Retailers Seek to Improve Quality of Life

SN STAFF

At a time when the economy and employment opportunities appear to be picking up, supermarket executives told SN they feel well-positioned to retain their best people thanks to new initiatives focusing in many cases on the quality of life on the job. Their remarks came on the eve of Food Marketing Institute's Future Connect employee-development conference in Dallas this week.

Steve Smith, chairman, president and chief executive officer of K-VA-T Food Stores, Abingdon, Va., said his company has cut turnover in half through a series of initiatives.

“Of course, the economy has had some effect on the drop in turnover, but we were moving in that direction before the economy went south,” he told SN.

Specifically, he said top management has become more willing to work with the company's employees over the years, “because if you want to have the best people, you need to have expectations for them to live up to your strategies — and in exchange you've got to be willing to work with them on quality-of-life issues.”

For store leaders, K-VA-T has developed quality-of-life programs to make it easier for the management team to schedule time off to spend with their families, Smith said.

“They can schedule weekends off, in an appropriate manner,” he explained. “We started this effort four or five years ago to reduce turnover, but we have focused more attention on it for the past two or three years. Initially we did focus groups, and while the big issue years ago focused on wages, today it's more quality-of-life issues among upper-middle management.

“We also work with clerks so they can schedule work hours and also attend to extracurricular activities,” Smith said.

For retailers, employee retention at the store level can snowball into a huge headache, said Jose Tamez, managing partner in the Denver office of executive search firm Austin-Michael.

“The employee turnover they have to deal with on a store-by-store basis takes up a lot of time — they are always looking for pharmacists, they are always looking for unit store managers, they are always looking for department managers — the need in the industry is just constant,” he said.

Meanwhile, reducing turnover at the store level is also seen as a way to manage costs, he explained.

For example, a wellness program at K-VA-T serves not only as a perk for employees, it also helps reduce the chain's health care costs, Smith explained.

The outreach program focused on preventative care has improved workers' health, “and helps us keep health care costs down,” he said.

“We've been paying for years for our employees to get health screenings, but a lot of people didn't use the program, so we brought the screenings to store level. And though we had less than 50% participate in the first year, we had 70% of those eligible participating when we did it again at the beginning of 2011. As a result our health care costs have come down for the past three years.”

AFS' EDUCATIONAL REWARDS

Dick King, senior vice president at Associated Food Stores, Salt Lake City, said AFS rewards people by sending them to educational conferences such as the National Grocers Association convention or FMI's Future Connect conference, to which it will be sending approximately 12 people this week.

“We like to send a good mix of people rather than just the typical executives — usually folks from middle management, though we've also dropped down to corporate store directors and people from the division offices.

“It's done not solely as a reward but also to expose them to the industry and give them an opportunity to attend sessions and get a more well-rounded view of the industry,” King said.

Associated also sends employees to the one-week executive sessions at the University of Southern California and Portland State University, and it sends middle-management people to the 14-week Food Marketing Management program at USC as well, he pointed out.

Within the office, Associated has relaxed the dress code for people who don't have meetings with outsiders. “We allow them more casual dress, unless there are days they have specific meetings to go to,” King said.

“We also offer flexible hours to office workers. If someone wants to work four 10-hour days a week and it fits our coverage needs, we allow that, and it's been well accepted. However, others prefer a regular Monday-through-Friday schedule.”

The company also tries to schedule events that people can look forward to, King said, such as once-a-week volleyball tournaments on a lawn area on the parking lot, “and we encourage them to join softball teams in local leagues.

“We also hold appreciation luncheons where people from the office and from the field get together so they know a wider group than just the people in their departments.”

AFS also tries to keep wages competitive with the rest of the marketplace for its non-union corporate stores and the departments at mostly unionized Fresh Market stores that are non-union. “We do a yearly survey to make sure our pay scales are within a range with the competition — not necessarily lower but within a range.

“We also continue to match 401(k) programs, which we think is a plus, especially since a lot of companies no longer do so.”

According to King, succession planning within each department is important. “We identify the needs of each department in the corporate stores and look at our long-term needs to make sure we have people ready to move up in those areas.

“We look at the workers in the department and consider their long-term aspirations, and sometimes we may determine we need to add management.

“If we can't find the people we need for succession, we do internal job posting, and if we still can't fill our needs, we go outside.”

Once a year Associated hosts an event at Lagoon, a local amusement park, where 1,500 to 2,000 employees will attend a barbecue and get discount tickets to the park, King said; it also has a large Christmas party for families and extended families of employees, he added.

Associated Food Stores also puts a lot of emphasis on encouraging employees to maintain good health by lowering the cost of health insurance to employees who get physicals and then work with a third party contracted by and paid for by the company, to help them deal with weight, smoking, diabetes or other issues, King said. “Each person who participates is assigned a mentor who works with them to establish goals, answer question and check up on them weekly.

