November 15, 2007
RSR Research: Getting Store Buy-in for Workforce Optimization – Lessons Learned
By Nikki Baird, Managing Partner, Retail Systems Research
Through a special arrangement, what follows is an excerpt of a current article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
I attended KronosWorks last week, where several Kronos for Retail customers presented on their implementations of workforce management. Most focused on implementing forecasting and scheduling, and while they ranged from grocery to big box specialty to small independents, and they were all in various stages of implementation – some had barely started testing, others were well into rollout – several common themes emerged among the speakers. These weren’t themes about the technology solutions so much as cultural and change management themes. And while some of the lessons are old lessons, they were all good ones:
Use the implementation to standardize workforce management processes. Several speakers emphasized the importance of going through process re-engineering before implementing. They used this step to make sure that the process is consistent across the chain – a potential risk when it comes to making sure that legally required policies and actions are enforced. It also helped make sure that responsibilities are aligned to the right people.
Put store managers on the project team. Several retailers mentioned that they had store managers on the project team. And even though it was challenging to make that happen, they emphasized that it helped tremendously with project success. In the case of a large grocer, it deliberately chose the biggest complainer about in-store technology projects. By co-opting the potential biggest saboteur and turning him into an advocate, the grocer eliminated what could have been a big roadblock to project success.
Make sure store managers have the right skill sets. Another large grocer recognized that the new emphasis on skills-based scheduling would require very different behavior from managers. Store managers might not have the right skill sets to make the most of the tools, so the retailer developed a very extensive training program – most stores received training and high levels of support for 6-8 weeks.
It’s not possible to over-communicate to stores about the implementation. When one larger grocery retailer that had long operated on fixed shifts moved towards schedule optimization and more flexible shifts, heavy emphasis was placed on the value of employees getting to express their preferences and easier ways to cover, swap, and request days off. Communications about it were blasted to employees at every turn. When it came time to roll the solution out, the grocer left it up to the regional managers to decide where the training and the rollout was going to fit into all the other things that stores had to do, so that it wasn’t a case of “corporate” dictating what would happen.
Discussion Questions: What do you think are some core strategies for improving store implementation of workforce management? What steps should be taken to ensure strong cooperation from store managers as well as the store staff?
[Author’s commentary] My biggest take-away from these sessions? We’re just on the cusp of realizing the full benefits from workforce management tools – there’s still a lot more that can be done. Also, as the data collection and model tweaking gets better, the value of the tools will only increase. The challenge really will be in making sure that “these powers are only used for good,” to borrow some comic-book phrasing. As one speaker commented, this is not about trying to balance a two-sided equation, but a three-sided one: cost vs. service vs. productivity. If you squeeze too hard on any one side, the other two will suffer. In today’s competitive environment, no retailer can afford to squeeze any of these dimensions.
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Workforce management systems require store managers to master more sophisticated skills leading to greater productivity. This leads to higher salaries, which reduces management turnover. Even if the software itself had a neutral productivity effect, the management turnover reduction alone would improve productivity. Installing these systems also gives insight into which managers can’t meet higher standards, which may increase turnover in the short run.
Workforce management systems are great but just like anything else, they require thought and deliberate execution. For instance, before you even start the project hype it up with employees, celebrate the investment to make everyone more efficient. Get t-shirts, order a cake for the kick off, do things that show this is everyone’s system and not a management watch dog system. Communicate the project time line and at every phase update the progress with a fun newsletter and prizes. It is imperative you get buy in and the only way to do that is to get everyone involved. Explain the benefits to the individual, i.e. higher profitability, bonuses, raises, employment security, etc.
Work force optimization tools are generally based on sales per hour or sales per 15 minute increments. The model looks to the equivalent time period and recent trend. The software works well for stable check out environments where lots of history has been captured.
But most of retail is not stable. As a consequence, store managers’ input is needed in implementing the model because there are five other factors that absolutely most be considered.
1. Weather. If the weather forecast for next Tuesday is sunny warm, the workforce forecast should be strongly influenced.
2. Traffic. The model needs to consider conversion rate as a function of staffing.
3. Quantity of staffing. The store manager will know if a prior period’s results were skewed because of staffing shortages during that time.
4. Quality of staffing. A good salesperson or customer service personal can have profound impact on prior results. This shouldn’t skew the workforce forecast.
5. Self service shopping. Retailers are investing in more line busters, kiosks, in store ecommerce terminals, and self checkout. These will affect the workforce forecast.
The first thing everyone has to do to make workforce management work is lower their expectations. There are so many factors that can impact the actual outcomes (weather, construction, school closings, social security check timing, welfare payments, etc, etc.) that no forecast is going to survive the first hour of operation.
Having set expectations, can the computer do a better job than the 20 year book keeper who knows Mary is likely to be late if she is scheduled for Monday morning because she has to drop her 4 year old at her grandmothers? The answer of course is no, but in today’s environment, dominated by part time employees and long opening hours, there is no longer that type of intimacy. Even if the front-end manager is doing the scheduling, the computer is better at tracking the quirks and the special personal circumstances.
