Creating a Win-Win for
Employers and Employees
Introduction
There’s no question that scheduling optimization soft-ware, which uses historical and predictive analytics to assist retail managers with the associate scheduling process, is hot. With razor thin margins and increas-ingly stiff business competition, retailers are striving to increase revenue while holding down their operational costs. Considering labor’s wide acceptance as a retail-er’s largest controllable cost, scheduling optimization has proven a compelling means to that end.
Retail Systems Research reports that half of the retail-ers surveyed for its 2014 store operations benchmark report have implemented scheduling optimization, and that 64% of retail winners—those boasting year-over-year sales growth of more than 3%—have successfully leveraged it to prioritize employee work schedules. Those retail leaders report that the time their associ-ates spend with customers is far more in line with cor-porate objectives than the 68% of retail laggards (those achieving less than 3% sales growth annually) who say their associates don’t spend enough time selling and
servicing customers (see figures 1 and 2).1
Without question, the flexible appropriation of labor to
meet customer demand can have positive implications on the retailer’s balance sheet, and scheduling sophis-tication is clearly one mark of a winning retailer. But for
all its benefits, applying a layer of software automation
to retail scheduling practices poses a potential risk to the retail associate’s quality of life, the consequences of which can cost retailers in the long run. To be clear, scheduling automation software holds great promise and delivers stellar results for the retailers who have deployed it, but that success is predicated on proper
management of the system. In this paper, we’ll explore
the scheduling challenges inherent in employing a high volume of part-time associates, and we’ll address how
scheduling software can be leveraged to improve—not
exacerbate—the problem.
The Scheduling Problem In Practice
Computer-generated schedules have proven their value to the bottom line on the labor budget. They minimize the labor store managers devote to building schedules,
giving those managers more time on the store floor where they can influence merchandising and sales.
With the proper inputs and work rule controls in place,
they also optimize the associate experience by eliminat -ing instances of favoritism and schedules create on in-tuition. On the other hand, improperly managed sched-uling automation can produced negative consequences. A sampling of these unwanted side effects include:
• So-called “clopenings,” the newly minted phrase that describes a situation in which an associate closes the store very late at night and is scheduled to open the store early the following morning.
• Too few or too many hours scheduled per week.
• Inflexible scheduling that degrades the associate’s
quality of life.
To avoid these consequences, retailers must strike a balance between the software features that enable cost management and those used to create employee-friend-ly schedules.
A July 2014 New York Times article by Jodi Kantor that
covered the plight of a non-exempt Starbucks barista
and single mom shone a spotlight on the potential pit-falls of automated scheduling.2 The Kantor piece, which
followed the barista through several days of her hectic and erratic schedule, garnered a lot of attention through illustration of an issue that’s all too common among
1What’s In Store For Stores? Retail Systems Research, June 2014, http://rsrresearch.com/wp-content/uploads/2014/06/2014_ 2Working Anything but 9 to 5, New York Times, August 2014,
http://www.nytimes.com/interactive/2014/08/13/us/starbucks-workers-scheduling-hours.html?_r=0
3Employment Situation News Release U.S. Department of Labor, Bureau of Labor Statistics, September 2014, http://www.bls.gov/news.release/empsit. htm
hourly retail associates. While Starbucks characterized the barista’s story as an isolated, store-level incident of mismanagement, it’s a scene that undoubtedly plays out among thousands of associ-ates across hundreds of retail brands every day. The public outcry and fallout that ensued resulted in some well-publicized, top-down scheduling policy changes at Starbucks.
The story serves as a hard reminder that while scheduling
optimiza-tion software is designed to benefit both retail businesses and their
associates, implementing it is not a “set it and forget it” proposition. Too often, the automated capabilities of the software result in its running autonomously. But managing the retail labor pool—pegged by the Bureau of Labor Statistics at more than 15,000,000 in the U.S. alone,3—comes replete with a number of dynamics that make
proactive, software-assisted scheduling prerequisite for most large retail employers. Some of those dynamics include:
• The fluid and management-intensive non-exempt benefits environment created by the Affordable Care Act (ACA).The ACA mandates “applicable large employers” (generally those who employed at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding
calendar year) to provide health insurance benefits to full-time employees, and it defines a full-time employee as one who is
employed on average for at least 30 hours of service per week.4
Subsequently, retailers are tasked with the relatively new
bur-4 Determining Full-Time Employees for Purposes of Shared Responsibility for Employers Regarding Health Coverage, Internal Revenue Service, http:// www.irs.gov/pub/irs-drop/n-12-58.pdf
5Part-Time Hours: Undertake ACA ‘Head Count’ Strategies Now, SHRM, March 2013, http://www.shrm.org/hrdisciplines/benefits/articles/pages/ health-care-reform-strategies.aspx#sthash.fciB3nMD.dpuf
6Millennial Branding and Randstad US Release First Worldwide Study Comparing Gen Y and Gen Z Workplace Expectations, Millennial Branding, Sep-tember 2014,http://millennialbranding.com/2014/geny-genz-global-workplace-expectations-study/
Retailers must strike
a balance between
the software features
that enable cost
management and
those used to create
employee-friendly
schedules.
