By Jana Reserva
Nov. 12, 2020
Productivity is one sign of a good operation, but many factors are at play to ensure success in the retail industry.
Jim Highfill, president at Lazarus Human Capital Services, sheds light on some of the challenges in retail workforce management and provides insight into what companies can do amidst a changing business landscape. With over 30 years in retail, he shares best practices on ensuring productive operations, creating efficient staff schedules, staying compliant with labor laws and adapting to different industry changes.
The real meaning of successful and cost-effective operations
If you’re a CFO, would you be open to a 10 percent increase in yearly sales resulting in an additional net profit of $100 million but no increase in productivity? Highfill conducted a thought experiment posing that question among 20 CFOs of multinational companies, and half of them rejected the idea.
“The point is, increases in productivity result from technology, process improvements, or clear communication, team involvement and training, the latter being most important,” he said. “It’s not always as simple as requiring more sales generated from fewer labor hours. When the workforce has clear goals and direct involvement in achieving them, they are more productive, more conscientious towards cost mitigating practices, and more rapidly adopt technology and process improvements.”
HR teams also have a crucial role to play as a human capital partner. They need to advocate for the workforce and ensure that communication of goals and the employees’ role in achieving those goals is clear and consistent.
“HR is a force multiplier when equally involved in any discussion of operational change,” he added.
Crucial factors when creating staff schedules
Staff schedules are at the core of any operation, especially for retail businesses. More than ensuring that all business areas are covered, there are other significant factors to consider.
“Everything starts with the forecast of sales, customer traffic and other related indicators that can predict labor demand. If you’re seeing large variances in productivity week to week, check the forecast variance first,” he said.
The other thing to identify is where and when labor is required. Companies typically use data for labor modeling, but they need to keep in mind how the human factor can also come into play.
“Even the most talented store managers can have what I call operational bias where they may over- or under-allocate hours to certain departments based on how well they understand those departments. Store-level modeling provides both a guide for allocating hours and evaluating any impacts of variance from the model. If you really want to leverage your company’s data science efforts, this is a level of granularity that shouldn’t be ignored,” he said.
Labor modeling is also crucial to identifying the right ratio of full-time to part-time employees. Weighing pros and cons and variables like flexibility, turnover and knowledge dilution helps strike a balance and create the right mix.
Most importantly, managers need to consider the needs of staff when creating schedules. It seems obvious but can be easier said than done, especially when managers get a handful of requests. “Using an employee self-service software is a great way to make it easier and more cost-efficient for the manager to handle this process, and when used with automated scheduling software, it can be a true game changer,” he said.
Workforce management challenges in the retail industry
Like with any industry, retail players are faced with a set of challenges. Highfill cited overcoming fear, facing political uncertainty, evaluating technology and figuring out the role of gig work as the top challenges that the retail businesses had to contend with.
Fear is usually a result of market volatility, and it can be felt from the executive, managerial and employee levels.
“You could almost call it a psychology problem,” he said. “There’s fear of business viability and financial uncertainty. Fear on the corporate level usually manifests itself as austerity on the store level in the form of draconic staff cuts in brick-and-mortar locations as more emphasis is placed on ecommerce. How does one cut back on staff costs without creating a death spiral where sales drop and more staff is cut and so on and so forth?”
Retailers need to recognize that their strength is in customer engagement. He explained that while it feels risky to invest in store resources, it is essential to preserving relationships with customers.
Political uncertainty is another thing that retail players need to navigate as it can influence how labor laws are being applied.
“HR departments must be prepared for a wide variety of scenarios on the federal, state and local level. It’s a monumental task,” he said.
Workforce management software is vital to retail businesses, but finding the most suitable technology can be difficult.
“The plethora of options can create a decision paralysis, especially for those that are navigating the selection process for the first time,” he said. “My advice is to evaluate five or six options, narrow it down to two for a proof-of-concept. Make a decision, go forward, and don’t look back.”
The rise of gig work is also something that retailers need to navigate. While it offers flexibility, it can also have an impact on an organization’s culture.
“Certainly there’s a place for gig workers in most sectors of retail. But there will likely be a lot of pain involved over the next several years as retailers try and figure out what best matches their needs while preserving the shopping experience and culture of the company,” he said.
Ensuring labor compliance when managing a huge workforce
Technology is vital labor compliance as it can help take into account various laws into the system and automate notifications when there’s a risk of penalty or non-compliance. However, companies need to pay attention to how technology is being adopted into the field.
“Executives may see scheduling as a logic problem, which it is in many ways. However, on the store level, it is an emotional issue as well. It’s the emotional part that creates bias reflected in schedules, which can cause compliance issues. A well-meaning manager might give favorable schedules to longtime loyal employees to the disadvantage of others, or may fail to recognize that an employee has not been given the number of weekends off, ” he explained.
Employee scheduling software provides a clearer picture and helps managers recognize potential areas where non-compliance may happen, enabling them to optimize schedules before issues can occur.
Building resilience in retail
With COVID-19 throwing a curve at the workplace, managers need to be agile enough to optimize their strategy given how quickly things can change.
“The volatility in the labor market will be with us as long as the pandemic is active. Managers are faced with having to reduce or increase staff on short notice as areas experience fluctuating levels of economic lockdown. It not only has an operational impact but a psychological impact as well,” he said.
Given the uncertainty of today’s business landscape, leaders need to step it up and think creatively. Beyond productivity, they must prioritize engaging their people and empowering them to thrive no matter the circumstance.
“Managers must be creative. Cross-functional training, job sharing, and constant communication and goal alignment are the main ingredients in a recipe for maintaining a cohesive team that will thrive in this period of uncertainty and change,” he said.
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