Tanda Blog: Awards & Rostering

Awards & Rostering

Public holiday rates – How to pay staff Christmas 2020

Public holiday rates applied to the holiday season can vary from state to state. Currently, some states award penalty rates for Christmas Eve, while others only award entitlements for the traditional public holidays such as Christmas day and Boxing day. In 2020, Boxing Day falls on a weekend, the Fair Work Ombudsman sets out that […]

How Hospitality Leaders Are Preparing For the Post-Lockdown World

While the full extent of the disruption caused by COVID-19 is still uncertain for restaurants, hotels, and other hospitality establishments, weathering through this pandemic is still possible.  Expenses are expected to return faster than revenues for most Hospitality segments. Australian border closures, cost conscious consumers and a society adjusting to a new normal will continue […]

How to Understand the Manufacturing Award in Australia

The manufacturing industry presently accounts for 5.6% of Australia’s economy. The industry is responsible for producing a wide range of products including food, beverages, tobacco, textiles, chemicals, machinery, and furniture and as such covers a large number of Australian workers. Although there is some variance, the majority of employees in these professions are covered under […]

How to Understand the Retail Award in Australia

In 2019, the Australian retail industry achieved a turnover of $AU329.6 billion, making it one of the largest industries in the country. There are almost 140,000 retail businesses in Australia, employing approximately 1.2 million people. This accounts for 10.7% of all employment, meaning a large number of Australians are covered under the retail award.  What […]

Can employers round timesheets?

Some countries have laws that set exactly how much an employer can round shift start and finish times on a timesheet. In Australia, no legislation deals directly with the process of timesheet rounding.  The Fair Work Act simply states that employees be paid in accordance with their employment terms (e.g. contract, award, enterprise agreement).   But […]

The minimum wage will increase by 1.75% in 2020. Here’s what you need to know.

The Fair Work Commission has handed down their annual wage review decision for 2020, confirming a 1.75% increase in the minimum wage. Ordinarily, the effective date of increases is 1st July each year. But this year, in light of economic conditions, the government has decided to implement effective dates in stages. The 1.75% increase will […]

Staying in Touch: How to Strengthen Workforce Communication during a Crisis

Communication is at the heart of workforce management. From establishing clear expectations, setting a bigger purpose, building company culture down to fostering accountability — communication will always be at the core of it all. It can either make or break operations and employee engagement. A study shows how poor workforce communication can be detrimental to […]

Want to retain frontline employees? Pay them properly

Eat out at a trendy restaurant or stroll into a store for some window shopping and the first person you encounter can set the tone of your interactions with the business as a whole. The demanding job of pleasing paying customers falls squarely onto the shoulders of frontline workers. They’re the first touchpoint someone has […]

A Roster System’s Role in Revitalising Australian Hospitality

Millions are being poured into locations around Australia as hospitality and tourism infrastructure projects aim to create thousands of new jobs and improve each city’s economy. But expensive new buildings may not be enough to attract local talent. According to projections from the annual National Skills Week in 2017, waiters, chefs, bar attendants and baristas, […]

Mountains into Molehills: Ways Businesses Reduce Admin

With business growth comes the increase in tasks in a manager’s plate. Critical thinking, staying abreast with the trends, making data-driven decisions, and empowering the workforce to ensure success become more important. But as a business grows, admin and paperwork tend to balloon too. So how do you grow your business but not your paper […]

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How this retailer increased profit by $8.9m from rostering more hours

There has been a lot of speculation on why we are losing retailers so fast. An interesting research piece from the US presented an alternative hypothesis that generalises the issue down to rostering for profit rather than rostering to control costs. For context – If you were given the choice of increasing revenue by 5% or reducing costs by 5% in order to create the most profitable outcome, what would choose? A “back of the hand” calculation would show that reducing costs increases profit more than the equivalent uptick in revenue. Accordingly, most retailers choose option two. This makes sense if you assume the two scenarios are independent of each other, but what if the cost was your employees? This is where the problems arise. For industries like retail, where staff have a direct impact on sales, it’s not as simple of a question as cutting costs to increase profit. In a study led by Professor Marshall Fisher from Wharton, he and his research team constructed a conceptual model from historical data to identify stores within a US-based retail chain that had the highest potential to benefit from increased labour spend. Importantly, the strategy was actually implemented at 168 retail sites over a 26-week period to validate the model, with the retailer electing to implement the strategy further. The result: A near $8.9 million increase in profit of the stores included. The labour cost challenge The challenge in allocating labour budgets lies in the tradeoff between the known immediate payroll cost and the less certain increase in sales that could be achieved with more staff on hand. The researchers point out that retail managers have a tendency to overweigh the decision to reduce the known payroll cost than the less certain increase in sales which could be achieved by allocating additional labour spend. The labour budget death spiral The study highlights the limitation of the most common retail strategy — setting labour budgets as a portion of sales. Fisher points out that this approach creates a circular problem by failing to take into account how store labour spend can positively impact sales, with the worst case leading to a spiraling effect of reduced sales forecasts reducing labour spend which reduces sales further and so on. Quantifying the impact of labour spend on revenue Creating labour budgets that are designed to maximise profit requires retailers to know on a store-by-store basis the correlation between labour-spend and sales. One way to do this is by looking at times when staffing levels deviate from the original schedule. If ten staff were scheduled on a particular day, but on that day only eight turned up, did sales also decrease by the same portion? If not, by how much? If the answer to the above is that sales didn’t decrease at all, the store is likely overstaffed. If there is a measurable impact, the inverse scenario is likely true and the store may be losing sales by being understaffed. This is the same approach used in the study, which found the relationship between random staffing deviations and impacts on sales was statistically significant. Results showed an increase in labour spend pointed to increased sales at varying degrees, depending on known store attributes. Implementing the strategy for profit The study identified stores in a US retail chain which had the highest market potential, making them good candidates for an increased labour spend. The market potential factored in attributes like average basket value and proximity to competitors, which would create scenarios that allow workers to have the highest impact on converting sales. In the study, 168 stores were selected this way, then allocated a 10% increased labour budget over a 26-week period, of which 75% of the increase was actually consumed in practice by the stores. The outcome was a 4.5% increase in revenue at the impacted stores and resulting in a near $8.9 million profit increase. Learning from the strategy The study shows empirically why the common practice of setting labour budgets as a fixed proportion of forecasted revenue is often self-defeating when applied in a retail setting. An opportunity exists to all retailers to leverage this same profit-centric model for defining labour budgets. The data required is available to all retailers however, it may just be a matter of leveraging that information with the right systems. An integrated forecasting strategy that integrates foot traffic, sales, and employee scheduling data is a practical opportunity afforded to retailers of any size to optimise their labour resource allocations. The interesting part is, Fisher’s research is readily available to all retailers who are looking to drift away from the traditional method of fixing labour budget rosters. The next step is to get this method of labour resource allocation battle-tested in the Australian markets. Stay tuned. Up next: What is the Contingent Workforce and how can you leverage it in your business?

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