Retail Sector Struggles with Low Employee Engagement

A survey finds that retail-sector employees have lower engagement levels than workers in high-tech and other manufacturing businesses, health care, banking and financial services, and government agencies.

The World of Retail: How Employee Engagement Can Help the Registers Ring, a study released Feb. 21, 2012, by the Kenexa High Performance Institute (KHPI), a division of Kenexa, a global HR consultancy, defines employee engagement as “the extent to which employees are motivated to contribute to organizational success and are willing to apply discretionary effort to accomplishing tasks important to the achievement of organizational goals.”

Respondents worked full time for organizations with more than 100 employees. The report was developed by analyzing 2007 to 2011 data from a sub-sample of employees from KHPI’s annual WorkTrends study, an international survey of more than 31,000 employees.

To compute an employee engagement index score, KHPI asked respondents to indicate the extent to which they agreed or disagreed with four statements:

• I am proud to tell people I work for my organization.
• Overall, I am extremely satisfied with my organization as a place to work.
• I would gladly refer a good friend or family member to my organization for employment.
• I rarely think about looking for a new job with another organization.

The research, which focused on employee engagement trends in the retail sector in the U.S., Brazil, China, Germany, India and the United Kingdom, revealed a marked drop in employee engagement in all six nations in 2011 compared to 2010, though most countries showed some improvement in results compared to 2007, when the global economic downturn began to impact the retail sector.

“The economic downturn has hit retailers everywhere hard, as costs have been cut, plans have been put on hold and brands have gone out of business,” said Rena Rasch, research manager of KHPI, in a statement. Moreover, she noted that the retail sector has seen “an increase in employee theft and shoplifting, which has been attributed to low pay, poor benefits and a perception among employees that their companies don’t care about them.”

Worth the Effort?

Although employee engagement is a “perennial struggle” in the retail sector, according to the report, given that part of its workforce is “part-time, lower-skilled and seasonal,” some employers might wonder whether engagement efforts are worthwhile in such an industry.

The short answer is “yes,” because employee engagement has a direct correlation with customer satisfaction and organizational performance.

“The simple truth is that engaged employees make a difference, particularly those in customer-facing positions,” Rasch explained. “When engagement is low, customer satisfaction and organizational performance tend to be low. But when engagement levels rise, these factors also improve because employees are more motivated to contribute to the organization’s success and more willing to put in extra effort to accomplish tasks that are central to the goals of the organization. In other words, by improving employee engagement, retailers can enhance customer satisfaction and increase sales volume.”

There are other reasons to pay attention to employee engagement, the study noted.

For example, a low level of employee engagement results in high staff turnover. More than 50 percent of unengaged retail employees said they plan to leave their employer in the 12 months following the survey, Kenexa found, compared to only about 10 percent of highly engaged retail workers.

“As the global economy slowly emerges from the recession, opportunities for employees will open up elsewhere, and retailers could find themselves competing for talent,” Rasch said. “This could prove costly for those with a less-engaged workforce.”

A separate employee engagement study, released by the Temkin Group on Jan. 5, 2012, found that of the 2,435 U.S. employees at for-profit organizations surveyed, 31 percent were highly engaged while 23 percent were disengaged.

This is notable, according to Temkin, because compared with disengaged employees, highly engaged employees are:

• 370 percent more likely to recommend that a friend or relative apply for a job.
• 250 percent more likely to make a recommendation about an improvement.
• 30 percent less likely to take a sick day.

Retail Recommendations

The Kenexa report included four recommendations to those in the retail industry:

• Develop effective leaders. “Leaders need to inspire confidence in their employees through their actions and their demeanor,” the report noted. “They must be trustworthy, honest and caring.”
• Help employees balance their work and life priorities. This includes direct support, in the form of flexible work schedules, which can help retailers tap into a larger talent pool, as well as management support and understanding.
• Ensure that compensation levels are fair. “What matters most is each employee’s perception of pay fairness,” the report noted. “Explain how their pay was determined, and show the link between their pay and their performance.”
• Foster a climate of innovation. Create opportunities for employees to try new things, share their ideas and be innovative so they will be inspired to perform at their best.

“Our research shows that employees who believe that their leaders and managers are effective have an engagement level that is three to five times higher than those who feel their leaders and managers are ineffective,” Rasch noted. “Anyone in a position of authority should look in the mirror, evaluate their own practices and develop their leadership skills and competencies.”

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.​​