Take your workforce off a 'lean' diet with better management practices
By John Orr, senior vice president of retail, Ceridian
New York City's recent passing of a "clopening" ban is additional evidence that workforce management practices are receiving greater public and media scrutiny. Whether it's a blog post decrying the effects of clopening (i.e., working back-to-back closing and opening shifts) or an article expressing outrage over call-in and other scheduling practices, much has been written about these symptomatic labor issues. Retailers and their consultants would serve their customers better by shifting their focus to the root cause that leads to these challenges — fiscally-lean coverage practices.
Retailers that rely on a pure financial control approach to managing profitability are predisposed to focus on costs because they believe it is the only thing they can control. Since approximately 80 percent of a retailer's controllable costs are labor, it is not surprising that retailers often recoup margin through reductions in staff and coverage.
When you consider the many competing influences on retail operations, it is easy to see the cause-and-effect. With increased consumer options, tremendous margin pressures, and omnichannel masters, retailers are forced to look to in-store payroll to recapture corporate earnings.
This focus on in-store payroll leads to lean scheduling practices. Retailers committed to this approach often suffer from a variety of the following:
- High employee turnover. This may be the result of overworking too few employees or offering undesirable scheduling opportunities (including clopening, unplanned overtime, call-in practices, etc.) that encourage employees to leave for greener pastures.
- Poor store balancing. The inability to share employees across physical store boundaries limits the capability to optimize part-time staff while providing full-time or 30 hours.
- Damaged employee brand. Dissatisfied employees may speak out negatively in social media and on rating sites poisoning the opportunity to build internal brand ambassadors and making it more difficult to attract and retain good talent.
These pains ultimately impact the customer experience. Customers are not loyal to the retailer; customers are loyal to the experience. Employees deliver the customer experience. It follows that an overworked, sleep-deprived, unfairly scheduled or mistreated employee will not deliver the ideal customer experience.
According to a McKinsey report, 70 percent of buying experiences are based on how the customer feels they are being treated. More importantly, companies that prioritize the customer experience generate 60 percent higher profits than their competitors.
Understanding that your employees are at the core of delivering a good customer experience and achieving profitability success, emphasizes the importance of treating your workforce well. How are you going to attract and retain the best associates if you're focused on "lean" workforce management practices? Shifting your emphasis on engaging your employees will allow for better alignment with customers' demands and improve the in-store experience, conversion, and sales.
Retailers who operate in the top quarter for employee engagement experience a 22 percent median profitability advantage over those that do not. These retail winners leverage state-of the-art workforce management solutions and leading practices to engage their workforce. Here are three approaches to stop the self-fulfilling prophecy of lean workforce practices:
1. Thoroughly review your policies and scheduling practices to determine if they are fair and support employee well-being. Instead of waiting for legislation to force the issue, make changes that demonstrate an appreciation for your employees This can be challenging if there is a lot of schedule irregularity or if employees can choose their own shifts or switch shifts with other associates without any consideration of the impact on their health. Current workforce management technology solutions can ensure that schedules are fair and can also alert managers when schedules are problematic. Managers can then proactively participate in improving work-life balance.
2. Apply the same thought process to engaging your workforce that you do to engaging your customers. Associates value the speed, flexibility and convenience of mobile and self-service applications offered by the latest workforce management solutions.
3. Gain visibility to in-store needs, so you can correctly plan and schedule the right employees to deliver the ideal customer experience and lift overall sales. Using state-of-the-art interactive scheduling solutions provide this level of visibility so that collaborative work is enabled, labor spend is optimized, coverage is ensured, and employees are engaged.
The short-sighted focus on in-store payroll reduction creates a vicious cycle: lean workforce practices leading to less service coverage resulting in less sales which drives further reduction in labor costs. The death spiral continues until stores are understaffed. Clopening, call-ins, and other poor scheduling practices are simply symptoms of under budgeting and poor planning. Investing in solutions and leading operating practices address the root cause of these problems and lead to a better state for employees, customers and retailers.