Magazine Article | May 17, 2007

Maximize Labor Management

Source: Innovative Retail Technologies

Labor is retail’s largest controllable expense; solutions abound to manage it.

Integrated Solutions For Retailers, June 2007

With labor costs spiraling and labor laws getting more complex, we turned to two experts in the field for advice. Here, Accu-Time Systems CEO Peter DiMaria and Pondview LLC President Frank Perlmutter share their thoughts on how retailers can automate and maximize their workforce management initiatives.

Why have workforce management solutions risen to the top of the retail budget priority list in recent years?
Perlmutter: Labor remains the number one controllable expense in retail, and the minimum wage keeps increasing. The newest generation of Web-based workforce management systems contain much improved functionality over the previous generation and have a lower cost of implementation as well as a lower cost of ownership over the years. Newer centralized systems facilitate regional, district, corporate, and store-level reporting.

DiMaria: Competition is fierce today, not just among retailers and mail order or Web products but competition for the discretionary income that a consumer may have available to spend. Consumers want a value in a product or service. To provide this, retailers need to manage their workforce at an optimal level. The workforce is the largest expense retailers have on an ongoing basis. Add the benefits that must be provided either by law, union, or to retain qualified personnel, and workforce management becomes a big blip on the budget radar screen.

Many workforce management software vendors are experiencing significant movement. What's the future for retail workforce management software? 
Perlmutter: The recent transactions involving both Kronos and Workbrain are indications of an overall interest in and vitality of the workforce management industry.  These companies are focused on retail because of the large opportunity in the retail sector. There are many chains that control a large number of stores. Each of these stores has a large employee population that represents an opportunity to balance labor cost controls with customer service levels. Many of these employees are part time with flexible availability (mothers' hours, student schedules). The best way to schedule to the anticipated store business, control labor costs, and accommodate flexible availability is with a workforce management system. Some of the new workforce management systems even allow you to accommodate preferred schedules or availability. With the increased costs of training and retaining employees, retailers seem interested in trying new scheduling techniques.

DiMaria: New products that are available to help retailers manage their workforce better have gained significant traction. The ability to easily add more applications or features on a core solution further justifies the investment.

What are two pieces of advice you would give retailers that are contemplating a workforce management systems upgrade?
Perlmutter: First, look for demonstrated scalability. How will this system perform when calculating a labor budget for a chain of 500 stores while store-level users are preparing time cards for payroll? Not only technical performance scalability, but how scalable is the ongoing maintenance and training of the system? What happens when you want to add a new labor standard across the chain? What happens when you want to change standards selectively in specific stores? Also, look for a complete integrated solution. The system should contain time and attendance, scheduling, forecasting and budgeting functionality. Both the budgeting and forecasting modules should use the same labor standards. This significantly helps with the accuracy and acceptance of corporate budgets and system forecasts, as there is no disconnect between the labor calculations. The scheduling system should be able to use either the corporate budget or the store-generated forecast to schedule labor.

DiMaria: First, find a solutions provider that knows the retail business, and check their references in detail. Don't just inquire about new installations; ask to speak with a user of an older version that's three or more years old. Second, the retailer needs to find a solutions provider that will support them well after the implementation and rollout.

What internal (process) outcomes should a retailer be looking for as a result of a workforce management systems project?
Perlmutter: All levels of a retailer's management team should have a better understanding of and more insight into the factors affecting the labor requirements and customer service. A good system should improve workflow by eliminating or reducing the ad hoc processes (i.e. e-mails, spreadsheets) developed in the absence of a functioning workforce management system. Store, district, regional, and corporate management should have better access to the important key performance indicators on a timely basis with a greatly reduced administrative cost. During most workforce management implementations, the focus on automation brings about many process improvements, which are implemented ahead of the automated system, thus providing unanticipated benefits.

DiMaria: ROI must be there for the retailer, and this is an easy way to measure success. Part of the ROI may even be intangible in terms of employee and customer satisfaction and ease of use.

What external (customer service/consumer-facing) outcomes should they expect?
Perlmutter: A complete workforce management system should improve customer service, control labor costs, and provide store management with information to react to unpredictable consumer behavior.  The system should be transparent to the consumer.  If, as all the systems claim, 'the right people are in the right place at the right time,' then the outcome is a satisfied consumer who will hopefully be a loyal customer. I believe the next generation systems will not only provide better customer service as a result of better scheduling, but will also improve the quality of employees through better hiring practices.

DiMaria: Improved traffic flow is inevitable, as the retailer will accommodate fluctuations in buying patterns that happen as a result of holidays, sales, or local demographics.  With this, the retailer should experience an improvement in the diversity of its shoppers, as well.

What noteworthy workforce management system execution mistakes have you seen?
Perlmutter: The biggest mistake is not performing proper due diligence during the vendor selection process. The failure to properly evaluate scalability before selecting a solution can cause an entire project to fail before the implementation gets started. Features are often verified through product demos and pilots but this doesn't prove scalability. Part of the due diligence process must include on-site visits to see the system working as part of a large environment and discussions with the labor management specialists about maintaining the system. Lack of executive support can also derail a solid implementation. The implementation of a new workforce management system needs to be supported from the CEO down. Perhaps the most common mistake that is made during these implementations is not addressing the cultural issues associated with implementing a workforce management system. Unlike a merchandising system, these systems have a direct impact on an employee's paycheck. They may be scheduled for fewer hours or at different times than they regularly worked and, in fact, have no regular schedule. These employees are typically a retailer's face to the public. Change management is needed to help with employee acceptance of the system, or the store-level user will find a way not to make the system work.

DiMaria: I see a big mistake in sloppy system requirements that don't include employee satisfaction or needs as part of the project goal. A lack of scalability, which hinders the retailer's ability to add features without breaking the core system, is another mistake.