March 6, 2009
Loblaw’s Unusual Approach to Jobs in Tough Times
While
many stores are looking for ways to reduce the numbers of their full-timers
to save dollars on wages and benefits and others are laying off workers
to get ahead of expected slowdowns, Canada’s Loblaw has gone another way.
The chain has decided to convert as many as 10,000 jobs from part-time
to full-time status to provide shoppers with higher levels of service and
to reduce costs associated with staff turnover.
According
to a Toronto Star report, Loblaw’s workforce is currently about
80 percent part-time. With the projected changes, 30 percent of Loblaw’s
store employees will achieve full-time status.
Turnover
of part-timers at Loblaw stores is approximately 50 percent every three
months.
"There’s
a sweet spot in there where people have better pay and the retailer gets
better productivity," Loblaw president and deputy chair Allan Leighton
told attendees at an investor conference at CIBC World Markets.
Perry Caicco,
an analyst with CIBC, told the Star that the union representing
Loblaw workers, the United Food and Commercial Workers, is likely to support
moves to increase full-timers and may be receptive to calls by the chain
for "flexibility" on its part as it seeks to compete with non-union
retailers such as Wal-Mart Stores.
Discussion Questions: Is now a good time
for retailers to be looking to shift their mix of full- and part-time
workers? Do you think Loblaw is headed in the right direction by looking
to increase its percentage of full-timers? Will larger numbers of full-timers
add up to happier customers who spend more in stores?
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Discussion Questions
Poll
I think the idea of shifting to a more professionalized workforce has always been a good idea. The trade-offs between higher hourly wage rates and less flexibility in scheduling are more than made up, in my judgment, by the improvement in the face presented to customers. Professional sales people are not an expense item, they’re revenue generators.
That said, making this kind of transition poses a number of challenges, but none that I think would be insurmountable. It can be done fairly quickly, but the payoff may take time to fully emerge, as training programs take hold, and those who can’t make the transition are identified.
At 200% part-time turnover p/a, Loblaw is between 25 and 50% higher than several key competitors. They have also scored among the lowest performers in customer service, so this is a smart move, IF they execute well.
Like all moves in retail ops, execution will be everything. Failure equals an even worse competitive labor disadvantage and less flexibility. I agree with Kevin that training and career planning will be crucial. LCL must ensure that all promotions to full-time are merit-based (never seniority-based) and that employees see it as an honor bestowed on people who the company values as “keepers.” They’d do well to take a page out of the Starbucks book on building careers with the company.
The polling question is really very different than the article. The polling question asks is now a good time to evaluate the make up of your full- and part-time employee mix? The answer has to be a definite yes.
Now is the time to evaluate everything you are doing in your organization and to ask whether we are doing the right things in the most effective way possible. The questions I challenge everyone to ask before they hire another person is, “Can we do this job differently or without hiring another person? Can we automate it, does the job need to be done at all? Can we get other employees to the work?” You will be amazed at the answers if you dig deeply enough and ask WHY and HOW can we do this job differently enough times. The only restriction put on the answer is that it can not effect the customer in any negative way and it is even better if it has a positive effect on the customer experience.
One quick example: One restaurant group I work with quit cutting the tops off of the strawberries they use to garnish some of their plates. A savings of over 1 hour a day in labor cost; it had no effect on the customer experience.
Loblaws needs to be careful going down this path. Converting part-timers to full-timers doesn’t necessarily mean an increase in productivity. If anything, elongated shifts and more days will wear down part-timers faster. I would go with a gradual approach. Max out the part-timers you have, convert volunteers and retrain them and add more part-timers to fill gaps.
Having happier employees usually results in happier customers. Loblaw is facing the fight of its life with the onslaught of Walmart Supercenters in Canada. We have all learned that trying to mimic Walmart usually ends in failure. Loblaw is choosing to take a higher road, a different and more compelling road, in order to compete with Walmart.
