The Gap: Increasing Employee Retention Through Increasing Its Minimum Wage

By Lexi Gordon
As part of my morning routine, I was sifting through emails on my iPhone today when I came across an email from Gap Inc. with the subject line, “Gap is doing more…” I normally delete these sorts of promotional emails, but this subject line was catchy enough to get me to click through. I assumed it was some sort of corporate social responsibility effort, like reusing waste products from the supply chain or partnering with a non-profit. I was pleasantly surprised to find that it had to do with increasing the minimum hourly rate of their employees to $9 in 2014 and to $10 in 2015. As a customer and former employee of the Gap, I applaud the company, and it’s not necessarily because I feel strongly one way or the other about the minimum wage debate.

To catch you up to speed on the minimum wage debate, here are a few quick facts:

What’s the Current Federal Minimum Wage?

 $7.25/hour (some states offer a higher minimum wage)

What’s the Debate About?

Obama wants Congress to raise the Federal minimum wage from $7.25 to $9 and to automatically adjust for inflation. In his State of the Union address, he “announced an executive order raising the minimum wage to $10.10 an hour for future federal contract workers” (New York Times). The goal is to address income inequality and boost the income of over tens of millions of workers.

The other side of the argument is that an increased minimum wage will increase costs for corporations, resulting in layoffs, more unemployment, and/or increased prices to consumers.

What’s the latest progress?

The U.S. Senate is expected to vote on a minimum wage measure in the coming weeks.

Now that you’re up to speed on the debate, let’s revisit the Gap email. Regardless of where you stand on the issue, Gap made it clear that raising its minimum rate was the right move for itscompany. Gap’s CEO, Glen Murphy, explains:

“Gap store employees are our main connection to you. They help you find the right size and select the ideal gift. They know the perfect things to turn the clothes you wear into the outfits you love. They are also students and moms, aspiring fashion designers, community leaders and entrepreneurs. They’re managing families, school schedules, and many other responsibilities. We want to reward their hard work, and we want them to stay with us and help you for a very long time.”

At exaqueo, we help our clients understand their workforce – and not just their approach to work – but the whole person. What they value, who they confide in, where they get their energy…The reason for this is because we see a direct link between a strong employer/employee relationship and employee retention. Knowing the whole person can strengthen that relationship, thus increase the likelihood of retaining that person. The alternative is high turnover, which we all know is costly. There’s a bit more to it, but you get the basic idea.

Mr. Murphy very specifically points out the connection between understanding the whole person and the impact it has on the bottom line. They have a goal of retaining employees – a difficult task in the retail business and expensive if you don’t do it right.  They believe that raising the minimum hourly rate will help them get to that goal. Mr. Murphy also draws the connection between the workforce and customers. Its employees are closest to the customers – those who purchase the clothes and make it possible for the company to even be in business. A poor customer experience caused by an employee could very well result in the loss of that customer forever. Mr. John Willard Marriott, Sr., Founder of Marriott International, said it best, if you take care of your employees, “they’ll take care of your customers and the customers will keep coming back again and again.” This is just another great example of the importance of your people to the bottom line.

Lexi Gordon is a Lead Consultant for exaqueo, a workforce consultancy that helps startups and high-growth companies build their cultures, employer brands and talent strategies. Connect with Lexi on LinkedIn

Ed Note: This post has been republished with the Author’s consent. You can find the original post here