Lunds, Wegmans Win FMI Maxx Awards for HR Programs

MARK HAMSTRA

MINNEAPOLIS — Lund Food Holdings won a 2007 Food Marketing Institute Maximizing People Award (known as Maxx Awards) at the FMI Human Resources/Training and Development Conference in its home city here this month for a centralized orientation program that has reduced turnover and cut costs.

Wegmans Food Markets won the award in the large-company category for its efforts to reduce the high school dropout rate in its headquarters city of Rochester, N.Y., through a multifaceted program that includes scholarship and employment incentives.

The Lunds program, which was recognized among retailers employing 4,000 or fewer workers, was designed to increase retention among new hires, especially among courtesy clerks, deli clerks and cashiers.

“About 24 months ago, we noticed that uniform use had increased, but we still never had enough people,” said Krag Swartz, director of training at Lunds, during a presentation at the conference.

The turnover rate among new hires was 56%, at a company where the average length of service was 17.2 years.

“Our 30-day evaluation had turned into an exit interview,” Swartz quipped.

Lunds, which operates 21 upscale Lunds and Byerly's stores in the market, calculated that the cost to replace each new, part-time worker was about $317, which translated into an annual expense of nearly $1 million for replacing 2,927 people each year. Other external research has placed the costs of turnover much higher, Swartz pointed out — at up to $2,100 per year to replace each new worker.

The company began to refer to turnover as “the expense without an invoice.”

Lunds examined the best-practices retention programs at other retailers, including Dorothy Lane Market and Supervalu, its wholesaler, as well as companies outside the industry, such as Nordstrom and Ritz Carlton.

Then, after consulting with store managers and front-end managers about how the hiring process could be improved, the company came up with an in-depth orientation program that immersed new hires in the culture of the company and replaced the store-by-store programs that had been in place. The goal was reduce turnover for new hires from 56% to 40%.

“We wanted everyone who started at the company to understand the whole enterprise,” Swartz said.

Orientation evolved into an immersion into the company's food products, complete with a lesson on the company's history and, usually, a visit from the company's chief executive officer, Tres Lund.

Trainees are also given homework to learn about placement of products within the store and expand their knowledge about the various departments.

Lunds also added a “pre-30-day follow-up session” to the orientation process to make sure that new hires were on the right track.

The result has been a 17% reduction in turnover, exceeding projections, and feedback from workers on the new orientation system has been “overwhelmingly positive,” Swartz said.

WEGMANS SCHOLARSHIPS

At Wegmans, the company's scholarship program also has served to reduce turnover among its student workers.

The Wegmans Work-Scholarship Connection Program began in 1987, when the Rochester Urban League had issued a call to action for local businesses to help solve the problem of high dropout rates at area high schools.

Wegmans, which was also experiencing very high turnover — about 100% — among its workers who attended local high schools, decided to answer the call, according to Ty Kelly, a Wegmans store manager who described the program at the FMI HR conference.

Wegmans created a program (written about in detail by SN in the April 23, 2001, issue) in which students who are doing well enough in high school can work part-time at Wegmans and earn scholarship funding for college. They are organized in groups of 30, and each group is overseen by a “youth advocate” who works full-time at the school.

The program has since been incorporated into a local social services organization, the Hillside Family of Agencies, and includes 1,500 students attending about 10 high schools in Rochester. The students are employed at 24 different Wegmans stores in the area, and the 71-store chain is expanding the program to Syracuse, N.Y., and Landover, Md.

“We plan to double the size of the program by 2010,” Kelly said.

The program has reduced Wegmans turnover to about 16% among students, and 80% of those who graduate high school in the program go on to attend college, he said.