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Why Is Hiring So Difficult Right Now?
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Why Is Hiring So Difficult Right Now?

Inside the industry’s labor woes and how operators can fix them,Hiring

Typography by Adam Hayes

CHICAGO — Already overwhelmed by a litany of new safety precautions, shockwaves hit the convenience-store landscape in mid-April when TravelCenters of America, Westlake, Ohio, furloughed more than 3,000 employees, cementing the coronavirus pandemic as a legitimate challenge to the industry.

Weeks later, Performance Food Group Co., the parent company of convenience-store distributor Eby-Brown Co., Naperville, Ill., furloughed or eliminated 3,500 positions across the organization.

Across the industry, store traffic slowed, profits dropped, and staffs kept shrinking. Months later, foodservice offers have reopened, restrictions have softened and c-stores remain open; in fact, most never shut their doors. But the industry can’t get its employees back.

From hiring and labor to sales and traffic declines, the pandemic has battered c-stores. CSP interviewed more than a dozen retailers and experts to look at how retailers move forward.

Unabashed Unemployment

In April, the U.S. unemployment rate hit a staggering 14.7%, the highest since the Great Depression. While that moderated to just more than 8% in August, it still rivals rates from the Great Recession a decade ago.

The government acted quickly to lower these numbers, and c-stores suffered from it. From late March through July 31, any U.S. citizen collecting regular unemployment compensation became eligible for the Federal Pandemic Unemployment Compensation Program (FPUC), which provided an extra $600 per week. These increased benefits brought on by the Coronavirus Aid, Relief and Economic Security (CARES) Act resulted in many out-of-work individuals opting to remain home rather than seek employment, a trend has plagued c-stores, an industry that largely offers hourly, minimum-wage positions.

“In many states, people could collect significantly more on unemployment than they could by working,” says David Nelson, senior partner for convenience-store and foodservice consultancy Business Accelerator Team, Scottsdale, Ariz.

“Think about this: If I could not expose myself to the risk of COVID-19, have all my free time to do whatever I want and earn more than if I was working full time, what choice am I going to make?”

The numbers speak for themselves.

Between April and July, more than three-fourths (76%) of unemployed workers were eligible for benefits that exceeded their lost wages from a previous job, according to an August 2020 white paper by the Becker Friedman Institute for Research in Economics at the University of Chicago. Beyond that, in May, 1 in 5 eligible unemployed workers was estimated to receive unemployment benefits at least twice as large as their lost earnings. The average retail worker who was laid off between April and July was estimated to collect 166% of their prior wage in unemployment benefits, the study says.

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The hiring woes in c-stores during these months was a direct reflection of increased unemployment benefits and the FPUC, says Roy Strasburger, president of c-store management services company StrasGlobal, Temple, Texas. The pandemic and resulting unemployment benefits have hit c-store workers of all ranks, but especially store-level associates who make close to minimum wage, he says.

“[The FPUC was] a good stipend for not doing anything compared to having to go to work and making less than or the equivalent amount of money,” Strasburger says.

Hiring is “unquestionably” the biggest economic issue facing the c-store industry right now, and the FPUC had a lot to do with it, says Greg Parker, CEO of Parker Corp., Savannah, Ga., a chain of 64 convenience stores in Georgia and South Carolina. Parker sees the potential benefits provided by the FPUC that c-store wages can’t compete with.

To put it in perspective, the average full-time c-store associate in the U.S. earned an hourly wage of $11.75 in 2019, according to NACS’ 2019 Compensation Report. In Georgia, anyone–regardless of industry–could have received up to $965 through unemployment and the FPUC, Parker says. That’s just more than $24 an hour–more than double the national hourly wage for c-store employees.

Of course, hiring is one thing; retention is another. Parker’s has struggled with both. Over the course of a week in early August, the company had 179 store-level employees miss one or more shifts, Parker says. The chain has held its standard hiring events–which usually have a turnout of about 40 people–with little success. Only a few people at most have attended each one, he says.

“Hiring right now is unlike anything we’ve ever seen,” says Parker. “There are a lot of reasons that are completely legitimate for why people are [not seeking work]. But you have also got the people who just say, ‘I’d rather stay home and make more money.’ “

That said, the FPUC benefits, which AnnElizabeth Konkel, an economist with the Indeed.com Hiring Lab in Washington, D.C., calls a “band-aid on a bigger problem,” ended July 31.

And more recent efforts to implement another enhanced unemployment benefit have failed, as the Senate blocked a $300 billion COVID-19 stimulus bill on Sept. 10. Still, there remain efforts to enact another financial relief bill ahead of the November presidential election.

“I don’t think there is a direct correlation between people deciding to not go to work because of the benefits,” Konkel says. So, problem solved, right?

Not quite.

