Magazine Article | December 16, 2008

Master Your Most Controllable Cost

Source: Innovative Retail Technologies

Controlling store-level expense is a must in this economy. Tightening up on time and attendance can add percentage points to your bottom line.

Integrated Solutions For Retailers, January 2009

Retail systems budgets are tighter than most of us can ever remember. There's a lot of systems investment scrutinizing going on, starting with unprecedented analysis of the potential for return on new investments. Many retailers are also poring over their existing investments, searching for expenses to cut and efficiencies to gain.

There's a long-held mantra among workforce management solutions providers that labor is a retailer's largest controllable expense. That makes workforce management and, more specifically, time and attendance a couple of likely places to look for efficiency gains that hit the bottom line.

Peter DiMaria is CEO of Accu-Time Systems, a time and attendance solutions vendor that specializes in retail. DiMaria says a time and attendance system is a quick ROI-enabler. "By investing in a time and attendance system, a retailer can ensure that the right employee is at their station on time, that overtime costs are reduced, and that employees can be used when needed," he says. "Many retailers juggle part-time workers, which presents an even greater challenge, and one that's better handled by an automated system." DiMaria says time and attendance is an excellent springboard for other applications like scheduling and absence management, which can also contribute to cost savings. Industry veteran John Orr, who recently founded a workforce management company called WORKBits, agrees. "Time and attendance is good in good times, and it's good in bad times. It helps retailers tighten up on top and bottom lines to improve profitability," he says. "Upgrading from manual procedures typically yields a 2% to 4% improvement in labor costs, which translates to about 8 minutes per day per employee shift of wasted time in environments where a retailer is not policing the clock."

Advances In Time And Attendance Technology?
DiMaria and Orr agree that biometric technology is the most important hardware advance to time and attendance technology in recent years. Once reserved for high-tech security applications, biometric technology has become standard fare at the punch clock. "The continued proliferation of biometrics to reduce buddy punching and ghosting continues to catch on," says DiMaria.  And because biometric technology has become a commodity, biometric punch clock price points have come down considerably. "The price point of a traditional biometric time clock has been driven down from the $1,500 to $1,800 range to the $300 to $400 range," says Orr.

Form factor advances include gravitation toward the self-service kiosk model. DiMaria says changing labor laws are causing advanced retailers to adopt terminals that allow employees to review and approve time cards right at the terminal. "This feature eliminates the need for supervisor involvement and, more importantly, eliminates conflict and disputes, which translate into fewer lawsuits for the retailer," says DiMaria. "Two major retailers have already taken advantage of the OPTIMUS [the new self-service time and attendance terminal offered by Accu-Time]." On the self-service approach, Orr explains another advantage to retailers and their employees. "The traditional time clock manufacturers and dealers recognize that simple clock-in and clock-out does not provide the value proposition that it used to. They've begun migrating to a device that facilitates more of a Web-based human resources portal that supports interactions with the hourly employee," he says. "Retailers understand that their employees are people, not inventory. Extending the provision of caring goes a long way. The more interaction the retailer facilitates, the more control employees are given of their work life. The more the employee feels a sense of accountability and professionalism, the larger the reduction in absenteeism and turnover the retailer will experience."

At Control Module, Inc. VP of Sales and Marketing Jimmy Bianco says multifunctional devices are helping retailers tackle the complexities of workforce management. "We're trying to provide one device that delivers many applications," Bianco says. Specifically, the Genus line  of terminals offered by Control Module delivers time and attendance functionality, integrates with payroll to eliminate discrepancies, and allows employees to access personnel information without requiring HR intervention. "Self-service terminals provide employees with information on such things as salary accrual, benefit time, and FMLA (Family and Medical Leave Act) updates. These are issues that previously required the time and attention of HR personnel," says Bianco. Further, housekeeping tasks such as benefits changes, shift results, and vacation requests can be submitted and accessed via self-service terminals.

Control Module also offers biometric technology at the terminal. "Biometric technology further reduces costs by eliminating the need to produce employee ID cards, which can be a considerable expense across a large, distributed retail business," says Bianco.

Technology Improves Deployment, Acceptance
Technology is supposed to be an enabler, and the aforementioned advances in time and attendance technology are no exception. Automated time and attendance systems are inherently beneficial and easily executed, thanks to technology. DiMaria says these advances are empowering employees to take charge of their time on the sales floor, stockroom, and DCs. "By being able to approve their work, employees have a better understanding of their own performance on an ongoing basis, and they become self-regulating," he says. "They can also look at their future schedule and make requests and changes in advance, thereby getting a schedule they are more likely to adhere to and further reducing the missing employee syndrome when they're needed most by the retailer."  Orr points out that, as is the case with most technology investments, the decline in price point goes a long way toward increasing acceptance and, therefore, deployment. A quicker, larger ROI is to be had, he assures. But he says a SaaS (software as a service) model is driving time and attendance, and indeed workforce management in general, by making these applications more readily available. "For many retailers, paying more than $300 for a biometric clock and additional service fees for drop-ship when something happens is not reasonable. There are much more elegant ways to capture work hours and manage the T&A process," he says. "Solutions like ours help retailers avoid deployment, support, and administration costs and maintenance agreements. That kind of flexibility and savings can result in a significantly lower total cost of ownership," he says.

Regulatory Issues Plague Retailers
Retailers grapple with countless regulatory issues that impact employment, and specifically, time and attendance. Sarbanes-Oxley, child labor laws that vary wildly from one state to the next, and the family leave act are but a few of them. For example, California passed a new law making it mandatory for employees working an 8-hour day to get a half-hour lunch and two 15-minute breaks.  Failure to observe this law can result in hefty fines for the corporation. "These regulations translate into tougher accounting rules," says DiMaria. "An automated time and attendance system is the best way to ensure compliance and reporting." Orr adds that automated time and attendance systems are also a means to avoidance of costly litigation. Bianco agrees. "Automation of the time and attendance system helps a retailer ensure the accuracy of payroll complexity, which is compounded by retail's many levels of salaried, hourly, and contract employees."

DiMaria says the Accu-Time system, for example, prevents an employee from coming back to work before the required lapse time for a break that has been taken. Not only does this ensure compliance with the law but it prevents unauthorized overtime conditions that could further burden the retailer with an already tight budget. Orr points out that while automated solutions are important, the ultimate responsibility for legal compliance lies with the retailer, not the software. "At the end of the day, the retailer owns its choices and therefore is responsible for configuration, data decisions, and so on. Sometimes it's hard to tell whether it's the solution or the interpretation and resulting configuration that caused the issue, or if store managers were not acting as an agent or in the bounds of company ethics," he warns.

Time and attendance solutions continue to evolve and are increasingly effective, thanks to advances in time clock hardware, the interface, and software delivery. As competition for retail employees gets tighter, it may serve you well to analyze your time and attendance environment. Is it helping you maintain employees or driving them away? Is it mitigating risk or creating it? Is it saving you money today, or will it cost you dearly later?