So what should we expect from the computer? First of all, we should not expect it to be right all the time. The computer schedule is the first phase in process management, Capacity Planning. The schedule provides the basis for the execution phase. To make the scheduling work you have to be able to adjust during the execution phase. This means having people who can adapt to what is actually happening. They have skills to work on the floor or run a cash register. There is nothing more discouraging to me as customer than to be “working” in a self checkout lane while the employees are having a “coffee clutch” at the front end because they were over scheduled. If these employees could also bale cardboard or fill holes, or maybe even bag for the self checkout lanes it would be better.
The way to measure the success of a labor scheduling program is to monitor the forecast against actual for sales and labor hours. Labor hours for the front end must be isolated from the rest of the store. It would be great if you can isolate peripheral departments so you can also monitor them, but remember that the timing for their activities does not match the front end sales. The trump card in this whole effort of course is the quality of the operational results. If you cut back front end hours, have you also increased customer wait times. Monitoring quality of results is a critical factor when implementing a labor scheduling program. You don’t want fewer hours on the schedule to result in more holes on the shelves. This is where working with the employees becomes critical. They have to understand what the goals are, and be tied in to the process. Sure you want to reduce labor costs, but is that going to cost jobs and overtime hours or can adjustments be made in hiring? What does that mean to the individuals, will their incomes be impacted? Department heads must be comfortable with the plan and be realistic in their analysis of results.
So can the computer help? By all means. But like so many other options, it is merely a tool.
Study after study has shown the obvious. Retailers have zero retention plans when it comes to their in-store work force. Even as they get first dibs on the best talent in the universe (if you want to have some fun, ask a room full of senior executives from ANY industry to raise their hand if their first job was in retail. At least 90% will raise their hands all the time), they don’t know how to convince this talent that retail is a good place to stay.
One survey done by my friend Katherine Jones found “company picnics” were the most widely used retention tool for hourly workers in general! Certainly most retailers have a “bench” of store manager candidates from their in-store workforce, but you’re more likely to move into another line of business from IT than you are from the store, and that’s saying A LOT.
There’s another problem as well…in another survey on retail loss prevention that we are currently collating, retailers confess that they don’t trust their employees at all. They view employees and their actions at the check-out stand as their greatest source of shrink.
Within that context, how will we ever get to a customer-centric store? It’s easy to say “empower store managers by putting them on project teams,” but how do we give them a say in the projects that get prioritized in the first place?
This is a really complex problem, and is as old as retailing itself. It’s going to take a complete paradigm shift and those happen typically as a result of some kind of shock. I don’t pretend to know what that shock will be…but clearly different behaviors are required.
One of the key factors in the success of these systems, as well as any other system implemented at retail, is raising the technical skills of those responsible for utilizing the application.
At best, conquering email is about the base level skill set available. Moving that up to the level of full utilization of sophisticated systems is no small task. Realizing that the technical skill level expected for retail management is different than it ever has been in the past is something, from my view, that has yet to come to pass. Certainly, those of generations employable today have at least exposure to computer usage, however, it is nowhere near the level that would inspire confidence in successful execution of these types of systems or others.
Further, it begs the question of how well retailers are doing to develop these skills or creating an environment such that those with them would see retail as a viable career choice. It’s sort of a double edged sword from my view. If they had them, would there be less and less of a need for the level of systems being designed to take skill out of management? Or, does it lead to the level of skills necessary to have confidence in the use of technology to assist you as a manager and become a tool rather than a hindrance?
Far greater a lesson learned through an excessive level of labor at any given hour should be the quality of labor skills at retail and the migration of that level for a greater future. The trend might be the opposite, but retail’s future lies in whether or not it begins do develop as an area of employment of choice. No matter what the level of scheduling at any hour, those that are scheduled on the front line are the key to sales and loyalty. Investing in them so that their utilization can actually be ‘optimized’ is a far greater adventure than and one worthy of taking beyond that of a system implementation.
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Workforce management systems require store managers to master more sophisticated skills leading to greater productivity. This leads to higher salaries, which reduces management turnover. Even if the software itself had a neutral productivity effect, the management turnover reduction alone would improve productivity. Installing these systems also gives insight into which managers can’t meet higher standards, which may increase turnover in the short run.
Workforce management systems are great but just like anything else, they require thought and deliberate execution. For instance, before you even start the project hype it up with employees, celebrate the investment to make everyone more efficient. Get t-shirts, order a cake for the kick off, do things that show this is everyone’s system and not a management watch dog system. Communicate the project time line and at every phase update the progress with a fun newsletter and prizes. It is imperative you get buy in and the only way to do that is to get everyone involved. Explain the benefits to the individual, i.e. higher profitability, bonuses, raises, employment security, etc.
Work force optimization tools are generally based on sales per hour or sales per 15 minute increments. The model looks to the equivalent time period and recent trend. The software works well for stable check out environments where lots of history has been captured.
But most of retail is not stable. As a consequence, store managers’ input is needed in implementing the model because there are five other factors that absolutely most be considered.
