Labor is the biggest strategic issue the convenience store industry faces today and will continue to face in the future.
“Unemployment remains low, and that means employees are quick to leave jobs for other ones. Because of that, turnover is high,” NACS CEO Henry Armour told a packed house at Thursday’s general session, where the theme was operational excellence.
The numbers tell the story, he said, with an unemployment rate of 3.8% (August 2023) and 134% store-level turnover (2022 NACS State of the Industry data).
The big question: How do you attract quality store-level employees who will stay and grow with your company?
To answer that question, NACS is looking to Dr. Zeynep Ton and her decade of experience with the Good Jobs Strategy. Her groundbreaking book by the same name was the impetus for founding the Good Jobs Institute, which serves leaders who want to improve the jobs and lives of their employees—while boosting their company’s performance.
The solution—the Good Jobs Strategy—to developing a more reliable, more motivated workforce, according to Dr. Ton, who is a professor at MIT Sloan School of Management, is to create an environment in which labor productivity is significantly increased so that employees don’t need second jobs.
The four pillars of the Good Jobs Strategy:
- Focus and simplify (reduce assortment/SKUs)
- Standardize and empower
- Crosstrain
- Operate with slack
Doing those things drive higher labor productivity and allow you to increase wages, Dr. Ton said. For example, standardization will enable efficiency, consistency and productivity.
“But that standardization is really done to reduce mental overburden,” she said. And when you combine it with empowerment, you unlock potential for your employees and for your company.
“That empowerment enables them to contribute to higher sales. That empowerment enables them to reduce costs by coming up with ideas that improve their system all the time. That combination of standardize and empower increases their productivity. And because they are more productive, now they can be paid more.”
A number of NACS retail member companies are working with the Good Jobs Institute. Two of those companies’ leaders joined Armour and Dr. Ton for a panel discussion on workforce.
Varish Goyal, CEO of Loop Neighborhood Markets in California, said the process of developing a new strategy for his workforce has been an eye-opening experience, especially as he was looking at data early on.
“There were a few things that really surprised us. Number one was the gap between what is deemed a minimum wage versus what is deemed a living wage,” he said. “We started to look at our staff and we had only a handful of folks in our company who were making a living wage. It turns out all of them were store managers.”
For Joe Hamza, CEO of Nouria Energy Corp. in Massachusetts, it was the complication of what could be simple processes that captured his attention early in the process.
“Right after the workshop we had with Professor Ton, our team went back and dove into the intricacies of our operation. What we found, quite honestly, is a lot of complexities,” Hamza said. “We had a lot of checklists. We had one for safety, one for food, one for lottery—one for everything. In fact, we had a checklist for checklists.”
What his company does now, he said, is look at every task within the organization in an effort to identify what is needed, what is redundant and how to make things simpler to be effective at what they do and deliver on their products.
Successfully reshaping your workforce to benefit your company and customers starts with a mindset shift, Dr Ton said. You have to go into the transformation not to be nice, not because it’s a feel-good thing to do but because you want to win with your customers.
“That customer-centric focus is critical,” she said. Once you realize this, you understand how obvious it is that you also have to be frontline-centric.