Wayfair Employee Turnover Problem

Wayfair Employee Turnover Problem Capstone Project
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Executive Summary
Organizational Problem/Opportunity to the Investigated
Employee retention has proved to be a critical problem affecting companies operating in the retail industry, including Wayfair company. Labor will be the greatest challenge within the retail sector in 2023. According to Deloitte (2023), there were 879,000 retail jobs lacking employees in November 2022. Recruiting and retaining workers has been a critical issue in the retail sector. Increased competition for hourly laborers remains stiff, with retail firms forced to offer greater flexibility and higher wages (Deloitte, 2023). High turnover rates constitute a prerequisite for lower productivity, reduced customer satisfaction, and deteriorated employee motivation. Employees are regarded as the most crucial, productive, and valuable asset of any organization, and retaining them proves an increasingly challenging endeavor for managers. Since the cost of replacing strategic employees entails significant turnover, retail companies must develop integrative retention programs (Singh, 2019). This is a substantial step in differentiating the company from its rivals and cultivating an environment where workers are valued and motivated. In this vein, the paper investigates the strategies that Wayfair can implement to retain its employees, reduce potential high turnover rates, and augment employee satisfaction and productivity.
Background and Argument Surrounding Employee Turnover
Management practitioners and scholars have been studying the issue of employee turnover, and it remains an important issue of concern for managers and organizations. Employee turnover is when employees leave the organization, thus forcing the managers to hire new workers. Various factors are attributed to high turnover rates in the retail industry, with individual, organizational, and environmental forces augmenting the issue concurrently. The leading factors contributing to the rising employee turnover include limited opportunities for career advancement, lack of development and training programs, job dissatisfaction, and poor remuneration. Retail firms have realized the need to address employee retention by implementing strategies to improve employee turnover and satisfaction levels (Chiat & Panatik, 2019). Some of the strategies that Wayfair should implement to address the high turnover rate include providing opportunities for career advancement, providing competitive remuneration rates, implementing employee education programs, and cultivating a safe working environment. The argument surrounding research problems is that employee retention constitutes a fundamental issue affecting retail companies' operations and sustainability. High employee turnover rates are a prerequisite for reduced performance, deteriorated customer satisfaction, and high recruiting costs (Li et al., 2019). Therefore, companies should implement strategies to solve the employee retention problem.
Overview of Recommendations for Wayfair
It is established that Wayfair company is struggling with high employee turnover. In this vein, decision-makers should employ strategic action plans to mitigate the adverse ramifications on company performance and sustainability. First, it is recommended that the company's leadership develop and implement employee retention approaches to address the factors motivating workers to leave the organization. In this vein, Wayfair should provide innovative non-financial and financial incentives such as employee reward programs, career development opportunities, flexible work schedules, competitive remuneration perks, and opportunities for career advancement (Al-Suraihi et al., 2021). In addition, the company should cultivate a positive working environment and create an organizational culture that promotes information sharing and authentic interactions. This implies the need for effective communication, opportunities for regular feedback, and including employees in decisions affecting their work and remuneration packages (Almawali, 2022). It is also recommended that the company support a culture of employee development and learning to inspire workers to seek further training and educational opportunities, which is central to career progression.
