Last updated on 9 April 2021
In the U.S., the retail industry lost 2.4 million jobs in March and April 2020 when the pandemic hit, per the Bureau of Labor Statistics April 2021. However, the industry was able to recover 2 million of these jobs since then, and saw an increase in employment by 23,000 in March 2021. At the same time, employment in leisure and hospitality rose by 280,000 in March 2021 as consumers gained more confidence in going about doing their usual activities.
With hiring picking up across retail and hospitality organizations in recent months, employers need to factor in the changes required in their hiring process, brought on by the pandemic. The first step of this change is to accept the new normal and adapt by re-imagining the way they attract, identify, and hire top talent.
According to Retail’s 2020 Post-Holiday Season Review, 96% of retail managers surveyed stated that they faced challenges in workforce scaling for the holiday season in 2020. 35% found it more difficult to meet hiring goals in that year than the last.
Furthermore, 41% of the retailers mentioned that they plan to focus more on cross-training over the 2020 season than during the 2019 holiday months.
Even before the pandemic hit, retail and hospitality hiring faced several unique challenges including automating outdated processes, candidate demographics, turnover, and market dynamics. This uniqueness also makes the ideal solution to these challenges very different from those of most other industries.
Some of the most prevalent challenges in retail and hospitality hiring are:
1. Risk of poor hiring at the store
Last-mile hiring is always tricky due to the limited control the organization has on the way in which hiring is done. In retail hiring, store managers can often go rogue and follow a completely different process instead of what is designed by the organization.
This happens because often most organizations have only paper policies in place and do not have tools in place which can drive desired behavior. Poor hiring leads to poor store NPS.
2. Consumer-like experience expectations
Most prospective candidates are very young and often this would be their first job. They have experienced the best of technologies as consumers of e-commerce and social networking sites and rate their hiring experience in comparison with those experiences. They don't understand or care about complicated corporate policies and restrictions.
So when you ask the candidate to fill 100 field form which only opens on a PC browser, a significant percentage of them drop-off from the process.
Employer-brand can also influence consumer perception of your brand as many candidates are also customers and word of mouth is very strong these days.
3. Alternate options in the gig economy
Retail and hospitality industries are competing with gig economies created by the likes of Uber and Doordash for talent. Gig economy systems provide flexibility and many times potential for better earnings. Gig economy jobs also give a better sense of being in control.
Retail and hospitality organizations need to create a sense of being in control right from the job application process to be competitive.
4. High Churn - Cost of Training
Retail and hospitality experience the highest churn among formal job sectors, many stores having more than 100% year-on-year churn.
The reasons are many some of which like poor hiring, alternate career options we have already discussed above. Training for new employees is a significant cost burden on stores.
It also has a significant impact on store experience for customers as a significant percentage of staff will be in the onboarding phase throughout the year.
5. Hiring Manager's Productivity
Understaffed stores put a heavy toll on the store manager. During this phase the store manager has to effectively do his job, missing staff's job and the job of hiring and onboarding.
These lead to burn-out amongst Store Managers, poor store NPS and other associated challenges.
6. Opportunity Cost of Hiring Lag
Delayed filling of open roles due to Hiring Lag leads to poor store NPS and reduced store sales. Hiring Lag can be due to a number of factors such as poor employer brand, competition for talent but one of the most common reasons is an inefficient hiring process.
7. Competition with Boutique Stores
While large chain stores often offer more attractive remuneration and benefits than boutique stores and hotels, they forfeit that advantage due to the complexity in the hiring process.
While having a centralized process is extremely critical to maintain hiring quality, offline hiring process with little automation often leads to delayed decision making and hence boutique stores who are able to move faster often out-compete large chains.
How To Overcome Retail & Hospitality Hiring Challenges
The above factors make a strong case for reinventing hiring in Retail and Hospitality. I have discussed a few ideas below:
1. Improve Candidate Experience
This can be done through a combination of virtualization of the hiring process, automation of routine steps to avoid unnecessary delays and enhanced branding & story-telling during the hiring process.
Improved CX can lead to a major reduction of losing candidates in the hiring funnel.
If the cost of getting a candidate to apply is $X and if n% candidate drop off, cost savings of improved candidate experience is $x*n%*number of candidates per open positions*number of open positions
2. Reduce Hiring Risk Through Advance Assessment Techniques
Scientific selection using modern assessment techniques instead of subjective evaluation of candidates by store managers can reduce hiring risk significantly.
A combination of behavioral and cognitive assessments is best fit for retail and hospitality jobs.
Another emerging trend is realistic job previews whether as part of the online candidate experience or in the form of trial shifts. They help candidates make the right decision about a role and support recruitment metrics including attrition.
If the cost of every hire you need to backfill is $X, total cost savings due to reduced churn is $X* the number of refills.
3. The Productivity of the Hiring Manager
The productivity of the hiring manager during the hiring process can be improved through the effective use of Automation and Reuse of hiring records. Automation and Reuse has significant potential in reducing efforts required from the hiring manager during the hiring process.
The cost impact of improvement in HM productivity as they are spending less time on hiring can be measured by multiplying the time savings from a lesser number of interviews per open position due to automation & re-use with per hour $ cost of HM.
4. Reducing time to hire with Instahiring
Techniques like Instahiring focused on solving the problem of hiring lag can help to fill roles significantly faster. Lesser number of unfilled roles lead to better store NPS and improved sales.
The cost benefit of improved speed of hiring can be arrived at using the formula total revenue/total employees/365* number of open positions*reduction in time to hire
5. Bring Down Cost of Hiring through Virtualization, Automation, and Reuse
We discussed techniques of automation and reuse when we discussed ideas for improving the productivity of the hiring manager. Virtualization, improved automation, and reuse also leads to reduced efforts & logistics cost of hiring.
Cost savings can be arrived by adding the total cost of time saved by recruiters & hiring managers + reduction in logistics and infrastructure costs.
While the above techniques are tried and tested, there are a lot of other techniques being successfully piloted by many organizations across the globe. As practitioners, recruiters need to proactively look out solutions which can solve specific problems. If you end up trying any of the above recommendations or something else works for you, please share your experience with me at firstname.lastname@example.org.