Employee Incentive Strategy

13 Oct 2021

More Hours, Fewer Workers: Why Retailers Need to Add Sales Incentive Programs to Their Holiday Planning

Image of Andrew Duffy

Andrew Duffy

Just as the weather starts cooling down across most of the nation, the holiday season is heating up as retailers roll out their seasonal hiring plans--hiring plans that look quite a bit different from years past.

In "normal" times, U.S. retailers would be hiring over 700,000 temporary seasonal workers to handle the influx of holiday shoppers. This year, that number has been reduced to just 190,000 despite predictions that consumers will spend more this year than they did during the past two holiday seasons. So why hire less holiday staff?

Source: U.S. Bureau of Labor Statistics
Source: U.S. Bureau of Labor Statistics

Even before the holidays, retailers across all categories have been struggling to fill thousands of open jobs. Now, they’re not only competing with each other for holiday staff, they’re competing with a boom in seasonal supply chain hiring. UPS alone is bringing on an additional 100,000 temporary holiday workers.

This dearth of available employees means that retailers that want to keep up with the imminent crowds need to take a different approach to staffing.

Labor shortages are impacting how retailers approach seasonal hiring in 2021

Target is ramping up for a busier than usual holiday shopping season by intentionally hiring fewer holiday workers. The company announced that it would only be hiring 100,000 seasonal team members this season, about 30,000 fewer than it usually employs.

Instead of trying to win the war for holiday talent the company is opting to invest that time and money into their existing full and part time staff. Target said it would give its existing workers an additional 5 million hours, which adds up to more than $75 million in pay, and let them schedule and swap their shifts with more flexibility.

While I applaud Target for creating more earning opportunities and shift flexibility for their workers, I am concerned that it won’t be enough. On the surface, offering existing workers the opportunity to ramp up their income by logging more hours seems like a good solution. But retail workers are burnt out.

Source: Traxia Technologies
Source: Traxia Technologies
Before COVID-19 hit the U.S., there were approximately 750,000 unfilled retail jobs. In July 2021, that number spiked to 1.1 million. The pandemic required retail staffers to step up and add even more job responsibility with little additional reward, causing many of them to seek work in different sectors.

Will the retail workers that are still hanging in there have the wherewithal to add more shifts, or will it push some over the edge and leave Target with a further reduced staff?

Employee rewards keep staff motivated during the holidays

Reworking seasonal hire plans is a risky move right now, as retail staff are already feeling depleted and overworked from the pandemic pressures and resulting skeleton crews. Retaining loyal employees and keeping them feeling engaged and valued through to the other side of the holidays will require more than just a few extra shifts and scheduling flexibility.

Without implementing reliable sales incentive programs, retailers risk staff burnout and a drop in retention rates post-holidays. Bonuses are a great motivational tool for employees to push through during times of increased work.

Some retailers are beginning to offer financial rewards—Kohl's said associates would be eligible to receive a bonus of up to $400 for working through the holiday season, while Apple is reportedly giving store employees up to $1,000 in one-time bonuses this season. The craft retailer Michaels is extending a 30% discount to its holiday hires and Best Buy has upped its hourly wage to $15 per hour in order to fill 5,000 open positions before seasonal buying ramps up.

Retailers like these, have recognized that their existing compensation and reward models won't be enough to get them through the busiest shopping season of the year. By offering bonuses, incentives and wage increases they are demonstrating a willingness to step up and rethink how they compensate retail workers. Let’s hope they also realize that this reward-based approach can’t end when the holidays do.

Doing more with sales incentive programs beyond the holidays

The SparkPlug platform can revolutionize the way retailers think about sales incentive programs and rewarding workers sustainably and consistently. The "bonus" concept has long been associated with a one-time, end-of-year "holiday bonus," but it can be so much more than that. We're changing the bonus conversation through our platform so retailers can reward their workers all year round.

Offering a bonus helps offset the consequences of hiring fewer seasonal employees and instead working with a reduced holiday staff that may be at risk for burnout. Having ongoing, reliable sales incentive programs are motivating in the same way that a bonus is. Sales incentive programs create a connection between output and income and setting custom sales goals and rewards make workers feel like they are part of something bigger than just a labor-heavy job.

Incentive programs can improve the quality of life for workers. They can be monetary rewards, like adding an extra $100 to an employee's next paycheck if they hit a sales goal. Rewards could also reflect employee values and include perks like paid time off, extra store discounts for holiday shopping, dining gift cards and more.

Get ready for the holiday season with SparkPlug. Contact us here to learn more and get started today.