Retail

The hidden cost of bad staff scheduling at store

10/10/2016

There is no doubt that in the retail industry a bad staff scheduling generates inefficiency and a hidden cost that should not be ignored if you want to take care of your business profit and margin.

Hourly employees are essential for the retail industry, and the long-term future of organizations that hire them.  Despite this interdependency, there are some crucial processes that generate frictions between business and employee needs. One point where this friction are more patent is in the scheduling process, where is manifested every time the  employee must face overtime spend under and over staffing error. If this error is highly frequent inevitably it will generate employee attrition.

Let’s go to the origin of the problem. Nowadays retailers must face a highly competitive market that request a superior customer service and personalized attention, while the price remains as one of the more important axes in the buyer decisions.  At the end a high customer service and a competitive price put downward pressure to the profit and margin

In order to cut cost, protect margins and keep stores staffed to provide a great customer service, retailers management has had cut IT budgets relying on outdated systems and processes. As a result many retailers still generate schedules manually which generate inefficiencies and deepen the employer-worker misalignegment

Some research Outmoded Scheduling Tools Result In Short-Staffed Retailers revel that the 57% of retailers still manually set the weekly schedule for hourly employees, and 56% of employees receive their schedules a week or less in advance. This time frame can make life difficult for the employee, who now has to accommodate personal obligations with less flexibility ahead of time. For their part, retailers have to worry about employee shift cancellations occurring at the last minute.

Unpredictable, inconsistent or otherwise unfair scheduling and shift management habits don’t happen without consequence. The traditional way of doing things has real cost for company profitability and success, creating more unforeseen costs when just retailers are trying to contain expenses.

Further inconsistent and last minute scheduling not only inhibits workers’ ability to plan personal and other professional obligations, it also encourages absenteeism, dissatisfaction and eventual turnover.

Particularly the later one is one common issue in the retail industry, In fact, 34% of retailers report a quarterly turnover rate of 26% for their hourly employees, with 33% claiming that this rate increased over the past two years. Employee turnover have no depreciable cost, On average, as is reported in our previous post “The importance of scheduling for employee engagement” replacing one worker costs up to 4.000$ (3.600€) and more than 60 hours of training. As turnover and costs mount, the quality of the customer experience drops.

Also worth to note, that   The unfriendly employee scheduling practices prorogue different impact in employees depending their ages, being in the youngest the worst. For younger hourly workers, scheduling discrepancies can be grounds for quitting. More than twice as many 18-25 year olds left their last hourly job due to receiving inconsistent schedules than 46-60 year olds (35% v. 16%). With Millennials recently claiming the largest share of the first world workforce (34% compared to Generation X’s 32% and Baby Boomers’ 31%), addressing these scheduling deficiencies will become imperative to retailers bottom lines.

Why generate smart schedules manually are so difficult?

Because smart schedules must satisfy employee and business needs, and this can be a juggling act for store manager, due to  they have the challenge to archive many goals, Some of the goals to archive include

  • Maximize customer servide in order to Seize maximum sales opportunities
  • Minimize and contain labor cost
  • Comply all labor regulations
  • Maximize employee satisfaction

Each one of this goals put pressure in different directions, and this is reflected in that 75% of employers say the most difficult part of scheduling is assigning shifts that accommodate both their staff’s availability and business needs. This difficulties handing the complexity is reflected in the result,  29% of employees say they rarely receive consistent work schedules.

At the end bad schedule generate a bad sizing of the store structure Almost half (46%) of retailers say they are frequently or sometimes understaffed, Of the merchants who are understaffed, 53% say the situation compromised their customer experience, which imply lost of sales opportunities

Other top consequences of being understaffed include:

  • Increased overtime (45%);
  • Decreased staff morale (30%);
  • Inability to meet sales targets (27%)
  • Inability to meet store compliance goals (25%).

Summarizing Companies that do little to address these scheduling issues will have difficulties attracting quality employees and providing superior customer experiences. Unless employers take action, the gap between businesses and their staff will widen, diminishing employee morale and corporate profitability.

To avoid understaffing and unpredictability, companies need to put smartness in the scheduling process. Fortunately the state-of-the-art in data analytics and software has made great progress in recent years, and  a potential way to alleviate all this scheduling issues would be  to shift to automated workforce management software with advanced analytical capabilities

The more advanced and smartnes scheduling management software provide capabilities to predict the future customer visits , to calculate the optimal size for the staff  structure at store, and  identify the more adequate schedule for each employee that fit perfectly  business and employee needs,  On this matter advanced analytics  can help tremendously.

With the right workforce management software in place to support store managers and and hourly workers, employers can reduce turnover, reduce absenteeism, improve the employee engagement, improve their customer experience and unlock significant cost savings. Employees, in turn, can better control their work-life balance and ensure consistent income, which strengthens economies and societies as a whole.

To maintain growth and minimize costs, businesses must quickly adopt more comprehensive systems to manage easily staff scheduling. By seeking out the right solutions now, employers will benefit immediately with greater operational efficiency, compliance, worker empowerment, and profitability.

If you desire to read more articles about staff scheduling issues and how advanced analytics can help, you should register to our linkedin group “Performance Based Approch” or visit the blog section in our website (www.orquest.com)