Now is the time to cut out the dead wood and plant new. If Loblaw is going to reward those who actually do a better job, know the products and can sell them better–I’m all for it. If, however, they are rewarding people just to assume service will increase with full-time status and promote across the board–I think it is a dumb idea.
Loblaw’s realizes that well-trained employees create a better customer service experience, which leads to higher consumer loyalty and better sales. 50% turnover of part-time employees leads to higher expenses and less consumer satisfaction. This seems like a no brainer.
Finally a retailer has the right idea! Despite what Wall Street says, this is ALWAYS the best way to increase business! Growth should come from strengthened stores not just throwing a store on every corner. Anyway, look at Wall Street, who can trust them after the mess they have created?!
Regardless of the economic times were are in, this is a smart move. While retailers need the flexibility that part timers provide, the benefits of having more full time staff are immense. Higher employee engagement levels, lower turnover rates, and typically far better service to customers are the result of full time staff. However, these benefits don’t just miraculously materialize with full timers. Loblaw will need to train/coach/manage them better to get the results they are after.
Absolutely, now is a terrific time to change what isn’t working. I think survival is a pretty good motivator. With Walmart breathing down their neck, differentiating themselves with great service beats a head-to-head price battle that they are bound to lose.
But, great service doesn’t just mean throwing payroll at the problem. That has never worked. Now’s the time staffing to traffic should be implemented, if it is not already in place. Service access technologies should be implemented that can stress payrolls and produce better ROI on the additional labor costs by directing the associates to the customers who want service.
And last but not least; training. The investment in associate development is overriding in the success of this strategy. You can have the right sized payroll, being accessed by state of the art access technologies, but if they have been poorly hired and have limited product knowledge, all is lost.
Yes, there are costs associated with employee turnover, however, turnover is not always a bad thing. In the grocery biz there are plenty of lower-skilled jobs that take relatively little training. Keeping turnover at a higher rate keeps the average hourly wage rate lower, and in union shops, keeps employees at the lower end of the benefits perks, also. This may be a heartless view, but it will definitely keep overall costs lower. With all the unemployment, the pool of potential clerks is higher-quality now, more than ever.
This idea is way overdue. If Loblaw’s invests properly in their workforce, their workforce will perform better. When you have the enormous turnover that Loblaw’s has experienced, you are subject to bad comments from ex-employees. With their huge number of ex-employees, that is a lot of bad press. Being loyal to your workforce will create a more responsible and loyal group of employees. And, it just might keep the unions at a distance.
Loblaw’s approach to meeting and exceeding the customer experience appears to be a good strategy. The key driver; those individuals that are most directly responsible for presenting your brand on a regular basis to your customers will need to trained effectively and coached consistently on the deliverables that are most important to Loblaw’s. Employees that are well trained and feel valued usually demonstrate better productivity.
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I think the idea of shifting to a more professionalized workforce has always been a good idea. The trade-offs between higher hourly wage rates and less flexibility in scheduling are more than made up, in my judgment, by the improvement in the face presented to customers. Professional sales people are not an expense item, they’re revenue generators.
That said, making this kind of transition poses a number of challenges, but none that I think would be insurmountable. It can be done fairly quickly, but the payoff may take time to fully emerge, as training programs take hold, and those who can’t make the transition are identified.
At 200% part-time turnover p/a, Loblaw is between 25 and 50% higher than several key competitors. They have also scored among the lowest performers in customer service, so this is a smart move, IF they execute well.
Like all moves in retail ops, execution will be everything. Failure equals an even worse competitive labor disadvantage and less flexibility. I agree with Kevin that training and career planning will be crucial. LCL must ensure that all promotions to full-time are merit-based (never seniority-based) and that employees see it as an honor bestowed on people who the company values as “keepers.” They’d do well to take a page out of the Starbucks book on building careers with the company.
The polling question is really very different than the article. The polling question asks is now a good time to evaluate the make up of your full- and part-time employee mix? The answer has to be a definite yes.
