Alex Rodriguez:
Thanks for having us.

Jeff Lenard:
Alex, can you set up the big picture about the issue and why McKinsey looks at things like this, maybe a quick overview of what McKinsey does to get a sense of where we’re going in this research and what retailers might be able to take away from it?

Alex Rodriguez:
Absolutely. We focus on what is top of mind for our clients and as you said, this is an unprecedented situation. All retailers are struggling with this in a big way, even retailers who have a reputation for being a wonderful place to work are seeing a few less people lining up to get jobs. Retailers are having to tackle this as we speak. In an environment where they’re also recovering from COVID, where the whole operating model of their stores and where frontline folks work is completely changing, for all those reasons this is really an important topic for McKinsey to be well versed on and helping our clients with.

Jeff Lenard:
So when you dive into an issue, what kind of things do you set up when you take on a problem and look at what needs to be looked at, what needs to be set aside because that’s noise?

Alex Rodriguez:
We will look for information from as many different sources as possible, and this will include publicly available reports. It would include any experience that we have as a firm ourselves because we have experts across all sectors who are very deep in different elements of every sector. We will look to interview people, leaders in the space. So in this case all retailers. We will gather our own information by being in the operation, speaking to the frontline and potentially interviewing them, sending out surveys, the list goes on. We take all of that and try to eliminate the noise and get to the key themes of what we’re seeing and we’re learning. We have some pretty strong themes as to what is coming out in this current labor scarcity situation.

Jeff Lenard:
And both of you presented at the NACS Leadership Forum earlier this year. The title was called ‘The Great Attrition.’ Annie, there was one slide that came up early, and I alluded to it at the beginning of the broadcast, 40% of employees are somewhat likely to leave their current job in the next three to six months. That is on top of the labor shortage we’re facing right now. You could hear a pin drop after that was mentioned. That’s the problem and we’re going to about the solutions, but when you see a number like that, what’s your immediate takeaway?

Annie Valkova:
We had a similar reaction when we first saw it because we looked at it across industries. We looked at it across positions and no matter how you cut it, that’s big. And some of it is coming from that unprecedented burnout that we are seeing, those large declines in wellbeing, both self-reported and objectively measured, and the idea that COVID fundamentally changed the way people think about their jobs and what they expect of their employers, what they expect of their day-to-day. That is manifesting itself, both in the great attrition we are seeing, but also in the way that it will sustain. Maybe the magnitude of it will change and the way we go through employment cycles historically, but that fundamental people now look at different things and for different things I think part of what’s driving that large number of people who say they’re ready to quit their jobs in the next 36 months.

Jeff Lenard:
I think the data is showing that a lot of those first batches of people who left their jobs were retirees for whatever reason they thought, okay, this is a challenging work environment, I feel comfortable, I’m just going to retire. A high percentage of people are leaving their jobs without another job and possibly without another safety net. When you look at the big macro trend, this is not just a big deal for employers. This is a big deal for everybody, because it may take a while to connect people who are motivated with people who want motivated employees.

Alex Rodriguez:
Absolutely. It is an incredibly high number. I think it’s actually over a third of people who in leaving their job in the last six months did not have another job lined up. And it is pretty remarkable when you think about exactly what you’re describing. How do you then get those people connected with the right position? But it’s just not how many people are making that decision right now. What we’ve learned is that their outlook on their jobs, but also life in general, has fundamentally changed in the midst of COVID. People have realized the value of spending more time at home. They have also changed what they feel they can expect from their job and as a result are willing to make a bit less, even be without a job for a while, or in a household where two people are working. Maybe one continues to work and they realize that they’re able to live off one salary while that other person is figuring out when they want to go back into a job and which job specifically they want to take on.

Jeff Lenard:
Annie spent a lot of time talking about three ways that retailers or anybody can tackle this problem. We’ll get to that in a second. What I thought was fascinating was comparing the relational aspects that people want with employers thinking that it’s about transactional elements. Alex, can you speak to the disparity between people saying, ‘I want this’ and employers saying, ‘I think they might really want this.’

