 was extremely damaging to Albertsons, Kroger and Safeway with the chains estimated to have lost $2 billion, not to mention the hardship faced by workers not pulling in their regular paychecks.

Not all labor relationships within retailing suffer from animosity or, perhaps worse, apathy. There are many broad exceptions: Costco, Container Store, Trader Joe’s, Wegmans, Zappos and others are often given high marks for employer/employee relationships.

Ultimately, however, many retail businesses see and treat workers as expenses to be contained and not assets to be exploited. They do this even as they proclaim, almost in unison, that their front-line workers are most important to performance.

Discussion questions:  What do you think is the state of labor in the retailing industry today? How would you fix it, assuming you believe there is something that needs to be fixed?

My post:

As a career-long retail leader, this subject never fails to frustrate me.  The easy excuse of the poor state of labor in retailing is the dominance of short term financial metrics driving bad leadership at the shop floor level.  The constant demand of immediate results that beat market expectations forces leaders to cut investment in long-term success strategies:  training and development, benefits that drive employee loyalty and performance, and time spent in efforts to intentionally engage line workers.

However, any leader in any retail organization can decide today to focus on loving their teams and provide simple development opportunities and engagement activities.  I’ve seen it personally over and over again.  Having said this, those retailers who continue to push their leaders to not focus on positive efforts to engage their staff will continue to decline into irrelevance.  Why?  Most operational leaders do not have the character strength to counter poor senior leadership.

How to fix this?  Support those retailers who get it – Container Store, Zappos, Costco and others.  Their financial results will continue to strengthen their market share and eventually kill off lesser contenders.  The evolution of retail, happening in front of us.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at Retailwire.com:  The State of Labor in Retailing

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