CVS’ Magic Pill Partnerships

By Mark Jr.

Aug. 1, 2006

While the Rev. Lionel Edmonds leads people to God, he also might help them get and keep a job with CVS. The minister is part of a unique partnership that helps the giant pharmacy chain build its workforce in the increasingly competitive retail industry.

    As pastor of Mount Lebanon Baptist Church in Washington, D.C., Edmonds presides over a 1,500-member congregation. In 2001, he agreed to sponsor a job fair for CVS that attracted 120 parishioners, 50 of whom were eventually hired.

    “He gives us a competitive edge,” Steve Wing, CVS’ director of government programs, says of Edmonds.

    The event helped CVS find workers as it expanded in the metropolitan Washington area. It also gave unemployed people a chance to jump into the labor pool.

    “You’re not just caring about their souls; you’re caring about their welfare,” Edmonds says. “You give folks hope. They get a career track.”

    The relationship CVS built with Edmonds is one facet of its work with government, nonprofit and faith-based organizations. These groups not only help the drugstore find workers, they also help retain them by providing social services. CVS augments retention by linking low-income employees to inexpensive home loans. Beyond these initiatives, CVS is trying to hold on to its older workers through a program that allows pharmacists to work in different regions of the country at different times of the year, thus keeping “snowbirds” out of full-time retirement. In 1990, only 7 percent of CVS’ employees were older than 50. Now that figure is 18 percent.

    Each of these efforts shows how CVS is looking in new places to staff its rapidly expanding network of stores.

    “I would give CVS very high marks for imagination and for tying the (faith-based) initiative to bottom-line business results,” says James Post, professor of management at Boston University and an author of a case study of the company. “CVS is running well ahead of Walgreens and Rite Aid in terms of this critical aspect of their business strategy. It’s about running the business better for investors, employers and customers.”

Powerful allies
    About a year before the job fair at Mount Lebanon, the company established a CVS Regional Learning Center in southwest Washington. The facility is a joint undertaking between CVS and the District of Columbia’s Department of Employment Services. In the front is a District one-stop job center for the unemployed. In the back is a mock CVS store, complete with a photo lab, electronic checkout registers, aisles of merchandise and a pharmacy counter. The center celebrated its sixth anniversary on June 1.

    Post praises CVS for partnering with the government to lower training expenditures. CVS spends about $1,500 to $2,000 to train a new employee in a learning center, but that’s after the government picks up the tab for expenses like rent, utilities, maintenance and security, and also offers tax credits. The final result is about a 50-50 split on costs.

    New CVS hires go to the regional center to train for their first jobs. Continuing workers visit to prepare for new jobs as they move up the company ladder. Among the occupations taught there: pharmacy tech, photo lab technician, shift supervisor and assistant manager. CVS has established similar centers in Baltimore, Atlanta, Detroit, New York City and Southern New Jersey. It is opening its newest one in Cleveland in September.

    Since 2000, CVS has hired 3,782 people who have gone through training at the Washington center. The retention rate in 2005 was 82 percent—a strong number for retail, an industry in which turnover can average 200 percent. People who have been trained include welfare recipients, ex-offenders, those with no previous work experience and high school dropouts.

    Altruism is not pushing CVS to offer jobs to people whom other employers often leave behind. The company needs to recruit and keep workers in a tightening job market. “They had substantially better retention results than competitors and other employers in the D.C. area,” Post says.

    The D.C. government has helped fill in the gaps that may cause workers to leave their jobs. Many of the new CVS employees don’t have prior work experience and often are in need of other services like transportation and child care that the local government can provide.

    “CVS has been smart,” says Gregory Irish, director of the D.C. Department of Employment Services. “It’s formulated partnerships with nonprofits, faith-based organizations and government in terms of delivering these holistic and wrap-around services to people.”

    Since 1996, CVS has hired more than 45,000 people who had been on public assistance through its welfare-to-work program. More than 60 percent are still actively employed, and the majority have been promoted at least twice.

    That record is made possible in part because of help from CVS’ agency partners. If a new hire starts to arrive late or miss work altogether, the government or an outside group can step in.

    “We have good managers, but they’re not social workers,” Wing says. As workers stumble, they can get help from other sources. And instead of being terminated, “the problem becomes a blip on the screen and they continue to work.”

    That outcome also benefits the D.C. government. It is working with CVS to break what has been a long-term cycle of poverty for many people.

    “What we’re looking at is not only the job placement of an individual. We’re also looking at how long they stay on the job,” Irish says. “Our whole goal is to make sure they become productive citizens and taxpayers.”

    The services the government offers “may mean the difference between their success and becoming unemployed again,” Wing says.

    Retention begins with the right hiring decisions. CVS works with the D.C. employment office to set standards. The government then evaluates potential applicants through a series of tests that measure their skills, aptitudes and personality. For instance, someone who wants to work outdoors or tends to be anti-social wouldn’t prosper in a CVS store, where customer service determines whether the business thrives or dies.

    The D.C. government is not looking for charity from CVS, Irish says. It does benefit when CVS takes people off the unemployment rolls, but in the process the government wants to bolster the CVS workforce, not enervate it.

    “We don’t expect CVS to hire people who are not qualified for jobs,” Irish says. “We’re selecting the people we think will fit the corporate culture of CVS.”

    That culture has produced strong results lately. Second-quarter sales for the drugstore chain rose 15.8 percent to $10.6 billion compared with the second quarter of last year. Same-store sales, an important retail measure, increased 8.8 percent during the same period. CVS operates 6,205 retail and specialty pharmacy stores in 44 states and the District of Columbia, and it employs 170,000. (A breakdown of part-time versus full-time workers was not available.)