Now is the time to evaluate everything you are doing in your organization and to ask whether we are doing the right things in the most effective way possible. The questions I challenge everyone to ask before they hire another person is, “Can we do this job differently or without hiring another person? Can we automate it, does the job need to be done at all? Can we get other employees to the work?” You will be amazed at the answers if you dig deeply enough and ask WHY and HOW can we do this job differently enough times. The only restriction put on the answer is that it can not effect the customer in any negative way and it is even better if it has a positive effect on the customer experience.
One quick example: One restaurant group I work with quit cutting the tops off of the strawberries they use to garnish some of their plates. A savings of over 1 hour a day in labor cost; it had no effect on the customer experience.
Loblaws needs to be careful going down this path. Converting part-timers to full-timers doesn’t necessarily mean an increase in productivity. If anything, elongated shifts and more days will wear down part-timers faster. I would go with a gradual approach. Max out the part-timers you have, convert volunteers and retrain them and add more part-timers to fill gaps.
Having happier employees usually results in happier customers. Loblaw is facing the fight of its life with the onslaught of Walmart Supercenters in Canada. We have all learned that trying to mimic Walmart usually ends in failure. Loblaw is choosing to take a higher road, a different and more compelling road, in order to compete with Walmart.
Now is the time to cut out the dead wood and plant new. If Loblaw is going to reward those who actually do a better job, know the products and can sell them better–I’m all for it. If, however, they are rewarding people just to assume service will increase with full-time status and promote across the board–I think it is a dumb idea.
Loblaw’s realizes that well-trained employees create a better customer service experience, which leads to higher consumer loyalty and better sales. 50% turnover of part-time employees leads to higher expenses and less consumer satisfaction. This seems like a no brainer.
Finally a retailer has the right idea! Despite what Wall Street says, this is ALWAYS the best way to increase business! Growth should come from strengthened stores not just throwing a store on every corner. Anyway, look at Wall Street, who can trust them after the mess they have created?!
Regardless of the economic times were are in, this is a smart move. While retailers need the flexibility that part timers provide, the benefits of having more full time staff are immense. Higher employee engagement levels, lower turnover rates, and typically far better service to customers are the result of full time staff. However, these benefits don’t just miraculously materialize with full timers. Loblaw will need to train/coach/manage them better to get the results they are after.
Absolutely, now is a terrific time to change what isn’t working. I think survival is a pretty good motivator. With Walmart breathing down their neck, differentiating themselves with great service beats a head-to-head price battle that they are bound to lose.
But, great service doesn’t just mean throwing payroll at the problem. That has never worked. Now’s the time staffing to traffic should be implemented, if it is not already in place. Service access technologies should be implemented that can stress payrolls and produce better ROI on the additional labor costs by directing the associates to the customers who want service.
And last but not least; training. The investment in associate development is overriding in the success of this strategy. You can have the right sized payroll, being accessed by state of the art access technologies, but if they have been poorly hired and have limited product knowledge, all is lost.
Yes, there are costs associated with employee turnover, however, turnover is not always a bad thing. In the grocery biz there are plenty of lower-skilled jobs that take relatively little training. Keeping turnover at a higher rate keeps the average hourly wage rate lower, and in union shops, keeps employees at the lower end of the benefits perks, also. This may be a heartless view, but it will definitely keep overall costs lower. With all the unemployment, the pool of potential clerks is higher-quality now, more than ever.
This idea is way overdue. If Loblaw’s invests properly in their workforce, their workforce will perform better. When you have the enormous turnover that Loblaw’s has experienced, you are subject to bad comments from ex-employees. With their huge number of ex-employees, that is a lot of bad press. Being loyal to your workforce will create a more responsible and loyal group of employees. And, it just might keep the unions at a distance.
Loblaw’s approach to meeting and exceeding the customer experience appears to be a good strategy. The key driver; those individuals that are most directly responsible for presenting your brand on a regular basis to your customers will need to trained effectively and coached consistently on the deliverables that are most important to Loblaw’s. Employees that are well trained and feel valued usually demonstrate better productivity.