As you know, hourly employee turnover in industries like retail, restaurant, and hospitality is common and expensive. Depending on the industry, hourly employee turnover rates historically run from 70–120 percent per year. A lot of companies struggle with turnover, and one reason is that the best hourly employees already have jobs. Companies like Costco, Trader Joe’s, and QuikTrip all have turnover rates of less than 15%. They have found the magic formula for lowering turnover while making money.
How, you might ask? One thing they focus on is building a thriving workforce. A thriving workforce across industries and job types demonstrates 16% better overall performance and 125% less burnout than their peers. They are also 32% more committed to the organization and 46% more satisfied with their jobs, according to Harvard Business Review. A thriving workforce is one that has vitality and one where employees can gain new knowledge and skills.
But these are vague terms, how do you build such intangible qualities? I think the first step is to allow hourly employees to make decisions. Set a dollar amount threshold, and put it in writing. For example, if the business decision costs less than $20, encourage your hourly employees to make the decision. Let them find what they think is the best solution to the problem, and if they make the wrong decision, it will only cost of $20 and you can write it off as cheap training. For the most part employees will make the right decision, and the time this saves for upper level employees is worth the times that the correct decision is not made.
In addition to saving everyone time, allowing employees to make decisions makes them feel connected to the success of the company. As the HBR article above states, providing decision-making discretion leads to thriving employees. Thriving employees are less likely to quit their jobs, and more likely to contribute to making the company as a whole thrive.
If you don’t believe me, take a look at Trader Joe’s, the store chain with more than 340 stores and $8 billion in sales. Trader Joe’s is deliberate about empowering employees and it pays. Turnover at Trader Joe’s is less than 10%, incredibly low for the retail industry where part time turnover is around 67% and full time turnover is around 24%.
Trader Joe’s does a lot of things right that make them a desirable place to work. I think that of the things they do though, giving employees the freedom to make decisions is the one with the highest return investment, and it is a model that almost any business can copy.