Store 24: Employee

Retention
Group B3
Introduction
• 4th largest convenience store retailer in New
England
Store24 • 82 stores in 4 North-Eastern U.S. States

• Low store-level employee retention

• Determination of a better compensation
Issues structure with performance-linked incentives

• Quarterly bonus of 3% of manager’s salary

Current for increase in crew tenure by 1.38 months
Practice
Data Analysis
Mean Mean
Stores Mean Profit
Manager Tenure Crew Tenure
Top 10 most
438,484 110.6 22.7
profitable
Bottom 10 least
155,859 27.4 6.7
profitable

Regression
Methodology

Benefit Analysis
Determination of
coefficients for Action Plan
Calculation of
MTenure & increase in profits
CTenure Evaluation of
from change in Options and final
tenures implementation
Regression Model I
Independent Variables: Managers’ & Crew Tenure, all store location factors

Variable Coefficient SE – Coeff T-value P-value

Interpretations
Constant 7610 66822 0.11 0.91
Increase in
MTenure 761 127.1 5.99 0 manager tenure by
CTenure 945 421.7 2.24 0.028 1 month raises
Pop 3.667 1.466 2.5 0.015 profits by $761

Comp -25287 5492 -4.6 0 Increase in crew

Visibility 12625 9088 1.39 0.169 tenure by 1 month
would raise profits
PedCount 34087 9073 3.76 0
by $945
Res 91585 39231 2.33 0.023
Hours24 63233 19641 3.22 0.002

R-Square = 63.8%; R-Square (adjusted) = 59.4%

Regression Models II & III
Model II: Manager Tenure (only), all store location factors
Model III: Crew Tenure (only), all store location factors Interpretations
Model R-Square R-square (adjusted) Looking at the
Model II 61% 57% incremental R-
square values,
Model III 44.1% 38.3%
Manager Tenure
has higher
Comparison With: Model I
importance in
Model R-Square R-square (adjusted) predicting the
profits of Store24.
Model I 63.8% 59.4%

Incremental R-square from Crew Tenure: 2.8%

Incremental R-square from Manager Tenure: 19.7%
Regression Model IV
Independent Variables: Managers’ & Crew Tenure, all store location factors,
new variables (Case B): Service Quality, Manager Skill & Crew Skill
Variable Coefficient SE – Coeff T-value P-value Interpretations
Constant -141434 98202 -1.44 0.155
Increase in manager
MTenure 683.7 119.4 5.72 0
tenure by 1 month
CTenure 870.1 400.3 2.17 0.033 would raise profits by
Pop 3.045 1.409 2.16 0.035 $683.7
Comp -28548 5169 -5.52 0
Visibility 7044 8606 0.82 0.416 Increase in crew
PedCount 34371 8307 4.14 0
tenure by 1 month
would raise profits by
Res 82079 36350 2.26 0.027
$870.1
Hours24 62784 18535 3.39 0.001
ServQual 944.8 544.8 1.73 0.088 Manager Skills &
MgrSkill 45198 16756 2.7 0.009 Service Quality have
CrewSkill -14137 17094 -0.83 0.411 a significant effect on
profits
R-Square = 71.4%; R-Square (adjusted) = 66.4%
Graphical Analysis
500000

480000

460000
Profits

440000

420000
MTenure
CTenure
400000

380000

360000
0 20 40 60 80 100 120

Tenure (in months)

Note: For the purpose of plotting, other variables have been fixed to mean values and
corresponding coefficients for MTenure and CTenure were used as respective slopes
Conclusions
Increase in crew tenure by 1 month would raise profits by $870
Thus, increase in crew tenure by 1.38 months would raise profits
by $1200

Increase in manager tenure by 1 month would raise profits by $683

Relative benefits from increasing manager tenure is less than that
from increasing crew tenure

Manager skills and service quality could be improved to have a

high positive impact on profits

Impact of crew skills could not be interpreted from regression

analysis, possibly because of high correlation with some other
independent variable

Store24 should go for such crew retention bonuses which cost

less than $1200 annually
Action Plan
• Increasing Wages
Analyse all
options & study • Bonus Programs
• Career Development
their costs Programs, etc.

Study the increase in

employee tenures /
service quality / skills
from different options

Determine strategies
which yield higher
profits than costs &
implement them