Alex Rodriguez:
There’s clearly a mismatch on many of the important reasons why people choose to leave a job or choose another job. There’s some expected ones where both employees and employers share the same perspective. One of those being work-life balance at the top, but beyond that, what’s really on employee’s minds, much more than employers realize are things like, am I valued by my manager? Am I valued by the organization? Do I feel that I belong within this organization? These are absolutely not the transactional sort of dimensions that one may have thought about, like compensation, which is one of the top-of-mind things for employers when they think about key drivers for employees. Anything related to physical and mental health are also things that employers consider to be on the higher end of importance, but are actually not as important as the relational elements that I described before. And so it’s very important employers realize that and understand how important it is for them to become credible on those more relational aspects, because that is what employees are increasingly focused on.

Jeff Lenard:
And it’s really hard to define if you’re doing it right or wrong with these words that you used in your research: valued, belonging, caring. It’s much easier to say, well, we’re paying them more. That got to be the easy way to solve the problem. It’s a definable metric. Annie, let’s talk about the three ways to flip the dynamic. How do we change this dynamic? What is the basic premise that you guys have in, ‘Hey, we can flip this, we’ve talked about a lot of negative stuff. Now we see opportunity here’ and walk us through that.

Annie Valkova:
The first part of it ties directly to what Alex was saying. Some of these findings are all based on this massive piece of research that McKinsey launched and then executed around Q4 last year, which was all around let’s see where the mismatch is between what employees and employers think. It also gives us that first pillar or that big learning around you need to understand what your employees are telling you. You need to understand what they are looking for. And as an employer, retailers need to build a culture that values employees as whole people. That is what Alex was talking about with the kind of transactional versus relational aspect of a job. The way we see that typically happen in a successful way is by looking at culture end-to-end.

Annie Valkova:
Looking at the different components of what constitutes a job and thinking through how we address them so that employees can feel like they’re being valued and that their time is well spent, it can do with broader purpose but also day-to-day tools. Do I feel enabled and well equipped to do my job? It can do with work organization and controlled flexibility. I feel like this employer cares about the whole of me and so the whole of me has things happening outside of work. All these components to build a culture that values employees, that’s the first pillar we see.

Jeff Lenard:
And that’s probably the difference between an employer saying you need to do your job and saying I’ll give you the tools to do your job. And if you don’t have them, let’s get you what you need.

Annie Valkova:
Exactly. We are in a relationship versus in a relationship that has not just a monetary kind of transaction value, but it has all these other aspects.

Jeff Lenard:
And we’ve all had jobs where we’ve had to with baling wire and all that other stuff figure out our way. Sometimes that’s fun, sometimes that’s stressful, but I would imagine that the more support you get from the employer, that’s a huge takeaway. There’s a lot of elements to culture, but one of the biggest ones is not just what your people think, but what they need in terms of giving them all those tools. What about the second one? You had three pillars and the second one was about making the day-to-day job simpler. Can you walk us through that?

Annie Valkova:
As we think about what employees and employers care about, one of the things that pops up is that idea that employees are looking for day-to-days that have more manageable workload, that have better tools and just a simpler job. Coming out of COVID, we think about all of the change that retailers had to live through. Be it different ways to service customers, being open today, closed tomorrow. A job that used to be complex became even more complex during COVID, and that is the opposite of what employees looking for. That idea of how do we simplify the job, be it through better processes, better tools, better training, to get to a point where both some of the pre-COVID inefficiencies and paperwork and manual work are now eliminated, but also a little of the COVID complexity that got introduced. Kind of bringing us back to base level to say what can we reasonably accomplish in this new stable state, whatever it is, versus the constant fire drill that COVID ended up being in many locations.

