Achieving Sustainable Returns on Your Labor Scheduling Investment in Today’s Recessionary Environment

The current economic downturn has impacted the retail sector, with the crisis gripping the financial sector spilling into the broader economy. Same-store sales are weakening everywhere, with holiday sales forecasted to be the lowest in 17 years. Shopping centers battle declining traffic, with many retailers closing underperforming stores and big discounts failing to lure shoppers. Challenging credit conditions and a highly volatile stock market only underscore the severity of the situation.

Complicating factors include the impact of the recession on retail labor. Median hourly pay has been falling for sales and clerical workers in retail, impacting many of the nearly 15 million people who work in the U.S. retail industry - the nation’s third-largest private sector employer.

The sluggish national economy has put pressure on many retailers to pinch pennies. Under the gun to become more efficiently running organizations, retailers are fighting to improve productivity and cut payroll costs, and the single biggest controllable cost in retail is people. Companies are more concerned about having the right people in the stores at the right time, and about being more productive with the store labor hours, not just cutting payroll. To address these issues, many companies are tweaking their scheduling systems and looking to workforce management systems to help convert their browsing shoppers into buyers.

Levers can be applied today to improve the stores’ operations and bottom line

Retailers can drive efficiencies by ensuring consistency through all stores and clarity of managerial and associate roles. In developing labor standards, time studies can be conducted and used to develop best practices into store procedures, resulting in a simple and practical store operating platform aligned with the overall company workforce management strategy. Key performance indicators and "balanced scorecard" reports can be used to gauge performance.

Effective resource allocation is also crucial; nearly 40% of a retailer’s operational costs are due to labor expenses so it is imperative that labor is used as effectively as possible. Successfully implemented automated labor scheduling can result in consistent operating, labor and sales execution across stores in line with a retailer’s strategy and improved store productivity and comp store sales growth.

How can you apply these levers quickly and sustainably?

Strategic projects require strategic awareness, and the decision to pursue the implementation of a best-in-class workforce management tool is a big decision requiring financial investment, time and resources. Properly implemented, best-in-class workforce management software staffs your stores in line with your customers’ and your business’ needs, with improved sales, reduced costs, and improved visibility and management of store execution.

However, the path to success can be challenging. A labor scheduling system is not a magic bullet and by the nature of the problem it solves, end-to-end workforce management is complex. Successful projects require higher levels of cooperation, and realizing return on investment is not easy.

Retailers need to consider key issues, such as how to achieve ROI objectives, how system generated payroll lines up with current levels of payroll, how to manage business risk and delays, and what level and type of support will be needed to maintain the system once implemented.

Implementation of labor strategy and tactics is an important first step. By defining a vision, goals, business case and best practice processes upfront, retailers will be best positioned to understand and exploit the strengths of a software tool and successfully take an integrated view of labor management across the Stores, IT, HR and Finance organizations.

Retailers may find the use of experienced guides to be helpful, until they become the experts themselves. A successful implementation often includes a staged rollout that balances speed with risk, the understanding of the service vs. support elements of labor, and cross-functional integration.

Finally, a fully-integrated change management plan is a critically underplayed practice that can avert the risks of delays in achieving ROI, sub-par levels of user adoption, surprises and passive resistance during testing and pilot, disrupted team harmony and focus on goals, and implementation and support cost overruns. The benefits of a successful change management implementation include financial goals reached on time, highest user adoption rates, lowest cost rollouts – on time and on budget, and improved store morale.

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