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Retailers cope with a tight labor market

Wages rise, but benefits, flexibility and sense of purpose are seen as keys to attracting today’s workers.

Retailers were already coping with a competitive labor market before the pandemic, but the events of the past year have compounded their staffing challenges and added some additional complications.

Many food and drug retailers recruited additional workers, raised wages and handed out bonuses last year as consumers stocked up on groceries and other necessities, such as disinfectant, sanitizing wipes and toilet paper. In addition, new sanitation protocols and a sharp increase in demand for curbside pickup also required many retailers to maintain high levels of staffing.

Offering COVID-19 testing and administering vaccines for the virus also kept food and drug retailers focused on attracting workers to assist with those functions.

CVS Health, for example, said in August that it plans to raise its minimum hourly wage to $15 per hour effective next July, with incremental increases beginning immediately. The company said that more than 65% of its hourly employees were already making more than $15 per hour.

As the economy reopened and restrictions loosened throughout much of the country this past spring, other retail channels and restaurants also stepped up their hiring, putting even more pressure on the available workforce.

These conditions have led food and drug retailers to issue mass appeals for labor and to roll out new incentives, including higher wages and increased benefits.

[Read more: CVS Health looks to add 25K employees with 1-day virtual career event]

CVS Health, for example, said in August that it plans to raise its minimum hourly wage to $15 per hour effective next July, with incremental increases beginning immediately. The company said that more than 65% of its hourly employees were already making more than $15 per hour.

“Our wage increase is the latest in a series of investments in our employees, including bonuses and benefit enhancements throughout the pandemic,” Rebecca Ferrick, a CVS Health spokesperson, told Drug Store News. “With millions of visits per day to our nearly 10,000 locations across the country, our retail business plays an important role in how we deliver care. Increasing our minimum wage for hourly employees will help attract and retain the talent needed for our
customer-centric business approach. Just as critical, it aligns with our values and our purpose, and builds on the history of our investment in our people.”

The wage increases, along with ongoing efforts to provide a competitive, comprehensive compensation package, will make the retailer “an even more attractive employment option,” she said.

Independent pharmacy operators are also seeking to cope with labor shortfalls, said Jennifer Zilka, group vice president of Good Neighbor Pharmacy field programs and services at AmerisourceBergen.

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[Read more: Walmart to raise hourly wages for employees]

“Labor challenges seem to be impacting all market sectors right now,” she said. “Across independent community pharmacies, we are seeing needs for clerks, pharmacy technicians and delivery drivers. For the stores in the Good Neighbor Pharmacy Network, we’re keenly focused on helping them retain talent and support existing staff members.”

AmerisourceBergen offers employee development tools that can be customized to the needs of specific pharmacies and their staff, Zilka said.

“We combine industry best practices with the insight of a dedicated business coach and incorporate the goals of the pharmacy owner to tailor a program that will empower staff, ensure they feel supported in their role and maximize employee engagement,” she said. “Our customers recognize how important good talent is to their patients, so we’re working with them on how they can invest and ensure the retention of existing staff members.”

[Read more: NCPA survey: Tight labor market squeezing local pharmacies]

Meanwhile, some companies have sought to expand the pool of talent that is available to them by loosening the requirements for employment.

CVS, for example, in addition to boosting wages, recently said that a high school diploma or GED would no longer be needed for most entry-level roles. This year, the company will also eliminate the minimum grade point average requirement for candidates from colleges and universities.

“This is harder for mom-and-pop retailers than it is for big retailers, but it’s important to provide career pathing, so that employees can build their skills and move up within the retail store, or within the field organization in the case of a larger company.”
Tom Hill, partner, Axiom Consulting Partners

Tom Hill, a partner at Axiom Consulting Partners, said eliminating the requirements would allow CVS to reach a broader spectrum of potential candidates.

“It really doesn’t surprise me that an employer like CVS, which has a robust training and onboarding program, believes it can tap into another piece of the labor market to find associates that may have been overlooked in the past,” he said. “I think it can be a really good move to open up the talent market.”

Hill said he’s also seen other employers re-evaluate whether college degrees are required for other specific positions as well.

Competing Beyond Wages
In addition to CVS, national retailers planning wage increases include Kroger, Walgreens, Walmart and Costco.