Table of Contents Executive Summary. 2 Organizational Problem/Opportunity to the Investigated. 2 Background and Argument Surrounding Employee Turnover 2 Overview of Recommendations for Wayfair 3 Section I: Organization/Industry Problem or Opportunity. 7 Introduction. 7 Definition of Terms. 7 Problem Statement 7 Purpose Statement 8 Research Question. 8 Intended Audience. 8 Section II: Problem or Opportunity Background. 9 Background of Problem or Opportunity. 9 Explanation of the Importance of the Topic. 9 Theoretical Framework. 10 Section III: Investigative Steps. 11 An Explanation of the Research Approach Taken. 11 Methodology Used. 11 Bias Found. 11 Topics Intentionally Not Addressed. 12 Section IV: Literature Review.. 13 Introduction. 13 Wayfair Background Information. 13 Overview of the Employee Retention Problem in the Retail Industry. 13 Theoretical Framework. 14 The Significance of Employee Retention in the Retail Industry. 14 Motivational Theories about Employee Retention. 14 The Role of Organizational Culture in Employee Retention. 15 Employee Retention Strategies in the Retail Industry. 16 Development and Training Programs. 16 Employee Engagement Programs. 16 Compensation and Benefits Packages. 17 Work-life Balance Programs. 17 A Case Study of Wayfair Company. 17 Overview of Wayfair's Retention Strategies. 17 Analysis of Wayfair's Retention Strategies Effectiveness. 18 Wayfair Challenges in Employee Retention. 18 Review of Recommendations for Wayfair and the Retail Industry. 19 Significance of Incorporating Employee Feedback. 20 Leadership Role in Employee Retention. 20 Incorporating Technology to Improve Employee Engagement 20 Conclusion. 21 Recap of the significance of employee retention in the retail industry. 21 Summary of Key Findings. 21 Future Research Directions. 22 Section V: Recommendations and Conclusions. 23 Interpretive Views About Results. 23 Recommendations, Options, Action Plans, and Practical Applications for Decision Makers. 24 Correlation to Investigative Findings for all Recommendations. 25 Conclusion. 26 References. 28
Section I: Organization/Industry Problem or Opportunity
Introduction
Employee retention has proved to be an increasingly challenging issue undermining the performance and sustainability of the retail industry, considering the high turnover rates of employees. The retention of employees is a fundamental factor in an organization's success both in the short-term and long-term. Companies, especially those in the retail sector, cannot understand the impact of high turnover rates of workers because it contributes to deterioration in productivity, customer satisfaction, and profitability. The increasing employee turnover rates in the retail industry negatively affect organizations, resulting in skyrocketing costs of hiring and training new workers, decreased customer satisfaction, and reduced productivity (Kosteas, 2023). In this vein, examining the factors dictating employee retention across the industry is increasingly crucial to establish effective improvement strategies for retention rates.
Definition of Terms
Employee retention refers to the ability of an organization or company to retain its workers over a certain period, usually a year. An organization effectively contains its workers if its retention rate is high and vice versa. Employee turnover implies workers leaving the organization such that if the rate at which employees are going to the company is higher than the industry rate, then the company has a higher employee turnover rate (Budomo, 2023).
Problem Statement
Wayfair company operates in the retail sector and is currently struggling with the problem of employee retention, characterized by the high turnover rate recorded in the recent past. The company has been recording deteriorated worker retention rates, leading to increased costs of employing and training new workers, decreased customer satisfaction, and reduced productivity. In addition, the competitive nature of the retail industry compounds the problem considering that other companies offer attractive compensation packages to attract and retain skilled workers. Therefore, Wayfair company will find this research useful as it will reveal the elements contributing to employee retention and thus establish effective strategies to augment their capacity to attract and retain employees.
Purpose Statement
This study aims to investigate the fundamental issues contributing to reduced retention of employees across the retail industry, with a particular focus on Wayfair company. The research seeks to identify the significant factors causing increased employee turnover rates. In this vein, it will be possible to offer recommendations to improve employee retention rates for companies in the retail sector. The study will offer critical insights into implementing effective strategies for worker retention by Wayfair company and other retail industry firms.
Research Question
The study seeks to answer this research question: What are the significant elements in the retail industry that impact employee retention, and what strategies can Wayfair company implement to enhance worker retention?
Intended Audience
This study's intended audience is Wayfair company's management team, operations managers, and human resource managers. This research aims to enable the company to develop and implement effective strategies to retain its employees. Also, the findings of this research will be fundamental for other retail industry organizations undergoing similar employee retention issues. Moreover, researchers and scholars investigating the same problem will benefit from the study.