Jeff Lenard:
And machines don’t have to be the enemy in this. Machines are the friend because if you can automate things that are either low enjoyment, low human add or even just downright humiliating where you just don’t feel good about it at all, I would imagine that enjoyment of the job and likelihood that you’re sticking around is going to dramatically increase.

Annie Valkova:
Exactly. And more manageable workload and a more attractive job overall.

Alex Rodriguez:
To build on what Annie was saying, I think that there’s no doubting that physical stores have become an area in which we experience a company and where customers are expecting more differentiated experiences. If they are taking the time to go to a physical location, given that reality, when we think about doing exactly what Annie was describing, automating some of the work, getting rid of some of the more monotonous work and actually freeing up time for them to dedicate more time to the customer, I think in today’s day and age, that is a huge win. It is not that we introduce machines to be the enemy. Machines is one lever in all of this.

Alex Rodriguez:
Introducing tools to help, including automation, can actually make a huge difference for people, especially if everything is framed in the way that is actually intended, which is to simplify the work. It is to eliminate those things, allow them more time to focus on what they love doing. If I’m selling bread and I love to bake, or I love to prepare products for clients in a tailored fashion, I’m probably less interested in some of the upstream processes to prepare some of the ingredients that go into that bread. There are countless examples of where Annie and I are helping clients identify those lower value adds from a customer experience perspective and taking those out and refocusing their time.

Jeff Lenard:
I would imagine by just doing that, or saying you’re doing that and committing to it as a business, that can probably go a long way toward stopping that attrition that I think people are concerned about over the next few months.

Alex Rodriguez:
Absolutely. Case in point, we’ve recently been helping multiple organizations on this topic. One in particular comes to mind where they’re already known for a distinctive employee experience. They’re a beloved company, both by customers and employees. Even they are trying to do this in earnest and figure out where they can take out pain points and points of stress for employees just by walking the talk and being in the stores and speaking to employees, trying to understand what those pain points and co-developing solutions with them has created a wonderful buzz within the organization well beyond the specific stores that we found ourselves at.

Jeff Lenard:
Annie took us through the first two of how to flip the dynamic. Number one being build a culture, number two, make the day to day simpler and more engaging. Take us through number three.

Annie Valkova:
Number three is all about how do you commit to upskilling and reskilling. We know there are multiple aspects to it and multiple reasons why it is a pressing topic. First one is we think through the research, one of the things that we see pop up is very important for both employers and employees. So that’s one of the ones that matches, that idea of career development and development opportunities. Employees are looking to stay. They’re looking to be valued and they’re looking to see a path that they can grow on. That’s one aspect of upskilling and reskilling. I think the other one is just the reality of turnover. Turnover is always high in retail and that’s one of the things that the retailers naturally work towards.

Annie Valkova:
As we think about a labor pool that tends to change that idea of how do we think about training as something that is part of the process and happens in a more intuitive way in this new environment, versus some of the old ways to train. It is also something that we’ve seen a lot of retailers look into again when they think about what labor pools they can access. How do they think about labor pools that previously they didn’t think about? How does both the commitment to reskill the actual reskilling help them access that? It could be through populations that are considering going to college, so we see a lot of college benefits being offered or populations that are retired and now we are thinking through bringing them back. What kind of flexibility do you need to offer them?

Annie Valkova:
It also adds a layer of understanding what employees are looking for to then say what is it that you’re offering and why it matters. We were at a manufacturing facility and someone who’s been working the forklift for a while told me, ‘You know, they’re offering college tuition but I’m 55. This is great, but it doesn’t help me.’ What does your employee base look like and how do you design something that is attractive to a whole set of them and not just to a particular generation? Upskilling and reskilling are the way to both keep employees, access new labor pools and confront the kind of everlasting problem of turnover.

Jeff Lenard:
On its surface, it sounds simple: build a better culture, make the job simpler and more engaging and commit to upskilling and re-skilling. If it were so easy, everybody would be doing it, and everybody would have their own answer. It’s obviously more difficult. The research looking at things like is enormously helpful in terms of getting people to think, ‘yes, my area is unique, but I share many things that are similar.’ Are there ways to get started? I like the phrase putting points on the board to show that you’re changing the mindset of your employees and then diving in a little deeper to make systemic change that I think people also crave.