Quote

An Industry Challenged

Certainly, more people have found work since the FPUC ended. In August, the number of full-time workers in the U.S. rose by 2.8 million to 122.4 million, and the number of part-time employees increased by 991,000 to 25 million, according to the U.S. Bureau of Labor Statistics. Across retail, 249,000 jobs were added in August.

But even without the FPUC benefit, hiring remains one of Parker’s biggest challenges.

“We have seen a shift in applicants since benefits paused on July 31,” says Parker’s President Jeff Bush. “However, we are still not seeing the same volume of applicants as we saw pre-pandemic.”

Even while the FPUC was in effect, it only assisted people collecting unemployment benefits. So for those who didn’t collect–and for those still not working–what’s keeping them at home?

“As frontline workers, employees are afraid that they’re exposing themselves and their families to a lot of risk [of contracting COVID-19],” Nelson says.

Parker’s executives realize that many employees are remaining home because of dire circumstances, such as taking care of a sick relative or out of fear of contracting the virus.

“Employees are looking for a safe, clean and caring environment,” Bush says. “Operators need to ensure that their offerings to prospective employees are in line with the new expectations that employees have.”

Health and safety concerns have also kept Kwik Chek Food Stores employees at home, says Kevin Smartt, CEO of the Bonham, Texas-based chain of 47 locations.

Some have said that they have compromised immune systems or are caring for sick loved ones and simply don’t want to risk exposure to the virus.

“Employees are afraid that they’re exposing themselves and their families to a lot of risk.”

“I think we maybe had two or three in our group that said, ‘I’m nervous. I just don’t want to [come to work],’ ” Smartt says.

Some chains have responded by publicizing hiring efforts and even adding positions to fill the holes. In late March, 7-Eleven Inc., Irving, Texas, announced plans to hire as many as 20,000 new store employees, either directly or through franchisees, to meet the increased demand for 7-Eleven products and services amid the pandemic. 7-Eleven also anticipated new positions to help meet a surge in orders through its 7Now delivery app.

Five months later, the chain doesn’t anticipate labor shortages moving forward and is thankful to be in such a position, says CEO Joe DePinto.

“In our corporate stores, we were able to staff appropriately,” says DePinto. “We were also able to identify candidates for franchisees. Unfortunately, other businesses have closed and may not reopen. As an essential business, we’ve been able to remain open and provide consistent employment.”

Managing the Message

Retailers have become aware that their COVID-19 safety standards and how they relay them to team members and potential job applicants can make or break their workforce.

“It’s always important, but particularly now, to create a safe environment for customers and store associates,” DePinto says. “Our focus has been and will continue to be on the safety of our customers, employees and franchisees.”

At this point, cleaning and sanitation efforts should have become standard operating procedure. Almost across the board, retailers have installed plexiglass barriers, added hand sanitizer at the front counter, enhanced cleaning of every touchpoint throughout the day and/or required masks when entering.

As a next level, operators may want to consider taking both employees and customers’ temperatures when they enter the store, Nelson says. But no matter the initiative, the message must be persistent: that the workplace is safe, he says. Nelson also suggests retailers tell employees to stay home if they are sick without consequence.

“Tell them, ‘We’d rather pay you to be at home,’ ” he says.

At Rmarts LLC, Deerfield, Ill., a chain of 13 convenience stores, communicating safety eff orts has been essential in retaining employees and hiring new ones, says President Ryan Razowsky. Razowsky–who also attributes Rmarts’ hiring troubles to safety concerns and the increased unemployment benefits–says his team has enacted monthly safety updates and instructions on how to handle various situations related to COVID-19.

“Communication is how we’ve managed to get through this,” he says.

Bush of Parker’s agrees that communication is essential.

When Parker’s employees expressed concern for their friends and family by coming into work and potential exposure to COVID-19, the company acted swiftly and made crucial changes. In its restrooms, Parker’s added doorless entry, as well as automatic sinks, toilet flushing and hand drying. It also implemented a feature where customers and employees can fill up on gas solely from their mobile device and avoid swiping their card into a machine.

“We doubled down on our communication efforts and put our focus on employee health and safety,” Bush says.

Quote

Money Talks

To entice new hires and retain current ones, many retailers have implemented financial incentives for its hourly and salaried employees, including wage raises, bonuses, weekly advancements and more.

“We’ve got to do something extra for these folks at this time,” says Nelson. “Make your hiring package as attractive as you can.”

At Parker’s, full-time employees who work at least 33 hours a week have received a $75 bonus per week. For those who work additional shifts or more than scheduled, they earn an additional $15 per hour, plus an extra $25 bonus. Parker’s is also offering $500 referral bonuses if new hires remain employed at the company for at least two months.

“If somebody worked 40 hours, they’ll be paid as if they worked an additional eight hours,” says Parker.

Between March 15 and May 2, Pittsburgh-based supermarket chain Giant Eagle–parent company of GetGo convenience stores–gave a total of $10 million in bonus pay to eligible employees. These bonuses recognized the work of Giant Eagle, Market District, Giant Eagle Pharmacy and GetGo employees and workers in warehouses and those who deliver product to stores.