Cincinnati-based Kroger said in March that it would increase its average wage to $16 per hour for hourly employees by the end of this year, following an announcement by Walmart in February that it would raise its average wage to $15 per hour. Also in February, Costco announced that it would increase its starting wage to $16 per hour.

[Read more: Walmart to invest in employees’ college education]

Offers of increased pay from these companies and others, such as Amazon, are expected to add additional pressures on smaller retailers that are seeking to hire and retain staff.

Hill said smaller retailers need to consider how they can compete for talent using other components of their employee value proposition. These components can include such perks as flexible scheduling that allows workers to attend to their other obligations, for example. He said Axiom has found that employee turnover is often closely related to workers’ desire for a more favorable work schedule, especially when job openings are plentiful and people can easily leave one job for another with similar pay.

Another way retailers can compete for talent is by making it easier for workers to qualify for benefits, as opposed to limiting workers’ hours to prevent them from qualifying for health insurance, for example.

[Read more: Hy-Vee intros pharmacy technician apprenticeship, seeks to hire 2K pharmacy techs]

a person standing in front of a store

Outlining a path to building a career is another important benefit that employers can offer candidates, Hill said.

“This is harder for mom-and-pop retailers than it is for big retailers, but it’s important to provide career pathing, so that employees can build their skills and move up within the retail store, or within the field organization in the case of a larger company,” he said.

Providing formal training opportunities can be a part of this career development, but it also includes providing on-the-job experiences that can help workers develop their skills and grow their careers.

Another recruiting tactic available to large employers is highlighting opportunities at multiple locations, Hill suggested. If someone applies for a position at one store, they could be alerted to available positions at other nearby stores, for example.

[Read more: Walmart to raise hourly wages for employees]

“That opens up the talent pool a little bit more, in case the candidate that was a silver medalist at one location might be a better fit with the manager and team at another location,” he said. “That way you get the most out of the talent that is available.”

Other tips Hill offered to aid in the recruiting and retention process included:

  • Consider posting ads in appropriate areas of job-hunting websites, such as ZipRecruiter, where potential employees may be seeking opportunities;
  • Schedule some interviews and initial discussions with potential employees by phone, rather than in person, both to minimize in-person interactions during COVID, but also for the sake of convenience; and
  • Pay close attention to the onboarding process. “Some research we have done in the past shows that a better onboarding experience improves retention and productivity of employees,” Hill said.

He said retailers also need to move quickly if a new hire isn’t working out. “It is an employee’s market right now, and just using 30-day probation or things like that just aren’t going to cut it,” Hill said. “It calls for recognition that some employees might not be a good fit, and moving them along quickly if they are not meeting the requirements of the job.”

[Read more: Target offering debt-free degrees to team members]

“Some companies might think they will be able to offer lower wages to people who just came out of college, or to young workers, because we are just coming out of the pandemic. My warning is not to do that because Gen Z is actually willing to be very loyal.”
Hana Ben-Shabat, founder of research firm Gen Z Planet

Tapping into the Gen Z Workforce
Members of Generation Z — people born between 1997 and 2012 — are entering the workforce at a rapid pace and represent the employees of the future for many retailers.

Managing the needs of these young workers requires a special approach that takes into consideration their life experiences and their attitudes about their careers, said Hana Ben-Shabat, founder of research firm Gen Z Planet and author of the recently published book “Gen Z 360: Preparing for the Inevitable Change in Culture, Work, and Commerce.”

After the 2008 recession, she said, many companies were using the excuse of a sluggish economy to offer low starting wages, which led many millennials, who were often burdened with high student debt, to jump from job to job to seek better-
paying opportunities.

[Read more: Target preps for the holidays by increasing employee hours, pay]

“Everyone is looking back and saying that millennials are disloyal, but millennials were acting in a rational way to maximize their personal gain by making those moves,” Ben-Shabat said.

She cautioned against retailers taking a similar approach in the wake of the pandemic. “Some companies might think they will be able to offer lower wages to people who just came out of college, or to young workers, because we are just coming out of the pandemic,” she said. “My warning is not to do that because Gen Z is actually willing to be very loyal.”

Ben-Shabat said her research shows that Gen Z workers are willing to stay five years or more with a company if the employer offers them the kind of experience they are seeking.

