Employee Retention Strategies at Wayfair Company

Literature Review of Employee Retention Strategies:
A Case Study of Wayfair Company
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Contents Section IV: Literature Review.. 3 Introduction. 3 Wayfair Background Information. 3 Overview of the Employee Retention Problem in the Retail Industry. 3 Research Question. 4 Theoretical Framework. 4 The Significance of Employee Retention in the Retail Industry. 4 Motivational Theories about Employee Retention. 4 The Role of Organizational Culture in Employee Retention. 5 Employee Retention Strategies in the Retail Industry. 6 Development and Training Programs. 6 Employee Engagement Programs. 6 Compensation and Benefits Packages. 7 Work-life Balance Programs. 7 A Case Study of Wayfair Company. 7 Overview of Wayfair's Retention Strategies. 7 Analysis of Wayfair's Retention Strategies Effectiveness. 8 Wayfair Challenges in Employee Retention. 9 Recommendations for Wayfair and the Retail Industry. 10 Significance of Incorporating Employee Feedback. 10 Leadership Role in Employee Retention. 10 Incorporating Technology to Improve Employee Engagement 11 Conclusion. 11 Recap of the significance of employee retention in the retail industry. 11 Summary of Key Findings. 11 Future Research Directions. 12  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. According to Kumar (2020), research by the National Retail Federation shows that the average retail employee turnover rates revolve around 60%, notably higher than the national average of 40%. 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.
Research Question
The research question for this review is: 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 provide workers the chance 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 dynamic of the culture that can be observed like company slogans and dress code. Mamatha and Geetanjali (2020) posit that the espoused values and beliefs comprises 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 employees in the industry (Abdulai & Kanko, 2019). Such programs enhance workers' knowledge and skills to perform their tasks effectively and offer opportunities to advance and grow their careers within the organization. According to Vasileva and Datta (2021), employees receiving continued development and training opportunities are more likely to be engaged and satisfied with their work and thus have higher retention rates. For instance, Wayfair runs a Wayfair University program offering workers with practical development and training opportunities across different functional business sectors. The program entails leadership training, mentorship programs, and on-the-job training designed to enable workers to improve their skills and grow their careers.
Employee Engagement Programs
Employee engagement programs facilitate a positive working environment that enhances workers' motivation, satisfaction, and commitment (Alhmoud & Rjoub, 2019). The engagement programs may include employee feedback, team-building activities, and recognition and reward systems. For instance, Wayfair's program enables workers to recognize and reward their teammates for significant performance and efforts towards the company, improving employees' job satisfaction and morale.
Compensation and Benefits Packages
Retail organizations should offer competitive compensation to attract and retain the top skills in the market (Abdulai & Kanko, 2019). Such competitive compensation perks may include salaries, bonuses, profit-sharing plans, and stock options. Moreover, they can offer benefits packages like retirement plans, healthcare, and discounts on company products. Wayfair offers its workers an extensive benefits plan such as competitive compensation and bonuses and benefits such as retirements, employee discounts, and healthcare insurance.
Work-life Balance Programs
Employees must balance their personal lives and work; thus, such programs are becoming more critical in the retail industry. Work-life balance entails incorporating telecommuting options, paid leaves for the family and personal obligations, and flexible work arrangements (Seema & Sandeep,...