Alex Rodriguez:
The principles do sound simple. Driving the type of impact that is required requires real investment, and achieving an end-to-end transformation requires an end-to-end transformation program. However, you have to start somewhere. Going back to the story I shared earlier about spending time in stores, trying to understand what is on employees’ minds when they come in first thing in the morning, what is it that they stress about, where are the time sinks, where are the more complicated parts of their job and hearing them out and then describing a set steps that the company will take to address those and launching quick wins here and there. Quick wins being any sort of action that would not require broad training or a new tool. Simple things that could be implemented rapidly across the whole network with the whole context of the company focusing on this and trying to understand how they can alleviate some of those pain points for employees. That feels like a very natural one to start with.

Jeff Lenard:
How about you, Annie?

Annie Valkova:
Listening. You need to understand what your employees are actually looking for. I think what we typically see come out of that is actually a very rich set of things you were looking for, Jeff, when you asked the question, which is what are the wins on the board that you can get to quickly? And then, what are some of longer-term ideas? Listening is helpful for employers because it provides them with information, but it also signals to your employees like you are listening. It sounds like a simple nuance, but that idea of we are now creating a channel and we’re going to use your ideas through that channel, and that should be a channel that doesn’t just happen once.

Annie Valkova:
I think it goes a very long way to say we’ve now created this vehicle for us to understand what you care about, and we’re going to do this. We are talking about it now, but it’s going to stay and we’re going to act on it. We see retailers build that as almost a formal thing. Then every quarter, here’s the winning idea after the big bang of here’s our set of initiatives. If there are multiple parts to it, once you get through the list and then get through some of the ideas and then truly invest, there are massive returns that we’ve seen through work in culture and organizational health and pure simplification. That idea of investment following where it needs to go.

Alex Rodriguez:
It’s not just about saying you’re going to do it then going out and listening, as Annie is describing. You’ve got to move to action. As you think about the fact that overall it could be quite a daunting task to achieve the full transformation that I think any retailer would be looking to drive in order to be an attractive place to work now and in the future, it all starts with one step. At the risk of saying something obvious, I think people need to plan that step to be something they will be able to carry out. In this case, listen to the employees and then act on it in the short term. Otherwise it could have the inverse effect.

Jeff Lenard:
Annie and Alex, before we let you go we have one final thing.

Jeff Lenard:
We have trivia each week and we try to link convenience store trivia to the topic. This week’s topic is around work, specifically ‘The Office,’ a TV show in the U.K. And the U.S. There was an actor from ‘The Office’ who based a lot of his material on working the overnight shift at a Store 24 convenience store. Was it Steve Carell, who played Michael Scott? Was it Rainn Wilson who played Dwight? Was it Ed Helms, who played Andy Bernard? Or was it B. J. Novak, who played Ryan Howard?

Alex Rodriguez:
Annie, do you know?

Annie Valkova:
I’m the only person who has not watched ‘The Office’ in the world.

Alex Rodriguez:
I’m going to say B. J. Novak.

Jeff Lenard:
It is Steve Carell. He’s a Massachusetts guy and he worked at Store 24 in Maynard, Massachusetts. On the overnight shift he saw some interesting people and that informed some of his characters. Now, Steve Carell also owns a general store, if you want to call it a convenience store, called Marshfield Hills General Store. Steve, if you’re listening, come on the show, we can talk about your store sometime. So until then, Annie, Alex, thank you very much for walking us through this research and presenting your findings.

Alex Rodriguez:
Thanks for having us.

Jeff Lenard:
And thank you all for listening to Convenience Matters. Feel free to subscribe and get our podcasts every week and join us in conversations about the industry and research that can affect your business and your brand.

Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

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