Kroger Seeing Payoff From Employee Investment

Investments behind The Kroger Co.'s workforce are having an outsized impact on employee retention, which is in turn improving customer experience in stores and the company’s costs to serve, Tim Massa, the company’s chief people officer, said in a presentation during the retailer’s annual report to investors.

After announcing a year ago a $500 million investment in employee wages, training and benefits as part of the Restock Kroger initiative, employee turnover is down 9.4% while average hourly worker wages are up 3.3% to $14.47 per hour, Massa said. And employees who do leave Kroger are staying longer before they exit, he added.

Tim Massa photograph courtesy of Kroger

For a company employing 460,000 workers, that’s a big accomplishment, Massa said, “but we’re nowhere near done.” 

Restock’s mandate to “develop talent” goes beyond worker wages, he continued, noting the retailer's focus on improving the experience for its workers—what Massa described as “differentiating ourselves with culture”—including attracting and developing high-level talent. Massa’s presentation outlined progress on all three fronts, and mapped out areas that will continue to see attention through the three-year Restock period.

“Both on our improving retention, and folks staying with us longer … those lead to improving our customer experience,” Massa said. “That associate is much more knowledgeable, much more engaged, knows their department, knows their category, and that improves that customer experience for our customers. Importantly, we see a cost to serve being lower and a return on investment being better by reducing our turnover costs.”

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Kroger earlier this year said it devoted a third of its savings under new federal tax laws to supporting an improved associate experience, including a plan to offer tuition reimbursement of up to $3,500 a year for education programs such as GEDs, certificate programs and college. More than 2,000 workers have since signed up.

Kroger concurrently rebranded its job recruitment program behind a “Careers With Promise” tag, which internal research indicates has resonated with Generation Z and millennial populations seeking hourly work, as well as outside talent. The company is also prioritizing development of “high-performance leaders” through its Kroger Leadership Academy, which provides every associate and leader with role- and leadership-based training and development and which Massa affirmed is helping to bring Kroger’s “feed the human spirit” purpose to life.

About 56% of Kroger’s hourly workers have seen an enhancement to wages since the Restock program began. Another 33% through collective bargaining agreements will see wage improvements in 2019 and the remaining 11% or workers will see wage increases by 2020.

“In addition to the wages, the things we’re looking forward over 2019 and into 2020 is how we continue to upskill our workforce and provide a more flexible workforce. Paramount to that is looking at our leaders of others as teachers and coaches to teach, coach and celebrate with our associates.”

Massa said Kroger was also looking to provide workers with more scheduling flexibility, and to learn from the gig economy for means to enable “on-demand” talent. In collective bargaining agreements like those recently completed in Cincinnati and Dayton, Ohio, Kroger is seeking more “wall-to-wall” clerks, providing the company with flexibility while supporting a message of opportunity in its “Careers with Promise” messaging. That also carries to the company’s actions in the community, as workers—like shoppers—are becoming intentional about how they make money, as well as how they spend it.

“We’re hearing from our associates that it’s beyond what we do in the store, it’s beyond how we interface with you on an app,” he said. “It’s what we do in our communities and how we give back is what really resonates as well with the men and women who join Kroger.”