Section II: Problem or Opportunity Background
Background of Problem or Opportunity
For a long time, the retail industry has faced the threatening challenge of worker retention, signified by increased employee turnover rates. Such a phenomenon is pertinent for retail organizations, including Wayfair company. Budomo (2023) asserts that employee turnover implies the voluntary or involuntary leaving of employees from an organization. Higher turnover rates negatively impact the retail industry's financial performance and operational adequacy. Of the fundamental factors leading to high employee turnover rates, the prevalence of low compensation perks is the most common (Kosteas, 2023). In most cases, workers in the retail industry get entry-level salaries which may not meet their basic needs and thus reduce job satisfaction and low motivation to work for the company. Moreover, irregular working schedules like weekend and evening shifts can be detrimental in destructing work-life balance, further enabling turnover rate issues.
Explanation of the Importance of the Topic
The topic of employee retention is critically essential for the retail industry. An increase in turnover rates implies organizations incur more costs in recruiting and training expenses for new workers. Additionally, continued employee turnover adversely affects productivity and smooth operations, considering the organization loses critical institutional knowledge when employees leave. Arguably, this can cause disruption of services, diminish brand reputation, and decrease customer satisfaction. A substantial cost is incurred in high employee turnover across the industry, with past studies imploring it surpasses 20% of a worker's compensation (Younis et al., 2023). Such financial burdens can critically affect the profitability of retail companies, especially those with narrow profit margins. Therefore, the company must develop and implement effective employee retention improvement strategies for long-term sustainability and success.
Theoretical Framework
This research employs a theoretical framework of social exchange theory. The theory explains that people engage in social relationships depending on the perceived costs and benefits of such engagements (Ahmad et al., 2023). In this employee retention context, the social exchange theory insinuates that workers consider the advantages and disadvantages of working for an organization. The benefits of working may entail opportunities to advance a career, supportive management, better financial rewards, and a conducive working environment. The costs may consist of limited prospects to advance a career, poor work-life balance, low compensation, and high work demands (Ahmad et al., 2023).
The adoption of social exchange theory helps this study explore how organizations in the research industry can improve the associated benefits of employment while mitigating turnover costs. Ahmad et al. (2023) argue that the theory helps understand the sophisticated dynamics between organizations and their workers, discussing the significance of having a mutually beneficial and conducive working environment. By considering and aligning the organization's goals and the employee's needs and interests, industry organizations can establish effective employee retention strategies and remain competitive in the industry.
Section III: Investigative Steps
An Explanation of the Research Approach Taken
The study uses a research approach of qualitative research design to explore the factors that affect employee turnover and possible strategies to improve retention. Qualitative data collection approaches entail the review of evidence on employees and management practitioners to offer insights into the factors causing the issue and the implications of employee turnover. This will enable the researcher to gather worker experiences and perceptions concerning job satisfaction, working environment, and retention intentions from the existing scholarly literature.
Methodology Used
The study methodology will involve a literature review, evidence collection and analysis to derive inferences, and dissemination of the results and the recommendations. The literature review will entail reviewing the existing literature concerning the turnover of workers in the retail industry. The study will conduct a literature review of current credible academic sources and use relevant scholarly journals published in the last five years. The inspection aims at identifying the significant factors leading to high rates of employee retention in the retail industry and the potential strategies used to enhance retention.
Bias Found
The social desirability study is a significant source of bias for this research. This phenomenon happens when the researcher offers insights that they perceive are socially acceptable and correspond to their expectations of the anticipated results. The study minimized this bias by ensuring the findings and insights derived from the review of evidence were anchored on existing credible evidence.
Topics Intentionally Not Addressed
The study failed to address the effects of external elements like industry trends and the economy on employee turnover rates. The study did not explore the topic extensively due to limited research and time constraints. However, future studies could examine how external factors affect employee retention in the retail industry.
Section IV: Literature Review
Introduction
Wayfair Background Information
Wayfair is one of the leading American e-commerce retailers which majorly deals with home goods and furniture. The company was founded in 2002 and has grown immensely to be one of the giant icons in the e-commerce and retail industries in the United States of America (Wayfair Home, n.d.). The company has more than 16 million products in its catalog, recording at least $9 billion in revenue annually (Wayfair Home, n.d.). Notably, Wayfair Home (n.d.) notes that the company boasts a workforce of more than 16,000 workers. Most of these employees work in warehouse operations and customer service. Arguably, the innovative approach to e-commerce retailing is a significant force that drives the company to success and focuses on offering customers an enjoyable and seamless shopping experience.
