The Case for Investing in People

NACS Magazine talked to Sarah Kalloch of the Good Jobs Institute.

May 28, 2024

For the NACS Magazine column "The Big Question," NACS spoke with Sarah Kalloch of the Good Jobs Institute.

What’s the business case for investing in your people?

Investing more in your people can feel expensive, but the reality is that not investing is far more expensive and far less competitive than many retail leaders realize. Low investment in people leads to high turnover. In an operationally intensive service industry like convenience, the cost of turnover is high, sometimes existential.

C-stores can fairly easily calculate the direct cost of turnover—hiring, training and getting teams to base productivity. We’ve seen this come in at 2-10% of revenue or 10-25% of payroll for some retailers and restaurants—and this is the smallest cost of turnover. Turnover will never be zero, but reducing turnover means you can invest those payroll dollars in keeping people (more training, higher pay) rather than losing them.

You need strong operational execution to deliver convenience: to be always in stock, process customers fast, offer quality food options, have relentlessly clean stores 24 hours a day and more. That level of execution is very hard to deliver with high turnover. We’ve heard from c-store leaders that the cost of poor execution is high—from higher shrink to lower inventory accuracy to maintenance issues to dirty stores to staff burnout.

All of these issues can increase costs and reduce sales today and tomorrow by reducing customer loyalty and goodwill. You can start to quantify this by looking at your key operational and customer satisfaction metrics and identifying the gap between where you are today and where you could be with stronger teams. We’ve found this gap is often substantial—20-50% untapped potential you could harness with better jobs. And this is still not the largest cost of low people investment.

To continue reading, check out the May 2024 issue of NACS Magazine.