Apple’s retail ops unpeeled: How sales relate to pay

The New York Times doesn’t accuse Apple of running a retail sweatshop in the latest installment of its iEconomy series. It’s hard to do that when people are paid more than minimum wage and get good benefits. Instead, the 4,200-plus words devoted to work conditions at the Apple (s aapl) stores describes a high-tech hamster wheel meant to be a brief stay for most, not a career. With $5,647 per square foot sales nearly twice that of Tiffany’s, the Times points out — it’s also a high-end retail player that pays like its products sell themselves and has so many applicants, it can afford to do just that.
Among the pros:

  • Employees, many of them there because they are Apple fans, get to work with products they like/respect and for a brand that has high consumer appeal. They get to feel as though they are doing doing something with a higher purpose, or as the Times puts it: “If there is a secret to Apple’s sauce, this is it: the company ennobles employees. It understands that a lot of people will forgo money if they have a sense of higher purpose.
  • Hourly pay that tops most retail scales and benefits that include product discounts, stock purchase plans, health insurance and 401(k)s contributions.
  • Retail advances like hand scanners and e-mailed receipts meant to free specialists, as the sales staff at Apple is known, from many of the mundane tasks clerks and salespeople at other retails chains face.
  • Looks good on a resume.

Among the cons:

  • No commissions, little room for advancement and quotas for certain items like extra warranty. Employees looking for bigger checks can make more at wireless stores or similar retailers that offer commission (but aren’t as cool).
  • The ripple effects of popularity in the five years since the iPhone’s debut: jammed stores, increasing need for technical support and attention.
  • The high-gloss stores themselves with beyond-bright lights and a jangly environment.
  • Doesn’t always help on a resume.

On its site, ResearchSails, the research firm the Times cites for its sales data, puts 2011 sales at $461,667 per employee based 36,000 full-time equivalents at 357 stores. In the article, the Times quotes RetailSails at $473,000 over 327 stores in 2011. Either way, that’s a far cry from the $25k a year the Times estimates most retail employees make. An ex-manager interviewed said he was making a little more than $40,000 when he left after four years. Technicians can make around $40,000 (they may vary by location).
Current Apple employees aren’t supposed to talk to the media. The exception interview for this story is Cory Moll, described as “a salesman in the San Francisco flagship store and a vocal labor activist,” who told the Times he got a 19.5 percent raise a few days ago to $17.31. That’s $2.82 an hour compared with 49 cents last year.
Moll told the Times his manager called him in and said: “Apple wants to show that it cares about its workers, and show that it knows how much value you add to the company, by offering a bigger raise than in previous years.”
Most of those quoted are ex-employees explaining how the job they thought would be a dream gig turned out to be a high-pressure way station or, in some cases, grew out of a job that’s really meant for the young.
Few Apple shoppers will ever meet CEO Tim Cook or any of the Cupertino execs who set Apple’s course. Samuel Jackson and John Malkovich are part of the latest advertising wave but neither of them are as important to sales as the specialists or to keeping users as the Genius Bar techs. (I’m sure there have been others but this is the first detailed Apple retail article I’ve read that doesn’t mention the Ritz-Carlton concierge program as Ron Johnson’s inspiration for the Genius Bar.)
When Apple set up a pop-up store in downtown Austin during SxSW 2011 for the launch of the iPad2, it was staffed by top managers, specialists and Genius Bar. After hours of non-stop launch-day traffic, they seemed sincerely still excited to be there — and they still were in the morning when a tech issue brought me back in. They knew they were part of creating an experience, not just selling a device, and they were determined to deliver. (Witness the picture above of the staffer posing with my purchases. I removed the picture at the employee’s request since it was a personal photo, not a news image.) I ordered my 4S online and had it shipped. It was much easier and just ever so deflating, like missing a block party. Some of that comes from the geeks in line; some from the atmosphere set by the employees. As the Times explains, that enthusiasm is baked in to the training process:

“My hands would sting from all the clapping,” says Michael Dow, who trained Apple employees for years in Providence, R.I.

When the enthusiasm is paired with customer respect and either knowledge or the sense not to fake an answer, it can be a killer asset. My colleague Erica Ogg wrote here last month about her experience with a broken iPhone — literally smashed in a several-story drop. She shared her answers to Apple’s customer survey, rating “my satisfaction with various aspects of Apple’s service on a scale of very dissatisfied to very satisfied.” Her replies were on the highest end of the scale.
Unfortunately, the Times reports, that’s not always the case with the employee satisfaction survey:

“… the key question asks employees to rate, on a scale of one to 10, “How likely are you to recommend working at your Apple Retail Store to an interested friend or family member?” Anyone who offers a nine or 10 is considered a “promoter.” Anyone who offers a seven or below is considered a “detractor.”

Former employees from Grand Rapids and Chicago tell of results in the last year “loaded”with 5s and 6s; techs were most likely to be dissatisfied. Apple told the Times: “The annual retention rate for Geniuses is almost 90%, which is unheard-of in the retail industry, and shows how passionate they are about their customers and their careers at Apple.”
Wonder how many are getting raises this year. Apple told ex-managers the Times interviewed that the goal is to keep employees for at least six years but the average is running more like two-and-a-half years. Apple may be saving money with its pay scale but at some point retention could save it more.