What To Do When the Minimum Wage Increases

Raising the minimum wage is currently taking over headlines in the restaurant industry, but it also has massive implications in retail and other minimum wage professions. Customer service representatives are an invaluable piece of a successful retail business, and they are directly impacted by minimum wage legislation.

Unfortunately, with a wage increase, consumers expect more from business with six in 10 Americans citing they are justified in expecting better service with a wage spike. However, many companies are forced to cut costs elsewhere, generally from employee benefits, which translates into unhappy workers, less job applications and lower retention.

Ultimately, these companies end up not only spending more on wages, but also on additional efforts to attract and retain employees. This can set businesses back months, if not years; however, the issue is not that the minimum wage legislation passed, but that there is no strategy in place for when it does.

Four Tips to Solidify Your Minimum Wage Strategy
Having a sound strategy in place for when minimum wage is bumped is essential to a retailer’s success. Since many will be competing for a similar pool of applicants, the key is to be the most appealing retail employer in the area, and to value your employees for what they are worth. Below are four tips to consider when formulating a minimum wage strategy:

1. Stay above the minimum wage
It may like sound too simple of a solution. With wages already increasing, how can my company afford to invest even more in base salaries? However, the ramifications of the cutting benefits decision are costlier than the wages themselves. Meeting the minimum wage makes you no different from any other retail employer in the area, and cutting benefits makes you even less attractive. When your company puts its people first, offering a better salary plus benefits, yes it is expensive, however it likely will cost less than employee turnover. Turnover can cost between 30% and 150% of an employee’s annual salary; a much higher price tag than staying above average.

Retailers spend weeks training their new customer service employees. The more you do to retain the people you have, the less you will spend on training and recruiting, and you are showing your employees that they are valued. A nice wage is the beginning of a loyal and talented team.

2. Focus on culture from c-suite to contact center
One of the biggest influences on retention for a company is its culture. According to research from Columbia Business School and Duke University’s Fuqua School, more than 50% of executives say corporate culture influences “productivity, creativity, profitability, firm value and growth rates.” Fostering a sense of purpose that reaches from C-suite to the bottom is a way to ensure that your staff will want to stick around.

Note that culture does not stem from happy hours; focus more on growth and leadership development opportunities. And while you may be considerate of how to engage those selling products on the floor, often forgotten are the people in the call center.

When your entry-level employees, like customer service representatives, see that they have a future with your company, they are more motivated to succeed. They want you to invest in their future, so offer proactive seminars or discussions during which your employees learn how to succeed internally.

It is evident that today’s workforce is expensive and has high expectations, but your people are worth the investment. Keep in mind also, that your customer service team knows better than anyone exactly what your customers want to see. Place value in their knowledge and you will find they want to contribute to your success.

3. Adopt technology for automatable activities
With all this said, clearly people are costing more than ever, so many retailers are focusing more on affordable, technological solutions. Artificial intelligence is becoming less of a buzzword and more of a tangible solution in customer service. Your business just needs to be smart about where technology can help and where it will hinder; look to the data for guidance.

A recent survey from Arvato found that 49% of people do not want to be served by a chatbot. However, 31% want more automatic call backs and 28% want more real-time order updates. It will serve you well to pin point where your people are valuable, and where they are invaluable. Empower customer service staff with more complex duties, and replace mundane activities with technology — your business will be more efficient, and your people will grow.

4. Partner with an outsourcing provider
Partnering with a customer service outsourcer allows even more money to be saved due to cost sharing. Training, recruiting, and staffing for your retail business won’t come from your resources, but rather a fixed cost can be agreed upon with the outsourcer. And, growth and technological implementation are put more in the outsourcers’ court than yours. Additionally, if the minimum wage raises in your office’s city, the outsourcer is not necessarily affected.

In Summary
The consumer expectation for minimum wage hikes to create better customer service, while not unfair, is not realistic. It is still up to you to train representatives properly for a positive result, and post-wage raise troubles can be avoided by being armed with preparations.

The key is to place value in your entry-level employees and recognize especially that the customer service team has more insight into your audience than anyone. When they feel valued and empowered, your retail business will see growth in its employees, its culture, and its profits. Find where technology can be used to eliminate the mundane and otherwise, look to an outsourcer who already has these values in place, and utilize them to keep costs low. By investing intelligently in your workforce now, you can avoid a major impact from legislative decisions later.

Fara Haron is the CEO of global business process services at Arvato and is a member of the Arvato CRM board. She has been with Arvato since 2009, and has led a rapidly growing team of CRM professionals while leveraging her international experience to support Arvato’s global CRM business.