The Impact of Onboarding on Reducing Frontline Employee Turnover

The retail industry has struggled with high employee turnover for years. According to McKinsey & Company, annual turnover among frontline retail workers is at least 60%, with some companies experiencing rates as high as 150% per year. That means a retail team can completely turn over in a year, which is a huge challenge in continuous recruitment, training and onboarding of new staff.

This is further amplified by the labor shortage. As of December 2024, there were around 7.6 million job openings across all industries in the US, that’s a lot of demand for workers. This presents a dual challenge for companies:

• To onboard new employees fast so they can get to full productivity and contribute to the company’s revenue.

• To retain employees for longer periods as each departure incurs additional cost and requires the recruitment process to start all over again.

The cost of turnover is high. It’s estimated that losing one employee can cost a company 6-9 months of that employee’s salary. For example with the federal minimum wage at $7.25 per hour, an annual salary is around $15,080. So the cost of losing one employee can be between $7,540 and $11,310. If a company loses 100 employees a year, that’s $754,000 to $1.13 million.

One of the tools that can help retail companies reduce turnover and get employees to full productivity faster is a well planned onboarding process.

Why Do Frontline Employees Leave and How Can Onboarding Prevent This?

The US retail labor market has a paradox—there’s a shortage of workers and newly hired employees leave within the first few days or weeks of employment. The reasons are many but common include:

1. Lack of Clear Expectations and Initial Confusion

New employees are thrown into the deep end without proper introduction. They may not know what their exact duties are, how to handle difficult customer situations, where to find information or who to ask questions. The lack of structure and support in the early days leads to confusion and stress, increasing the risk of early departure.

2. Insufficient Training and Preparation for Frontline Work

Customer service in retail is tough—it requires product knowledge, communication skills, problem solving and the ability to handle difficult customers. If a new hire doesn’t get proper training they can quickly feel overwhelmed and incompetent and lead to frustration and resignation.

3. Challenges in Adjusting to the Team

Retail is an industry where teamwork plays a huge role. New employees struggle to fit into an already established team especially if onboarding doesn’t include integration with the rest of the team. Lack of support and sense of belonging makes new employees feel isolated and disconnected from the company.

4. Lack of Flexibility and Scheduling Issues

One of the top reasons for resignation is scheduling chaos. New employees are not informed enough about shift planning rules and most of the time they get conflicting schedules. Unclear rules or last minute changes in schedules increase frustration and decrease motivation to stay with the company.

5. Insufficient Managerial Support

Managers especially in large retail chains are overworked and don’t have time to support new employees properly. Lack of regular feedback, motivation and sense that supervisors truly care about their development makes new employees lose engagement quickly.

How Can Onboarding Minimize These Challenges?

A structured and well planned onboarding process can overcome these challenges and increase the chances of retaining employees longer. Key elements of an effective onboarding process include:

• Clear and Transparent Introduction to the Role: Provide new employees with detailed information about their duties, expectations and career paths within the company.

• Preboarding Before the First Day of Work: Send new employees initial materials introducing them to the role and specifics of the job even before they start employment, right after the offer.

• Interactive Training and Customer Situation Simulations: Through which new employees feel more confident and better prepared for different scenarios they may encounter in the store.

• Mentor or Buddy System: Assign new employees a more experienced colleague who will help them navigate the company, answer questions and support them in the first weeks of work.

• Automation of Key Processes: Streamline the onboarding process and digitize paperwork so new employees can focus more on actual work and not get lost in paperwork or chaos.

• Regular Feedback Meetings: Ensure new employees that their voice matters and they can express their concerns or suggestions about the onboarding process.

How Good Onboarding Translates into Financial Benefits

‍With high turnover in the retail industry investing in an effective and automated onboarding process is not only good to have but necessary. A well planned onboarding can increase employee retention and automating this process can get new employees to full productivity in as little as 3-5 days.

Market examples show that proper onboarding from day one translates to business results. For example, Sam’s Club a subsidiary of Walmart recently announced wage increases for around 100,000 frontline workers as part of their strategy to invest in their workforce and improve job satisfaction which is key to customer experiences and membership renewals.

Imagine a retail company with a 60% annual turnover (which is actually a good rate). If the company has 1,000 employees a 60% turnover means losing 600 employees a year.

Conclusion: Why Onboarding Solution is a Game Changer

In an industry where high turnover is the norm, a structured onboarding process isn’t just nice to have—it’s strategic necessity. By streamlining the way new hires get into their roles companies can reduce early attrition, increase employee engagement and overall operational efficiency.

An onboarding platform can take this to the next level, ensuring consistency, reducing administrative burden and giving new hires the tools they need to succeed from day one. With features like interactive training, digital preboarding and real-time performance tracking such a solution empowers both employees and managers to navigate the onboarding process smoothly.

Retailers who invest in onboarding technology are already seeing results—lower turnover, reduced training costs and faster time-to-productivity. In an environment where every employee matters implementing an onboarding solution is not just an HR investment but a direct contribution to the bottom line.

If reducing frontline employee turnover and workforce stability is a priority for your business it’s time to rethink onboarding. The right technology can turn new hires into long term employees, driving both employee satisfaction and business success.

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