With ever-increasing competitive pressure and razor-thin margins, retailers are constantly seeking ways to grow their top line while containing costs. One of the major strategies that many retail brands have adopted to achieve this outcome is optimization of their labor force through state of the art scheduling software that leverages a multitude of inputs and predictive analytics to create what is intended to be that “perfect schedule”.
It's true that retailers have been able to realize benefits from the computer-generated schedules by piecing together the availability of an ever-increasing pool of part-time labor and leveraging automation to increase efficiencies and cut significant cost. However, in recent years issues have surfaced that illustrate the output from the billions of dollars invested in this technology is far from perfection. The short term gains have been eclipsed by the impact on retail associates' quality of life, as evidenced by some of the unwanted by-products:
- Too few or too many hours scheduled per week
- Last minute schedule changes that make it difficult for workers to plan ahead
- Inflexible scheduling that degrades the employees' quality of life
- Consecutive closing and opening shifts which burn employees out
So prominent are the problems that they have made it to headlines in major newspapers and publications, including the New York Times and NBC News. Even labor advocacy groups like the Retail Action Project have been pushing legislation to protect the workforce. As a result, municipalities are now introducing laws to address these problems. For example, as of July 3rd, 2015, the city of San Francisco will be enforcing a new set of ordinances, which will mandate that formula retailers with 20 or more locations worldwide and 20 or more employees in San Francisco:
- Publish working schedules to employees at least 2 weeks in advance
- Offer additional hours of work to current part-time employees before hiring new employees
- Provide employees with an estimate of minimum number of shifts/month and days and hours of shifts, prior to start of employment
- Provide employees with compensation for each on-call shift for which the employee is required to be available but is not called into work
Retailers that do not comply with the above will be assessed a range of significant financial penalties. Indeed, there has been a swath of other legislation in the wake of the New York Times article, including the Federal Schedules that Work Act and ordinances in New York and Vermont; and several other municipalities are planning to enforce similar laws.
These just-in-time scheduling solutions have not only impacted workers' quality of life but have led to longer term challenges for the retailer. Among the biggest impacts is worker turnover due to job satisfaction. In 2012 the Hay Group reported a 67% turnover rate for part-time retail employees* while a study by the Center for American Progress found that it costs, on average, $3,328 to recruit and train a replacement for a retail associate earning $10 per hour.** Poor scheduling has also cost retailers significantly in terms of negative PR, like that experienced by Starbucks due to the New York Times article referenced above.
So what can retailers do to manage this delicate balance between their benefits and employees' needs? The answer is that workforce optimization best practices, enabled by properly configured tools, can benefit the associate as much as the employer. Some proactive steps the retailer can take are:
1. Post schedules in advance — Leverage best in class predictive analytics and integration to traffic data to develop a predictable schedule, which can be published to the workforce at least one week, and preferably two weeks, in advance.
2. Ensure system enforces key constraints — The scheduling solution should enforce key business constraints and labor standards - checks against “clopenings” (i.e., assignment of consecutive closing and opening shifts), minimum/maximum shift lengths, and minimum number of hours between shifts — as well as manager and employee preferences.
Increase communication and collaboration — Deploy web and mobile self service applications that empower staff to manage their own availability and schedules through more frequent communication. This mechanism also gives staff the opportunity to choose to work flex-shifts and peak periods as opposed to being dictated their schedules.
3. Employ the right incentives — Legislation is now being enacted to ensure hours are provided to existing staff before retailers take on new employees; however, retailers should realize that accommodating their existing associates in this manner will ultimately benefit them. Providing the extra hours and monetary incentives can go a long way towards improving job satisfaction and loyalty, minimizing staff turnover and reducing the dependence on a part-time labor work force which already reports a medium 67% turnover rate.
4. Deploy a legally compliant solution — With steadily increasing legislation aimed at protecting the workforce, it is critical that retailers implement a scheduling solution that can ensure compliance. Percolata has invested significantly in developing not only a solution that incorporates best in class forecasting with traffic and employee self service , but is fully compliant with the latest labor rules and regulations.
With these measures in place, retailers can create stability in the lives of their workers; and a more satisfied, happy worker is much more inclined to better service their customers, which in turn pays dividends in increased customer spending and loyalty.
*Source: Hay Group, May 2012, http://www.haygroup.com/ww/press/details.aspx?id=33790
**Source: There Are Significant Business Costs to Replacing Employees, CAP, November, 2012, http://cdn.americanprogress.org/wp-content/uploads/2012/11/ CostofTurnover.pdf