The rate of turnover in the retail industry (13 percent) is among the highest in the country — second only to the tech sector (software) at 13.2 percent. While the digitization of retail and advent of e-commerce is inevitably taking more workers off the sales floor and into back-channel positions (e.g., telecom sales reps), the fact is that retailers can be doing more to leverage artificial intelligence (AI) and automation to retain top talent and position them for success in an evolving industry.
When it comes to redesigning the employee experience in any industry, compensation must be a top-line priority. But this also means rethinking compensation for our multigenerational, tech-savvy and work-life balance workforce. That is to say, compensation today isn’t just limited to salary.
A recent report by the Work Institute shows that while compensation and benefits (9 percent) ranks among the top reasons for employees leaving a company, other reasons like retirement (7 percent), well-being (9 percent) and work-life balance (13 percent) are also critical factors that employers must consider implementing into their compensation packages. In other words, pay alone isn’t enough to make employees feel valued or incentivize them to stay at your company.
Meeting employee expectations goes a long way for retailers looking to improve employee retention, create seasonal hiring road maps and increase overall employee productivity. With that, here are some ways that retailers can meet the demands and expectations of employees through pay transparency, workplace diversity and pay equity.
The power of transparency is not to be underestimated in our data-driven and socially empowered world. While once a taboo topic, reports now show that more employees are comfortable discussing their salary information with colleagues, or with their employers making compensation data available across the company. In fact, Glassdoor reports that 70 percent of employees globally believe salary transparency is good for employee satisfaction. Yet, nearly the same amount (69 percent) wish they had a better understanding of what fair pay is for their position, for their skill set at their company and in their local market.
It’s up to retailers to give employees the tools they need to understand not just what they're being compensated, but why. Doing so will have a significant impact on employee trust, satisfaction and productivity. When paired with the power of AI, pay transparency can also be pivotal in increasing motivation across the organization. For example, businesses can give sales reps access to their sales numbers and compensation forecast through the application of predictive analytics. The ability to clearly see how their sales impact their compensation scenarios in real time will help boost employee performance and improve their perception of corporate transparency overall.
The reciprocal relationship between employee satisfaction, workplace diversity and corporate profits is undeniable. In fact, McKinsey reports that companies in the top quartile for gender diversity on their executive teams were 21 percent more likely to experience above-average profitability than companies in the fourth quartile. But for employees, it isn’t enough for a company to be diverse; they must also compensate, promote and reward talent with an eye toward fairness.
According to Randstad US, 78 percent of employees say a workplace where people are treated equally, regardless of gender, sexual orientation, age, race or religion, is important to them. However, more than half of companies aren't meeting this expectation, as 56 percent of female workers and 52 percent of male workers believe their employers could do more to promote gender equality and diversity.
Retailers can use AI and predictive analytics (and the increasingly widespread ability to offer remote work options) to boost diversity by looking at skill and ability, rather than location and background. This model of hiring — not discriminating based on geography — is even more conducive to the growth of e-commerce. Retailers can seek and hire top talent beyond their physical communities, which gives them a massive opportunity to grow a diverse gender, ethnic and socio-economic workforce for their virtual shopping services. AI is also useful here when it comes to creating compensation plans across multiple states and regions, and adhering to local pay laws and market trends.
Workers today, especially younger generations, expect their employers to take a firm stance on issues like diversity and pay equity. Among workers age 18 to 35, 75 percent expect employers to take a stand on equal rights, climate change, immigration and constitutional rights.
When it comes to compensation, pay disparity continues to perpetuate American society at the detriment to women and minority groups. With employees perceiving retail to be the most diverse industry (according a 2017 survey by Owler), retailers have an obligation to ensure fairness across their compensation and performance management process.
By leveraging AI and predictive analytics in the hiring and onboarding stage, retailers can eliminate unconscious bias from the compensation equation by making compensation fair, based on a variety of rules which could include education, experience, certifications and more — but not race, age or gender. Once a candidate is onboarded, retailers can continue to evaluate, incentivize and reward employees against a number of factors that contribute to the only thing that matters: their overall performance.
The evolution of the retail industry from brick-and-mortar to e-commerce gives brands an unprecedented opportunity to overhaul everything from digital investments to hybrid in-store experiences to corporate culture and more. Compensation management redesign must be a top priority in this period of transformation if retailers want to retain the innovative talent they need to stay competitive far into the future.
Fabio Ronga is the CEO of beqom, a compensation management company.
Related story: New Survey Reveals Retail's Gender Wage Gap
Fabio Ronga is the CEO of beqom, a compensation management company. Fabio's main objective is to make the people at beqom happy. He drives the company strategy and makes sure everyone understands it and is equipped to contribute to it. If the people at beqom are happy, we significantly increase our chances to make you and your people happy. Coming from SAP, Fabio spent his career creating, marketing and implementing innovative enterprise software in North America, Europe and Asia.