“In many states, people could collect significantly more on unemployment than they could by working.”

In March, Love’s Travel Stops & Country Stores, Oklahoma City, a chain of more than 500 locations, gave all hourly store employees a $100 bonus and $2 per hour pay increase. Love’s salaried managers received their first-quarter bonuses regardless of whether they made their targets, and a month earlier than normal. Also in March, Pilot Co., Knoxville, Tenn., a chain of more than 750 locations, bumped all hourly pay an additional $2 as part of its “Thank You Pay” incentive. This program ran through April 29 and applied to regular hours worked as well as overtime hours.

These bonuses and increased wages have become tokens of appreciation from operators to their employees–and incline workers to remain at their jobs, says Don Strenk, former BP America executive and current president of c-store consultancy Strenk Management Consulting, Orange County, Calif.

“[Bonuses] give a reason for your employees to say, ‘Hey, here’s a reason for me to stay here,’ ” Strenk says. “That bonus money is very much appreciated.”

Beyond financial benefits, operators are also boosting their hiring packages with a handful of other tactics.

See Also

GPM Investments, Richmond, Va., a chain of more than 1,200 stores, offered incentives to team members that can be used to pay for food, fuel and other essential items. Besides its bonus plan, Love’s has offered increased paid sick time, including up to 80 hours missed because of COVID-19. Pilot has offered employees a free meal every shift up to $10. The list goes on. Nelson even suggests that retailers who are trying to employ recent college graduates consider tuition reimbursement.

It’s now October, and the industry is still struggling to find and keep employees. How long are these labor woes expected to last? Strasburger believes the c-store industry will get its hiring back on track by the end of 2020. Of course, there is a chance the extra unemployment benefits could be extended, and the pandemic concerns last far into 2021. In this case, retailers must change the way they hire people, he says.

4 Ways Retailers Are Rewarding Employees

In May, CSP surveyed convenience-store retailers about how they have compensated store employees during the pandemic and what their plans were regarding those compensation packages.

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Retail Jobs Added in August 2020

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Source: U.S. Bureau of Labor Statistics

By the Numbers: COVID-19, Foot-Traffic and Sales

There are more jobs to be done in retail amid the COVID-19 pandemic, from extra sanitizing to keeping track of how many customers are in a c-store at one time. So why hasn’t Kwik Chek hired additional employees to keep up with the new tasks?

Slow foot traffic, says Kevin Smartt, CEO of Kwik Chek.

“Even though our inside sales are up, our actual foot traffic is down,” he says. There is less traffic in the store, so there is a little additional labor to help accommodate some of those needs in terms of intensive cleaning and things like that.”

Kwik Chek has increased hours for some employees, but not head count, Smartt says.

Foot traffic in c-stores plummeted in March when stay-at-home orders were put in place.

While it started to rise in late April, it plateaued by late summer, says Donna Hood Crecca, principal for CSP sister data firm Technomic Inc., Chicago. Traffic trends are uneven, though, depending on where a store is located and what type of market they are in, she says.

“Between the virus and political unrest, urban markets are challenged right now on a traffic front,” Crecca says.

Despite the low traffic, c-store dollar sales were up 3.1% for consumer packaged goods (CPG) in the last 52 weeks ending on Aug. 8, says Larry Levin, executive vice president of consumer and shopper marketing for Chicago-based market research firm IRI. However, the rest of the retail market is up 9.4% in CPG sales, and c-stores have lost some of their market share.

“It’s an artifact of people taking advantage of shopping at bigger boxes, and also of course the stay-at-home factor,” Levin says.

At the same time, people may be more willing to shop at a c-store because they can go in and out quickly, Levin says. However, people likely are willing to pay more for items at a big-box store because they want one-stop shopping and can get everything from groceries to beauty supplies at a bigger outlet, he says.

Traffic Patterns: Demand in C-Stores

While total CPG sales have exceeded previous-year sales levels amid the COVID-19 pandemic, total edible-product sales in c-stores have been down, according to IRI’s CPG Demand Index. The demand index provides a metric for tracing changes in spending on consumer packaged goods (CPG) in c-stores across the U.S. It measures weekly changes in consumer purchases against the year-ago period to compare what is happening now to pre-COVID-19 levels.

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Source: IRI CPG Demand Index for C-stores

C-Store Trips Decline

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Source: NACS and PDI Insights Cloud report

Traffic Challenge Vs. Other Channels

Consumers were asked: I’ve physically visited [retail channel] less often since the pandemic began …

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Source: Intouch Insight

Fueling Trips

After nearing 60% in February, the percentage of consumers who said they enter a c-store every time they purchase gas or recharge their electric car dipped quite a bit.

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Source: Technomic Q3 2020 C-Store Consumer Marketbrief

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