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Why Hourly Retail Employees Need Performance Reviews

  • Written by  Abby Baumann, EPAY Systems

0aaAbbyBaumann EPAYIt’s no secret that, as far as desirable employers go, the retail industry doesn’t rank at the top of the list. For the American workforce, retail jobs are often equated with low pay, nonexistent benefits, long hours and limited growth opportunities. But forward-thinking retailers are working hard to shatter these misconceptions — and, perhaps surprisingly, performance reviews are one of the tools they’re using to turn things around.

Carefully conducted performance reviews can not only lower turnover rates; they also can boost employee engagement and even productivity on the sales floor. Consider these five reasons that retailers can benefit from implementing strategic performance review systems.

Recognition-Based Performance Reviews Motivate Employees

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Given that retailers don’t have many incentives to offer hourly workers, recognition-based performance reviews can be especially effective. The performance reviews become a structured, scheduled time when managers can show recognition for a job well done and appreciation for employees who go above and beyond.

Study after study proves that employee recognition leads to improved work performance. In a survey by Globoforce, 78% of workers said they’d work harder if they felt their efforts were better appreciated and recognized. 

Furthermore, when employers took the step of removing performance ratings from their review process, employee performance dropped a full 10%, according to a study by Corporate Executive Board (CEB).

In other words, productive employees who take pride in their work want their efforts to be noticed. Effective performance reviews accomplish this very thing. 

Feedback-Driven Performance Reviews Reduce Turnover

Last year, hourly store employees had the highest turnover rate in the retail industry — a whopping 65% — according to a survey from the Hay Group division of Korn Ferry.

As you know, turnover is expensive. Considering that the cost to hire and train a replacement for one minimum wage employee has been calculated to total $3,328, improving employee retention is a sure-fire way to improve your bottom line.  

Studies suggest that employers can combat turnover simply by providing positive feedback to employees via platforms like performance reviews. Researchers at Gallup found that, in a study of more than 65,000 employees, those who received strengths feedback resulted in 14.9% lower turnover than those who did not. 

Of course, this means turning around the common perception held by both managers and employees that performance reviews are primarily vehicles for criticism. It means encouraging store managers to focus on employees’ strengths and talents as well as opportunities for improvement. But isn’t that something managers should be doing anyway, all year long?

Performance Reviews Leverage Strong Manager-Employee Relationships

Everyone knows the old expression, “people leave managers, not companies.” According to one Gallup survey, a full half of employees who quit their jobs did so to escape a difficult manager. But that survey also found that the door swings both ways. When employees like their managers and feel comfortable at work, they’re more committed to their work and workplace.

When managers give employees positive attention and encouragement, it can help hourly workers feel more connected and strengthen loyalty. In this event, a properly conducted performance review becomes a positive experience for both parties.

The key may be to provide managers with structured performance review training. When store managers are promoted internally — without the benefit of formal managerial training — they may not know how to conduct meaningful performance reviews without coaching and guidelines.

And since managers play such an important role in retail, using 360-degree feedback in performance reviews can help ensure you have the right kind of people in those very important management positions. Collecting feedback from a manager’s employees as well as their supervisors can provide a more balanced view of what’s really happening in a given store.

Performance Reviews Can Set Employees Up for Success

An effective performance review isn’t just about positive feedback and recognition — it’s also about encouraging employees to hone existing skills and develop new ones. When employees feel confident in their performance and excited about learning new things, they’re more engaged and productive.

Managers can use performance reviews to find out what tasks employees enjoy doing and what they would like to do more of. For example, if an employee most enjoys working in a particular department, that’s good to know — and a doable thing to accomplish. If an employee wants to try a hand at something new — say, updating the window display or staging an endcap — it’s in the retailer’s interest to not only let them try it but give them the guidance to do it well.

While you may be limited in how much formal training you can offer store employees, learning what they’re interested in during performance reviews and then offering them opportunities to do so can be incredibly rewarding for employees.

Performance Reviews Can Focus On The Future

Beyond an assessment of an employee’s recent past performance, effective performance reviews address future performance expectations. It’s an opportunity to help employees better understand their role within the company — i.e., see the big picture. Employees appreciate being in the know.

And while most retail employees probably don’t envision a long-term future with any given retailer, it’s important to use performance reviews to discuss the employee’s future path at the company.

This is the chance to find out what would make an employee stay — perhaps a shift update, more work hours, a modest pay increase, benefits or potential upward movement. You won’t know if you don’t ask, and performance reviews are the perfect vehicle for these conversations. 

Retailers Can Use Performance Reviews To Get An Edge 

In summary, American retailers are up against a number of challenges: high employee turnover, tight margins and fierce competition, both in stores and online. In this environment, every detail matters.

Instituting a thoughtfully developed performance review system is one way retailers can motivate and engage their hourly workforce — and in this industry in particular, that can yield a unique competitive edge.


 

Abby Baumann is the Senior Marketing Coordinator at EPAY Systems, a leading SaaS provider of integrated human capital management software designed to help medium to large businesses manage and pay their hourly workers.

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