1. Weather. If the weather forecast for next Tuesday is sunny warm, the workforce forecast should be strongly influenced.
2. Traffic. The model needs to consider conversion rate as a function of staffing.
3. Quantity of staffing. The store manager will know if a prior period’s results were skewed because of staffing shortages during that time.
4. Quality of staffing. A good salesperson or customer service personal can have profound impact on prior results. This shouldn’t skew the workforce forecast.
5. Self service shopping. Retailers are investing in more line busters, kiosks, in store ecommerce terminals, and self checkout. These will affect the workforce forecast.
The first thing everyone has to do to make workforce management work is lower their expectations. There are so many factors that can impact the actual outcomes (weather, construction, school closings, social security check timing, welfare payments, etc, etc.) that no forecast is going to survive the first hour of operation.
Having set expectations, can the computer do a better job than the 20 year book keeper who knows Mary is likely to be late if she is scheduled for Monday morning because she has to drop her 4 year old at her grandmothers? The answer of course is no, but in today’s environment, dominated by part time employees and long opening hours, there is no longer that type of intimacy. Even if the front-end manager is doing the scheduling, the computer is better at tracking the quirks and the special personal circumstances.
So what should we expect from the computer? First of all, we should not expect it to be right all the time. The computer schedule is the first phase in process management, Capacity Planning. The schedule provides the basis for the execution phase. To make the scheduling work you have to be able to adjust during the execution phase. This means having people who can adapt to what is actually happening. They have skills to work on the floor or run a cash register. There is nothing more discouraging to me as customer than to be “working” in a self checkout lane while the employees are having a “coffee clutch” at the front end because they were over scheduled. If these employees could also bale cardboard or fill holes, or maybe even bag for the self checkout lanes it would be better.
The way to measure the success of a labor scheduling program is to monitor the forecast against actual for sales and labor hours. Labor hours for the front end must be isolated from the rest of the store. It would be great if you can isolate peripheral departments so you can also monitor them, but remember that the timing for their activities does not match the front end sales. The trump card in this whole effort of course is the quality of the operational results. If you cut back front end hours, have you also increased customer wait times. Monitoring quality of results is a critical factor when implementing a labor scheduling program. You don’t want fewer hours on the schedule to result in more holes on the shelves. This is where working with the employees becomes critical. They have to understand what the goals are, and be tied in to the process. Sure you want to reduce labor costs, but is that going to cost jobs and overtime hours or can adjustments be made in hiring? What does that mean to the individuals, will their incomes be impacted? Department heads must be comfortable with the plan and be realistic in their analysis of results.
So can the computer help? By all means. But like so many other options, it is merely a tool.
Study after study has shown the obvious. Retailers have zero retention plans when it comes to their in-store work force. Even as they get first dibs on the best talent in the universe (if you want to have some fun, ask a room full of senior executives from ANY industry to raise their hand if their first job was in retail. At least 90% will raise their hands all the time), they don’t know how to convince this talent that retail is a good place to stay.
One survey done by my friend Katherine Jones found “company picnics” were the most widely used retention tool for hourly workers in general! Certainly most retailers have a “bench” of store manager candidates from their in-store workforce, but you’re more likely to move into another line of business from IT than you are from the store, and that’s saying A LOT.
There’s another problem as well…in another survey on retail loss prevention that we are currently collating, retailers confess that they don’t trust their employees at all. They view employees and their actions at the check-out stand as their greatest source of shrink.
Within that context, how will we ever get to a customer-centric store? It’s easy to say “empower store managers by putting them on project teams,” but how do we give them a say in the projects that get prioritized in the first place?
This is a really complex problem, and is as old as retailing itself. It’s going to take a complete paradigm shift and those happen typically as a result of some kind of shock. I don’t pretend to know what that shock will be…but clearly different behaviors are required.
One of the key factors in the success of these systems, as well as any other system implemented at retail, is raising the technical skills of those responsible for utilizing the application.
At best, conquering email is about the base level skill set available. Moving that up to the level of full utilization of sophisticated systems is no small task. Realizing that the technical skill level expected for retail management is different than it ever has been in the past is something, from my view, that has yet to come to pass. Certainly, those of generations employable today have at least exposure to computer usage, however, it is nowhere near the level that would inspire confidence in successful execution of these types of systems or others.
Further, it begs the question of how well retailers are doing to develop these skills or creating an environment such that those with them would see retail as a viable career choice. It’s sort of a double edged sword from my view. If they had them, would there be less and less of a need for the level of systems being designed to take skill out of management? Or, does it lead to the level of skills necessary to have confidence in the use of technology to assist you as a manager and become a tool rather than a hindrance?
Far greater a lesson learned through an excessive level of labor at any given hour should be the quality of labor skills at retail and the migration of that level for a greater future. The trend might be the opposite, but retail’s future lies in whether or not it begins do develop as an area of employment of choice. No matter what the level of scheduling at any hour, those that are scheduled on the front line are the key to sales and loyalty. Investing in them so that their utilization can actually be ‘optimized’ is a far greater adventure than and one worthy of taking beyond that of a system implementation.