She also noted that benefits are even more important to Gen Z than wages, according to her research. “This is a generation that grew up during the 2008 recession,” she said. “They were seeing their parents losing their jobs, sometimes losing their homes, and that experience is really ingrained in this generation. They have really learned the lesson that, from a very young age, they have to secure their financial future.”

[Read more: Costco raises its minimum wage]

Along those lines, some tools that can attract these workers include matching 401(k) retirement programs and good health insurance.

According to Ben-Shabat’s research, 88% of Gen Z said benefits are important or extremely important to them when selecting an employer.

She also agreed with Hill that flexibility in scheduling is particularly important to young job seekers, as this was cited as an important consideration by 80% of Gen Z people that she surveyed.

Personal development and training are also very important to this generation, she said.

Recruiting ‘Digital Natives’
Retailers should keep in mind that younger consumers entering the workforce are more technologically savvy than any generation before them, Ben-Shabat said.

[Read more: Schnucks to award 4th bonus to front-line employees]

“They are true digital natives,” she said. “They know how to use technology, and they expect that companies that are trying to recruit them should have a smooth, technology-driven process.”

More and more companies are embracing new tools, such as video-based resumes and candidate-directed online interview scheduling, to appeal to younger workers, she said.

“When you do a video resume, you allow a person to express who they are, without actually having to fill a page with ‘stuff’ that they did,” Ben-Shabat said. “There is a limit as to how much a 20-year-old person has done.”

A video resume not only allows candidates to express themselves, but gives employers an opportunity to gain a sense of how the person speaks and behaves, she said, noting that these qualities are particularly important in a retail environment, where customer interaction is often a key aspect of the job.

[Read more: Walgreens offering new round of employee bonuses, rewards]

In addition, she said, today’s younger consumers will likely feel very comfortable submitting a resume in video format. “For this generation, this is very natural. They love to do that, and they have the tools to do that.”

Allowing job candidates to schedule their interviews themselves online is another way employers can make the application process more amenable to younger workers. This puts the candidate in control and reinforces the fact that the employer is taking a modern approach to the hiring process, Ben-Shabat said.

At the same time, retailers also need to be careful about over-automating the hiring process, however. “I have seen some companies that have gone into a totally automated recruitment process, and that can be a very major turnoff,” she said. “You have to strike a balance between personal contact with the candidate and using technology in the process.”

[Read more: CVS Health opens Workforce Innovation and Talent Center in Pittsburgh]

Another important consideration is the speed and responsiveness of the employer, she said. “Gen Z really does not want to wait. If you take too long to respond to them — or what they perceive is too long — they will never get back to you again.”

Providing Purpose
Ben-Shabat also suggested that young workers want employers to provide more than the traditional onboarding process, where companies simply explain the company’s mission and policies.

“That’s all great stuff, but Gen Z wants more,” she said. “I think it’s important to give people context and explain why you do things.”

[Read more: Holding on to pharmacy’s pandemic-era gains]

A common complaint among Gen Z workers is that they are often asked to perform tasks, such as filing reports, without adequate explanation from the employer about why those tasks are important. “This is the kind of thing that gets Gen Z extremely frustrated,” she said.

Training should also take into account the fact that young workers are comfortable using technology, Ben-Shabat said. Retailers should consider offering training via short videos that workers can watch when it suits them, and organized in a way that will be familiar to them, topic by topic, she suggested.

“Gen Z can absorb a two-minute video better than they can a half-page memo. It’s just the way they are wired,” she said.

Another way to leverage Gen Z’s technological prowess is to offer them reciprocal mentoring opportunities, through which young consumers can have the chance to learn certain skills from older workers and, at the same time, teach their digital skills to the older workers in exchange, for example.

Gen Z is also very competitive, and these workers overall consider their careers very important, Ben-Shabat said. “They want to make progress, they want to make a contribution and they want to move fast up the ladder. How you give them these things will be very important in terms of whether or not you can keep them.”

Other characteristics of Gen Zers are their value of community and sense of belonging, she said.

“They want to be part of something that is bigger than them,” said Ben-Shabat. “They really want to work for companies that do good in the world.

“I have spoken to so many Gen Zers and surveyed so many Gen Zers, and I keep hearing that all of the time,” she said. “They will not take offers from companies that they deem are either harmful to the environment, or don’t do anything good for the society they are in.”

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