“This program is designed to let people know we think they're important.”

Opportunity at Tops

According to Frank Curci, president and CEO of Tops Friendly Markets, Williamsville, N.Y., “The job market is improving, but we have not seen any defections. We just finished putting our organization together [after acquiring much of Penn Traffic last year], and being part of a company that's growing and thriving and finding opportunities for people means we've been able to attract all kinds of great help because we're a company on the move.

“We're building new stores and acquiring stores, so this is an exciting environment for people to be in. They like our growth prospects because it means they can grow and prosper with the company, and the people who are joining us can have an impact.

“And because we're independent, rather than a big chain or a division of another company, we're able to do things our own way and people like that.”

Because the store-level employees are unionized, “we can only do the soft stuff, like making sure they have the kind of schedules they desire, making sure they have a positive working environment and making sure they feel appreciated, which we try to do.”

NEW DIGS FOR STATER BROS.

Jack Brown, chairman and chief executive officer of Stater Bros. Markets, San Bernardino, Calif., said his company's new facility can be seen as a tool for recruitment and retention.

“We have a new headquarters and distribution center, so we offer the most modern work environment there is — with gardens and walking paths on the property to encourage people to walk during their lunch breaks,” he said.

“And we like to promote from within. In fact, 90% of our retail management team started with Stater and worked their way up through the stores. And once they get to management level, employees are aware there will be opportunities for further promotion.

“We almost never go outside for retail management, with the exception of IT and finance. And the management people here know I have no children in the business, so each one knows he has the chance to sit in the red chair, which is my chair,” Brown said.

Stater Bros. also encourages its employees to take advantage of opportunities for further education. “We offer a community-college program through the Western Association of Food Chains that's open to anyone — from the newest clerk to the teamsters and anyone else — that offers 12 courses; and if they complete the program, we refund the full cost of tuition and textbooks.”

Since the company opened its new offices two years ago, the courses — mostly business-oriented, “which can help people in their own lives as well as in their jobs,” Brown noted — have been offered on-site in the chain's training center, with the professors coming to Stater Bros.' facilities.

“And since this is an industry-sponsored program, some classes have people from other companies in them,” Brown explained. “I go down to speak to every class, and so do several of our executives, to share our own experiences and get very personal.”

Graduates of the WAFC community college program get a certificate that counts toward an associate degree. More than 1,000 Stater Bros. workers have enrolled in the program.

“We believe our industry needs a better-educated workforce to compete in the future because so many jobs involve more IT knowledge than in the past, so we're giving them this opportunity.”

Stater also sponsors 10 scholarships a year at California State University at San Bernardino, “and we encourage our people to apply. And if we aren't able to give all the scholarships to employees, we encourage their dependents to apply,” Brown explained.

People Vs. Process

Tamez of Austin-Michael said a few companies stand out in the industry for doing an exceptional job with employee retention.

“There are companies that have their own unofficial form of retention by creating a work environment and a compensation environment that keeps people there,” he said, citing Wegmans Food Markets, Rochester, N.Y.; Publix Super Markets, Lakeland, Fla.; Costco Wholesale Corp., Issaquah, Wash.; and WinCo Foods, Boise, Idaho.

“Those are companies that do a good job of retaining their people not only by paying a good and fair wage, but creating a work environment that is almost unmatched,” he said.

What sets them apart, he said is the fact that they focus on being people-driven, as opposed to process-driven.

“We know that in the supermarket industry, processes are an important part of the business — getting the product to the store as cheaply as you can and selling it at a margin where you can make a profit,” he said. “But being too process-driven can lead to a lot of turnover.

“If you look at Publix, that company is all about its people, and WinCo is all about people. It's not that those companies are not process-driven, it's that they are just more people-driven than some of the process-driven companies that end up having higher turnover.

“The companies that are people-driven rarely have their people's resume's appearing on electronic bulletin boards or in recruitment circles,” he said.

Overall, the supermarket industry tends not to have formal employee-retention incentives, other than the typical stock grants and options among executives at the largest chains.

In addition, non-compete clauses in executives' contracts can serve as retention factors by limiting the choices these people have for other employment, he pointed out.

At many companies, retention strategies are engaged on a case-by-case basis — “So and so says she's leaving, and we need to do something to keep her,” Tamez explained. “We can add more to her compensation, or award stock grants or something.”

In general companies tend to “get looser with the purse strings” further and further up the executive chain of command, he said.

“It's interesting how supermarket chains will institute store-level programs aimed at counterbalancing the turnover, yet at the higher levels they will go through dollars more frivolously,” he said.

Reporting by Elliot Zwiebach and Mark Hamstra