Weekly Read Chapter 2
Week #3 and I want to welcome you back for another session of Weekly Read. We’re going to jump right in to Chapter 2 or Truth #1 Humans are more important than Hardware. Several years ago and possibly even through today, large retail operations changed the way they scheduled the work force. Traditional scheduling was abandoned in favor of “just in time scheduling'“ with the intent of having just enough staff on the schedule as needed. To give you a quick recap, Great Idea - Terrible Execution.
In an attempt to stabilize the staffing levels in their stores, the employers threw their employees lives into disarray with no real means to address it. This is an almost perfect example of counting on a tool to address a problem that is far more complicated than it seems on the surface. What could they have done differently?
Let’s start with the core problem and I will suggest to you that the core problem isn’t staffing - it’s the lost revenue. The surface argument is that there is too much overhead in relation to labor costs in the stores, but more than likely it is the missed opportunities to generate revenue that most retailers are truly focused on. Can you remember a time when you went into a store such as Ann Taylor where there were shoppers and what appears to be a fully staffed store, but there was very little activity in the store? I know I’ve seen it on a number of occasions. The way that you’re greeted when you enter most stores doesn’t lead to a definitive sale. Questions such as “Is there anything I can help you with? or “Do you need anything?” give those potential customers the opportunity to respond with “I’m just looking.”
However if the visitors to the store were greeted with verbiage along the lines of “Are you shopping for something formal, something for work or something casual?” you increase the likelihood of a sales opportunity. When the sales opportunities increase, we all know sales increase. And when sales increase, revenue can increase. So is the question really about the quantity of the staff or quality of the staff? We’ll discuss the notion of “quality vs quantity” in a later chapter, but for now I want you to hold on to the idea that a well trained, motivated and engaged staff - will always outperform a staff that doesn’t possess these characteristics, staffing levels aside. Obviously there are cases where a understaffed business misses out clearly because of the smaller head count, but in most cases I’d ask you to think long and hard about what the staff in the store could be doing to increase sales.
When management teams see their staff as variables or entries in a log, they become two dimensional. They are no longer people with lives and responsibilities, they become “plug & play” options to be used indiscriminately. And when you reduce a three dimensional person into two dimensional software that missing human dimension will become a problem.
These types of solutions tend to be focused more towards short term returns instead of long term problem solving. “Front line managers are squeezed,” says Susan Lambert, a University of Chicago researcher who studies low-wage workers. “The managers are the ones who are held accountable for keeping a ratio for sales or traffic and the number of hours. Sometimes they look at it every half hour, and make adjustments all day long.”(7 https://www.nbcnews.com/feature/in-plain-sight/shift-change-just-in-time-scheduling-creates-chaos-workers-n95881) The workers live in a world of school closings, car accidents, elderly parents and numerous others unplanned occurences and the managers live in a world of hourly sales reports and labor costs. Sound like a winning strategy to you?
If you accepted my earlier premise that the real issue is lost revenue, then we also have to discuss how the stores are managed. If a manager of a store is forced to spend the bulk of the day referring to computer generated schedules and making adjustments on the fly based on estimated store traffic, how much time does that store manager have to do the other things that are necessary for the store to reach its goals?
If we look at all of the variables that go into a retail store’s success, staffing is not the only one. Does the sales process match the clientele? Is the right merchandise in the store? Have the right people been selected as retail consultants in the store? Are the goods priced to be profitable or simply drive traffic? All of these variables will play a role in daily sales numbers, however if your management team is handcuffed to a screen watching hourly calculations - when do they have the time to investigate these other incredibly important factors?
Now let’s talk about what became the primary unintended consequence that after the workforce optimization systems went into place - increased costs.
“...when employers take a purely in the moment, tactical approach to demand for labor activity without regard for any other considerations, they run the risk of increasing overall costs.” ~ Lisa Desselkamp HR expert & consultant with Deloitte
The increased costs Ms. Desselkamp was referring to can come in the form of lower productivity and increased overhead when unsustainable scheduling results in higher turnover, missed shifts and low-worker morale. (8 https://www.nbcnews.com/feature/in-plain-sight/shift-change-just-in-time-scheduling-creates-chaos-workers-n95881) Among all industries, according to a 2012 study by the Center for American Progress, people working in accommodation, food services, leisure, hospitality and retail – some of the industries most affected by irregular shift work – also reported the highest rates of employees quitting their jobs. In another 2012 study, the Hay Group found that there was a whopping 67% median turnover rate for part-time store workers. These high turnover rates can come with a big price tag. The CAP study found that the cost of replacing employees with salaries under $30,000 was about 16% of a worker’s salary. (9 https://www.nerdwallet.com/blog/finance/time-scheduling-save-companies-money/)