April 4, 2022 | Last Updated on: January 10, 2024
DISCLAIMER: This article was written in 2022 and has not been updated. For more up to date information about small business funding products and options, please browse our recent articles.
For better or for worse, the COVID-19 pandemic gave the American public a lot of time to reflect on the jobs they were holding. Some enjoyed the option of working from home so much, that in-person work no longer fit their needs. Others found client service jobs both risky and challenging in an era of mask and vaccination mandates. And a few even realized a new career path for themselves.
No matter the reason, a lot of employees resigned all within the same time frame, and most industries took a hit as employees resigned. From hospitality to education to finance to construction to government, the Great Resignation arose.
Along with the term “The Great Resignation” came the term “Employee’s Market.” Whereas the job market in the past was controlled by the employers, this rush of resignation handed the power to the job-seeker.
Despite its overwhelming effect, a pattern within this slew of resignations also became clear. Nick Bunker, an economist for Indeed, wrote: “The ‘Great Resignation’ is more a story about strong demand for workers, rather than a rethink of work among higher-income workers.”
This shift is now being led in part by lower-wage workers, who are leaving their current roles for something better. As Bharat Ramamurti, the National Economic Council Deputy Director, tweeted on January 10, “it’s not the Great Resignation – it’s the Great Upgrade.”
And so, employers, especially those that hire part-time workers for lower wages, are having critical difficulties with employee retention. How can businesses, like gas station convenience stores, market themselves as a Great Upgrade?
In this article, I will discuss how gas station owners can budget accordingly for the high employee turnover rates. I will address the importance of:
Think of the annual cost of employing someone at your gas station. When this employee leaves, it costs about one-third of that annual amount to hire a replacement.
Why does employee turnover cost this much?
Without a talent pipeline, you will have to recruit for a new replacement. This will cost both money and time.
Expectedly, there will be an advertising cost, whether you chose to advertise in job forum websites, newspapers, or even on the side of a bus. Advertising and sourcing at job fairs is another good option, but another added expense.
And, of course, if you choose to outsource and use a contracted recruiter, you will have to pay their fees.
Even if your human resources team has a talent acquisition division that can recruit for these open roles, you will have to consider that recruiting costs time and energy that could be spent on other HR duties.
And even after an offer is made, there are still costs to consider in order to get your employee fully onboarded. For one, if your business conducts any pre-employment background screening or drug tests, these will also have to be considered when creating your new hire budget.
Then, there are the costs we scarce remember to budget for. Do you offer signing bonuses? Holiday bonuses? Does your business have any relocation costs? These can all be additional costs to be considered.
Training and orienting a new employee is yet another cost, though it costs more time than money. While the new employees are getting oriented, their coworkers may have to take on extra responsibilities in the interim, or managers may have to take time out of the work they are doing to train new employees. Therefore, the most cost-efficient staff is a long-term staff.
Lastly, there are the costs your gas station business may never know it lost. Consider a new hire being oriented at the cash register, and a customer never coming in because the line looked too long. Or perhaps a customer calls for a business inquiry, but the phone was left to ring because your business was short-staffed. Now, that customer never gave your gas station business.
All these costs considered, it is clear that senior management should reprioritize employee retention to avoid as many of these costs as possible. After all, there are so many expenses in running a small business as it is. And, in light of the recent rise in gas prices affecting inventory, it may be that much more difficult to devote more money and resources to new hires. In these re-budgeting conversations, ask yourself the necessary questions:
If you have not yet created a budget for your small business, now this the time. The budget should follow your business’s numbers from the previous year to help guide you toward future projections, but keep in mind the financial impact of the Great Resignation, as it will lead to additive costs.
Budgets should include projections of both fixed and variable costs. Fixed costs include salaries and rent, while variable costs include costs subject to change, like inventory. You should also include any one-off capital costs, but be wary of budgeting for these extra purchases, when you will need to anticipate to allocate more money to incoming new hires and general employee turnover costs.
Additionally, you should keep track of your monthly net income. This will help you notice when your working capital is increasing or decreasing and will allow you to make any necessary monthly adjustments.
Finally, a financial consultant’s second opinion can help you better plan for your business’s monetary trends. With the Great Resignation so heavily influencing the gas station business, you will not want to put your business in any more financial deficit.
