If you ask leaders in any retail industry, including rent-to-own, what keeps them up at night, they will probably say the inventory challenges that this COVID-19 pandemic has presented. But a close second on that list might be retaining great employees.
According to Wikipedia, “Employee retention can be represented by a simple statistic (for example, a retention rate of 80% usually indicates that an organization kept 80% of its employees in each period). However, many consider employee retention as relating to the efforts by which employers attempt to retain the employees in their workforce.” Looked at in this sense, retention then becomes the strategies used to keep employees rather than the outcome.
We may all want to say that our target is zero employee turnover, but that is difficult, if not impossible, to achieve in any business model. But what is the industry standard for the rent-to-own community? For comparisons, turnover in the hotel industry varies from 60 to 300%. Grocery is typically 100% while typical retail is 59%. As CNBC recently reported, fast-food companies are losing 100% (and, in some cases, more) of their employees each year. Interestingly, according to the 2021 Bureau of Labor Statics report, the overall annual total separations rate or turnover rate in 2020 was 57.3%, and in my experience, the rent-to-own industry is right in the middle between 50-60%.
I have always defined my key strategies for retaining employees in the RTO industry to be:
- Start new hires the right way
- Compensate competitively
- Find new ways to challenge your employees
- Set clear expectations for each position
- And then, ask for feedback with an employee satisfaction survey to get as much insight as possible into what motivates your employees
The one piece I would like to add to this strategy is employee praise! Think about an old boss you did not necessarily like; how would you rate their skills of recognizing, praising and rewarding hard work and achievements? Now, take an honest assessment of your skills at delivering praise today – are you truly providing timely recognition for great performances, large and small?
Delivering effective employee recognition is mostly an art, not a science, and the key takeaways for me are as follows:
- You must be timely. The more time that passes between a great performance and the recognition, the less impact you will have. Immediate is never too soon.
- Specific praise is most impactful. Do not just tell an employee that they did a good job – tell them how they did a good job. This lets them know you are truly paying attention.
- Don’t mix your messages. One thing I was guilty of as a leader was praising along with constructive feedback. Unfortunately, your employees will only hear what they need to do better. Save the performance improvement conversation for later.
As a rent-to-own industry leader, your challenge is to create a recognition culture. That means that you need to spend time trying to catch employees doing good things and provide that sincere feedback. Be unexpected! Tenure recognition is great, but an employee saving a great customer and you recognizing it is awesome!
My last employee recognition tip is old school: do not underestimate the impact of a handwritten note. This long-forgotten style of gratitude and thanks for a job well done is very powerful.
I know that brick-and-mortar rent-to-own is and always has been a high-relationship, loyalty-business transaction with the existing customer base, but you cannot forget about your employees who drive that customer loyalty. Praise and recognition are essential to success and have never been as important as they are today!
This article was first published in the May 2021 issue of Retail Observer.