Overview of the Employee Retention Problem in the Retail Industry
Employee retention has long been a pertinent issue in the retail industry. Increased employee turnover rates significantly threaten a firm's bottom line since the cost of recruiting and induction of new workers escalates (Kumar, 2020). Moreover, high employee turnover rates result in reduced productivity, poor customer satisfaction, and decreased morale. The entire industry faces a significant problem of employee retention because most retail companies have low compensation rates and demand longer working hours, most depending on a similar workforce pool (Singh, 2019). Retail companies must develop ways of differentiating their brands from competitors and establish an environment where workers feel motivated and valued.
In this context, this review is guided by the following research question: what strategies can Wayfair implement to retain workers, reduce their turnover rates, and enhance employee productivity and satisfaction? This paper will explore this study question through a comprehensive literature review of strategies the retail industry can implement to retain workers and an extensive analysis of the current retention strategies practiced by Wayfair. Through answering this question, this literature aims to offer actionable recommendations that Wayfair and other retail companies can incorporate to enhance employee retention rates.
Theoretical Framework
The Significance of Employee Retention in the Retail Industry
Retention of employees is fundamental to human resource management, especially in the retail industry. Increased employee retention can positively affect the organization's bottom line, like reduced costs of recruiting and training employees, improved productivity, and enhanced employee morale (Seema & Sandeep, 2023). However, Singh (2019) points out that the retail industry has one of the worst employee retention rates compared to other industries, at 60%. One central element leading to higher turnover rates in the industry is the perceived lower compensation rates and limited opportunities to grow and develop careers. Therefore, retail companies need to improve their employee retention strategies which enhance positive working environments and opportunities to develop employee careers and thus decrease turnover rates.
Motivational Theories about Employee Retention
Motivation is critical in encouraging employee retention considering that workers stay where they are motivated to work. Herzberg's Two-Factor Theory is the most common motivational theory for employee retention, which insinuates that worker satisfaction and dissatisfaction are two distinct identities (Pancasila et al., 2020). The theory observes that employee job satisfaction closely relates to motivational issues like personal development opportunities, recognition, and achievement as opposed to hygiene issues like job security, compensation, and working conditions. Moreover, Pancasila et al. (2020) assert that the social exchange theory suggests that employees are likely to stay where they are gaining in exchange for their services. Thus salaries, career growth and development opportunities, and a conducive environment will improve employee retention. Another motivational theory related to employee retention is the self-determination theory. The theory dictates that workers pose innate psychological needs such as relatedness, autonomy, and competence (Pancasila et al., 2020). Companies that allow workers to advance their careers, skills, and autonomy have higher employee retention rates.
The Role of Organizational Culture in Employee Retention
Organizational culture is a fundamental factor in retaining employees in the retail industry. Employees working within a positive organizational culture have a greater sense of engagement and belonging which is crucial in worker retention (Singh, 2019). Schein's organizational culture model outlines three levels of organizational culture: artifacts, espoused values and beliefs, and primary underlying assumptions (Mamatha & Geetanjali, 2020). The artifacts' level entails dynamics of the culture that can be observed, like company slogans and dress code. Mamatha and Geetanjali (2020) posit that the espoused values and beliefs comprise company-stated values, while the underlying assumptions entail such values and beliefs that shape the workers' behavior. Moreover, Denison's organizational culture model states the essence of corporate culture in retaining workers by insinuating that high-performing companies have four outstanding cultural traits: mission, adaptability, involvement, and consistency (Mamatha & Geetanjali, 2020).
Employee Retention Strategies in the Retail Industry
As mentioned above, the retail industry faces a pertinent problem of employee retention, which poses detrimental implications for organizations regarding operations and finances. Retail companies should establish effective worker retention strategies to avoid increasing worker turnover rates. This section of the literature review will analyze four effective employee retention strategies prevalent in the retail industry:
Development and Training Programs
Development and training programs are critical strategies for retaining employ...