A hand with homeownership
    As it does business with CVS, the D.C. government sees the company as the customer and job seekers as the product. In the process, the lines of demarcation between the public and private sectors blur. That starts with the look of the job center.

    What was once a dilapidated building now has a sleek design. It features CVS signs, gray and black interior colors, flat-screen computer terminals, indirect lighting, comfortable cubicles for job searching and steel pipes exposed with a postmodern flair.

    “You can’t tell it’s a government facility,” Irish says. “It has a private-sector feel. That was intentional. It inspires confidence from those who use the services.”

    Rebuilding the job center was a centerpiece of the District’s effort to revitalize the area that surrounds it. Once a rough area, it now features new businesses, renovated buildings, a new elementary school and several new housing complexes.

    Like a proud father, Wing highlights the improvements during a tour. He hopes that CVS employees move to the neighborhood. “They’re our employees. They’re our customers,” he says. “We want them to live in the neighborhood where they work.”

    To help employees buy new homes, CVS has launched a program that gives staff who have worked for two years a $500 forgivable grant and access to loans that are 1.5 percent below the prime rate. Managers and pharmacists are eligible when they’re hired.

Since 2000, CVS has hired 3,782 people who have gone through training at the Washington center. The retention rate in 2005 was 82 percent–a strong number for retail, an industry in which turnover can average 200 percent.

    Prescriptions for Homeownership is an initiative involving CVS, Freddie Mac, Bank of America and Mount Lebanon church. It targets the company’s 1,000 employees in the D.C. area.

    The company again turned to Edmonds to introduce the program. The minister conducts financial literacy and homebuyer education sessions at the CVS center. Since its inception, 80 people have participated in information meetings, eight have secured loans and two have closed on houses in the Washington area. The company wants to start similar programs throughout the country.

    Although CVS works with federal lenders and commercial banks, the church connection is key. Many of the people applying for the program live in the inner city and have not had much access to loans. A local minister like Edmonds is someone they can trust to help them work through bad credit issues.

    Those who receive loans must stay with the company for three years. But once they buy a home, employees may feel connected to the company in a relationship that is deeper than a financial agreement. They may find that CVS is a foothold on the economic ladder.

    “It’s a motivational factor,” Wing says. “They see the company as a partner. If they’re bettering themselves, they want the company to do well too. They become an even stronger and better employee because they feel we’re trying to help them.”

Courting older workers
    CVS goes beyond the country’s inner cities to keep its workforce in shape. It has also tapped a growing pool of mature workers. One innovation is the snowbird program, which adjusts work to older workers’ schedule rather than let them slip off into retirement.

    In this initiative, the company offers employees the chance to spend the winter in warm climates, such as Florida, and to work the warmer months of the year in the East or Midwest.

    In the past year and a half, the company has signed up 350 to 500 employees for the snowbird program.

    “They want to work,” Wing says. “If we want the best people, we’re going to have to be flexible.”

    Sometimes CVS must lure a worker out of retirement. That was the case with Dave Johnson, a pharmacist who spends Memorial Day through October 1 in Tecumseh, Michigan. He and his wife, Linda, live in Naples, Florida, the rest of the year.

    While Johnson’s wife is on the golf course, he is working at a CVS store. He rotates among four locations in Michigan and nine in Florida. After selling the two pharmacies he owned and retiring at age 49, Johnson and his wife spent two years traveling. But then he became bored.

    CVS was happy to welcome him behind the counter and set up a schedule that fit his needs. Johnson, now 57, works two 14-hour shifts during the week and every other weekend.

    “I’ve always loved what I do, and I get personal fulfillment from going to work,” he says. “I enjoy the connection with the people. Everybody has a problem; everybody has a story to tell.”

    Bouncing from store to store and between regions also keeps things interesting. “We have things to share from other stores and other ideas,” he says.

    Working for the same company in two different places makes the life of a part-time employee much easier. For instance, Johnson only has to deal with one computer system and one corporate culture. In addition, he has seamless employment, something that doesn’t exist in seasonal hiring.

    “You can’t hire someone for three or four months and then cut them loose,” he says. “You’re not going to find many people who are going to work that way.”

    But CVS, along with some other U.S. companies, has realized that if it structures jobs to suit people who, like Johnson, want to maintain 401(k) and health care benefits, it can tap into a steady and reliable workforce.

    CVS also knows that it’s not just older workers who come to work because of benefits. It’s also what low-income workers are seeking. That’s why the company has developed a benefits package that is available to part-time workers. Making the transition from never having held a job to working 40 hours a week can be tough.

    “They may not be ready to work full time,” Wing says. “But they do need the health benefits, and this way they can get them.”

    Continuing to attract employees from low-income populations is likely to become more urgent for CVS. The company estimates that the retail pharmacy industry will more than double by 2012 and that several high-growth areas of the country lack adequate pharmacy coverage.

    The company’s efforts in the community will help it establish connections that can lead to new hires.

    “They’ve been good corporate citizens in the District of Columbia,” Irish says. “It’s a matter of enlightened self-interest for CVS.”

    For Edmonds, it’s a matter of ministering to his congregation.

    “Every one of them has someone in their family or a friend who is looking for a job,” he says.

    Sometimes, the CVS relationship helps Edmonds put more people in the pews. Once he found himself trying to persuade a young man to come to worship. The conversation focused on the difficulties of finding a job.

    Edmonds says he told the teenager: ” ‘You want a job? Come to church. We’ll get you a job at CVS.’ He was in church the next Sunday.”

Workforce Management, July 31, 2006, pp. 1, 22-28Subscribe Now!

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