Implementing
scheduling
optimization is not a
“set it and forget it”
proposition.
Figure 2den of managing part-time associate schedules for ACA compliance. Without software-automated work rules, employers are at risk of not only spending too much on labor, but spending more than necessary
on benefits, as well. And, if they shirk the benefits
responsibilities outlined in the ACA, retailers are
exposed to some hefty fines. When a large employer fails to offer coverage to a sufficient number of
full-time workers, it’s subject to a penalty that’s equal to the number of full-time employees (minus up to 30) multiplied by $2,000.5
• A changing workforce. Generations Y and Z com-prise the bulk of the retail workforce, and their
expectations are unlike the labor pool of yesteryear.
They’re tech-savvy, mobile, and willing to move. In fact, when asked in a recent Millennial Branding/ Randstad Professionals survey, Gen Z (ages 16 to 20) indicated that they plan to work for four
compa-nies and Gen Y (ages 21 to 32) said five during the
course of their careers.6 These digital natives are
clearly choosier, and the study goes on to illustrate that they’re looking for organizations that they trust
and believe in, those that exhibit social respon -sibility, and those that care about their work/life balance. Keeping these associates—and avoiding
costly attrition—requires considerate and flexible
scheduling.
• Competitive wages.The aforementioned Millenni-al Branding study reports that only 28% of Gen Z said money would motivate them to work harder and stay with their employer longer, as opposed to 42% of Gen Y. However, as Henry Ford taught us in 1914 when he doubled the pay of his assembly line workers to combat turnover, compensation com-petition plays heavily into the attrition rate among
young employees. Perks and benefits—not the least of which among young associates is schedule flex
-ibility—can pay off significantly in the form of both
associate “stickiness” and an improved labor pool. When workers across the country heard of Ford’s
goodwill, they flocked to Detroit in droves.
Retailers are wise to ensure they use automated
sched-uling flexibility to create positive outcomes, because
organized labor and retail labor advocacy groups are
increasingly taking note of exceptions, such as the Starbucks example above. In its report Discounted Jobs: How Retailers Sell Workers Short, the Retail Action Proj-ect found that only 17% of the retail workers it surveyed had a set schedule. The majority of workers, it said, face increasingly unpredictable hours, on-call shifts, call-in pay violations, penalties for scheduling requests, and
benefits avoidance through “legal misclassification.”7 Those employers exhibiting some compassion for asso -ciates as their schedules are created—which, in high-vol-ume associate environments all but requires some degree of automated schedule management—will not only garner positive PR, they’ll improve associate sat-isfaction and reduce their attrition rate in the process. With modern scheduling automation tools, it’s possible
to achieve these outward-facing benefits while simulta
-neously refining labor spend on the back-end.
Scheduling to both corporate and associate needs works congruently with that initial intent of scheduling optimization; it contributes to a reduction in the high cost of attrition.
Long-Term Consequences Of Poor Scheduling
While there are many factors that contribute to asso-ciate attrition, many of them boil down to job satisfac-tion. If an associate is appreciated, compensated, and empowered, that associate is less likely to search for greener pastures. As hourly retail associates go, the link
between schedules and job satisfaction is inextricably linked. In cases like the Starbucks example cited above,
unmanaged “optimization” of associate schedules lean too heavily to the business side, resulting in a perceived lack of appreciation for the associate’s life outside of
work, a disregard for their compensation expectations,
and a belittling sense that they lack empowerment— that they’re little more than a business asset. These factors lead to some troubling statistics:
3
7Discounted Jobs: How Retailers Sell Workers Short, Retail Action Project, 2012, http://retailactionproject.org/wp-content/uploads/2012/03/7-75_ RAP+cover_lowres.pdf
8Hay Group survey, May 2012, http://www.haygroup.com/ww/press/details.aspx?id=33790
9There Are Significant Business Costs to Replacing Employees, CAP, November, 2012, http://cdn.americanprogress.org/wp-content/uploads/2012/11/ CostofTurnover.pdf
10Bureau of Labor Statistics, September 2013, http://www.bls.gov/news.release/jolts.toc.htm
11Global Innovation Survey 2013, PwC, 2013,http://www.pwc.com/en_US/us/consulting-services/assets/global-innocvation-survey-us-summary.pdf 12State of the Global Workplace: Employee Engagement Insights for Business Leaders Worldwide, Gallup, 2013, http://www.gallup.com/strategicconsult-ing/164735/state-global-workplace.aspx
• In 2012, Hay Group reported a 67% median turnover rate for part-time retail employees.8
• The same year, a CAP (Center for American Progress) study
found that it costs, on average, $3,328 to find, hire, and train a
replacement for a retail associate earning $10 per hour.9
• More recently, according to the Bureau of Labor Statistics, retail hires were up 5% in June 2014, while separations (quits, layoffs, and discharges) were up 4.6%.10 These figures are high relative
to other industries, and they illustrate the associate “churn” that’s so prevalent in the retail industry.