While budgeting is generally always a good idea, being more conservative with your variable and one-off capital costs until the projections show otherwise is an easy way to play it safe.
Keep in mind that the Great Resignation may weigh on your business financially, and this may be a great time to use Biz2credit as a resource to help apply for a loan.
For more information on loans typically granted to gas stations, as well as alternate revenue sources, click here.
Those interested in applying for loans for a gas station should reexamine Small Business Administration’s 504 and 7(a) loans.
If your budget does not have reallocation wiggle room, you may also want to consider alternative methods of gaining working capital, like opening a business credit card or applying for a term loan.
You couldn’t predict the Great Resignation, a social facet of an unpredictable pandemic. But there are proactive things you can do to bolster your employee retention, so as to keep your current employees happy with and employed at your business.
First, you can examine company data during the Great Resignation period to help plan for future employee turnover.
To calculate your employee turnover rate, you can divide the number of employees who left during a set period of time by the total number of employees at the beginning of that set timeframe. Multiplying this number by 100 will give you a comprehensible percentage.
If you are the sole proprietor of your gas station, it helps you estimate the amount of money you can put aside for employee turnover. If you are a part of senior leadership, this number can be a necessary reference point when discussing a budget reevaluation.
Also, knowing how you compare to competitors can also help you gauge how you stand within the job market. Remember, your goal is to be your current and future employee’s Great Upgrade.
As of this month, the mean hourly wage for a gas station attendant in the United States is $12.26 (remember, different minimum wage laws may make this number vary by state). The mean yearly salary is projected to be $28,410.
Of course, if the hourly wage you offer is higher than this mean average, you can advertise this competitive wage in hopes of increasing your candidate pool. After all, a job with an above-average wage can be a prospective employee’s next great advancement or promotion.
If the hourly wage your gas station offers is below the mean average, consider revisiting your budget. Ask yourself the following:
Out of 1,624 responses, only 28 percent of gas station attendants believe that the mean annual salary covers the cost of living in their respective areas. It is important to be cognizant of statistics like these and consider comprehensive benefit options. Some of these perks can be extremely enticing and won’t weigh down your wallet.
Employee benefits and incentives are greats tools to attract prospective candidates and to promote employee retention. They can also be used as leverage when your budget doesn’t allow for wage increases.
An employee discount is the most common benefit granted to a gas station attendant. This will take out little, if any, from your budget. Other common benefits for gas station attendants may make more include:
While investing in a more positive experience may be an additive cost to the budget, it can proactively reduce employee turnover.
After all, the best way to prepare for employee turnover is to prevent turnover altogether.
A positive employee experience is vital to this changing job market. Perspective employers looking for their next Great Upgrade may be seeking career development opportunities, a welcoming work environment, and a better work-life balance.
So, before worrying about the cost of replacing your employees that choose to depart, invest your time in creating a work environment that fosters these positive facets.
For example, as a business owner, you should always be thinking about how to boost employee morale. Consider creating an Employee of the Month program, where you showcase a photo or descriptor of an exemplary employee. This shows the employee that their hard work is not going unnoticed, leading them to feel more valued.
You can also revisit your employee training program. New hires who have a positive onboarding experience are much more likely to work at your business in the long term. Perhaps you implement onboarding initiatives like a mentoring program to help acclimate new hires successfully in the company and give them an opportunity to make positive connections with their coworkers. Your involvement in the onboarding and orienting process can be vital to the employee’s retention, as it shows that you value all of your employees.
Furthermore, you can also be proactive about the hiring process. It can take time to find the right candidate for your company. Confirm salary expectations with the candidate early on, to ensure the candidate’s expectations match your job description. Also, consider using group interviews. This could save you necessary time and will also give you an objective group of comparison when evaluating the interview.
Lastly, consider creating a talent pipeline from the prospective employees that you did not choose during the interview if they are qualified. You never know when you may need a new employee, and if you have a few candidates in mind, you can spare yourself from taking up more time to conduct interviews.
The bottom line is that budgeting for employee turnover involves a combination of:
It is important to keep an open dialogue with your employees. For example, as states discuss dropping their mask mandates, the decision of keeping it may be up to your discretion as a small business owner. Discuss what conducting business without a mask mandate may look like with your employees and gauge their comfort level. Open communication is an easy way to promote employee retention, and it is something you will not need to budget for.
