Home Progressive Grocer The Employee Satisfaction, Productivity and Profit Connection

The Employee Satisfaction, Productivity and Profit Connection

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SUPERVALU University’s second installment of best practices education focuses on performance management, staffing and morale.

This year, SUPERVALU University is working with Progressive Grocer to share insights from an organisational survey database of tested questions created to provide grocers with the information and tools to help identify trends that may be affecting productivity, employee morale and customer service. Since 2003, more than 14,000 employees from 278 individual grocery stores have taken the survey; 50 percent of the data is from 2008-2009, making it highly relevant in the current recessionary environment SUPERVALU University’s organisational survey has a total of 12 categories. Per the bar graph, five of the 12 categories have been condensed under the heading of Merchandising.    

This series of research from independent retailers and best practice sharing begins with the analysis of the results from the Staffing, Performance Management and Morale categories. Though they are closely related, we decided to start our analysis with these three categories for two other reasons. First, they are consistently the lowest-scoring areas, even for grocery retailers who have the highest scores on the organisational survey overall. And second, there is a direct correlation between how well stores score in these areas and how well they score in overall operations and profits. SUPERVALU University’s organisational survey database supports several other studies that show a link between employee satisfaction and customer satisfaction, productivity, and financial results.

Performance Management

In the Performance Management category, survey ratings and comments centred on employee appreciation and respect, or lack thereof, by management. Employees of the highest-scoring stores said that they felt appreciated; their dedication and hard work were noticed, even if they felt they were underpaid. It is important to note that employees who felt underpaid did not link low compensation to their feelings about how well they were treated by their managers. These findings are also consistent with other national surveys that show employees are looking for more than just a paycheck. It is common for managers to overestimate how much of a motivator salary is for their employees.

In this tough economic environment, owners and managers need to find creative ways to recognise and reward their employees. There are individual preferences and generational differences that dictate how people like to be appreciated, so it is vital for management to have candid discussions with their employees about expectations. For example, younger employees tend to appreciate flexible scheduling and opportunities for development, and older workers are looking for job security and benefits. One way to ensure you are addressing employee perceptions is to conduct an employee survey. Ideally administered by a third party to ensure anonymity, organisational surveys are a great tool not only to measure employee satisfaction, but also to benchmark all areas of the business. Employers who are relying on the tight job market to retain their staffs are missing opportunities to increase productivity now, and risking an exodus when the economy rebounds.    

The questions on which independent retailers scored the lowest in the Performance Management Skills category had to do with a lack of constructive feedback. Employee comments indicate that they want to be respected by their managers and work in a performance-driven workplace where they are given feedback about how to improve. Co-workers who were not held accountable for poor performance and policies not being enforced equally were also seen as disrespectful and demoralising.

Additional areas of Performance Management with low scores indicate a lack of performance reviews, raises, benefits and training. The annual performance review is the ideal time to formalise feedback and review compensation. Unfortunately, many independent retailers do not have a standardized review process or a performance-based compensation program. Employees should receive annual salary increases based on their performance review ratings. Studies have shown that raises that are based solely on tenure can have downsides for employers and their employees, rewarding unproductive behavior or de-motivating your best workers.

Specific comments on the survey for stores that scored low in the area of Performance Management described a lack of training for themselves and especially for management. Decades of exit interviews have proved that employees don’t leave jobs, they leave managers. Therefore, the ability of managers to give constructive feedback and conduct motivating performance reviews is critical to store success. Investing in the development of store leaders as managers of people is often overlooked. It should come as no surprise that employee comments linked the lack of management training to high turnover and the fact that “the ‘good’ employees were leaving to go work for the competitors.” Retailers need to be reminded that strong performers have options even in a down economy, and a proactive strategy for managing all employees is time and money well spent.  

Staffing

In the Staffing category, almost all stores struggled with the ability to hire qualified people. However, the difference between stores that scored well in the Staffing category overall and those that did not was the investment in employee training. Having a solid training program in place will become even more essential when the economy rebounds and the labor market gets tighter. Stores that scored low in the Staffing category also scored low when asked whether they were taking steps to understand why people were leaving. Conducting an exit interview can be challenging when resigning workers rarely give notice. However, the information gained from candid conversations can be invaluable to an organisation that wants to retain employees and improve operations.

Morale

Stores that scored the highest on the survey in the Morale category also scored high in the areas of employees getting along with their coworkers and feeling that their management team worked well together toward common goals. Comments from the highest-scoring stores indicated they also had owners who were perceived by employees to be part of that collaborative and goal-oriented management team. These results confirm that positive morale starts from the top and works its way down through the store. Owners play an integral role in setting the tone for work environment. There was also a correlation between a positive work environment and employee perceptions of strong customer relations. Employees who are treated well by their employer are more likely to treat customers well. Building a culture of respect for the employee will result in better customer service and bottom-line results. Since morale and performance management are closely related, it is not surprising that stores that scored poorly in the Morale category scored the lowest on questions relating to employee respect and addressing employee concerns such as scheduling.

Investing in Human Resources

Low scores in the Performance Management, Staffing and Morale categories are common in the grocery retail industry, especially for smaller independents with no human resources (HR) department. If a retailer does have someone handling HR, all too often the responsibility is limited to payroll tasks. But the danger is, sometimes you don’t know what you don’t know. The lack of expertise in this area can have serious legal ramifications. To maximise their greatest asset, retailers should consider hiring an experienced human resources generalist or a consultant who can help them establish programs to manage performance, staffing and morale that are aligned with the strategic direction of the organisation.