• In its 2013 Global Innovation Survey, PricewaterhouseCoopers
found that 57% of executives consider finding and retaining the
best talent to make innovation happen a challenge.11
Poor scheduling practices undoubtedly contribute to costly attri-tion, but just keeping associates around isn’t enough. Scheduling automation tools also help retailers keep associates engaged, which is just as important, because dispirited associates are poorly performing associates. This is important to the business, because improving associate well-being and morale of associates isn’t just a
soft benefit. In fact, organizations in Gallup’s Q12 Client Database
with an average of 9.3 engaged employees for every actively
disen-gaged employee experienced 147% higher earnings per share (EPS)
compared with their competition. In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee
experienced 2% lower EPS compared with their competition during
that same time period.12
With sophisticated rules-based scheduling optimization software,
industry leaders are avoiding PR nightmares like that experienced
by Starbucks. They’re building associate-considerate schedules that simultaneously result in higher staff satisfaction, a reduction in
associate churn, better customer service, and more efficient labor
budgets.
Optimized Schedules Require Standards
That Benefit Both Parties
Contrary to its portrayal in the aforementioned NYT column,
prop-erly-managed scheduling optimization software benefits the asso
-ciate as much as it benefits the merchant. To achieve that mutually beneficial experience, corporate executives should maintain sched -uling policies, those policies should be accommodated by the soft-ware, and managers should be well-trained on both said policies and the features and functions of the software that enforce them.
automation tools
keep associates
en-gaged, which is
important because
dispirited associates
are poorly performing
associates.
Organizations with an
average of 9.3
engaged employees
for every actively
dis-engaged employee
experienced 147%
higher earnings per
share compared with
their competition.
Some best practices include:
• The development of predictable core schedules that
have the ability to flex up as needed. The best way
for employers to use scheduling optimization soft-ware to improve stability is to standardize a core, repeating schedule that guarantees a baseline num-ber of hours, then use the optimization software to cover needs outside of the norm.
• The deployment of employee self-service. Give
asso-ciates the opportunity to choose to work flex-shifts
and high demand periods, as opposed to dictating schedules.
• Establishing rules within the software to guard
against certain scheduling scenarios, such as “clopenings.”
o The software should validate a minimum num-ber of hours between shifts in such a way that even the store manager can be forced to comply with a minimum rest period.
o Consider software rules that guarantee a mini-mum number of hours to associates in smaller bits throughout the week, which builds asso-ciate satisfaction while enabling retailers to achieve the labor cost minimization and cus-tomer service goals they seek.
• Consideration of “fairness” rules that manage how many nights or weekends associates are scheduled, helping managers avoid intuition-based mistakes and associate favoritism.
• Advanced schedule development and posting. The scheduling process should be completed not less than one week, and preferably two weeks, in ad-vance. Managers responsible for this process should be closely monitored by corporate.
• Monitoring manager performance in the system and coaching them when necessary.
Conclusion
Scheduling optimization software isn’t a product of corporate greed and inhumanity. As part of a holistic WFM solution, it can be leveraged to create stability in the lives of workers while simultaneously helping
retail-ers improve customer service and run more efficient
businesses.
About Infor
Infor is the world’s third-largest supplier of enterprise applica-tions and services, helping more than 70,000 large and mid-size companies improve operations and drive growth across numerous industry sectors.
Infor Workforce Management is the most functionally rich solution for aligning long-term workforce planning with short-term forecasting and scheduling to optimize budgets, control payroll costs, maintain customer service levels, and comply with labor rules and regulations. With features that address every aspect of effective workforce management today— including planning, scheduling, time and attendance, and absence management—it also includes sophisticated busi-ness intelligence tools for measuring and analyzing workforce performance.
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