Tanda Blog: Awards & Rostering

Awards & Rostering

3 Common Rostering Problems Managers Face (And How to Solve Them)

When most managers think of a roster system, it’s usually just about letting staff know of hours they’re expected to work. Paul on the night shift, Sally on the morning shift, John on the weekends — how difficult is it to even make the perfect roster? Turns out, it’s extremely difficult. Why build the perfect […]

3 Steps to Onboard a New Employee

Looking for talented and culture-fit employees is hard enough on its own, but the real challenge for any manager is when the onboarding process kicks in. Is onboarding really important? Onboarding new employees is essential in making sure they know specific details about the company, knowing who they’ll be working with, and setting expectations at […]

3 Reasons Why a Tablet Device is the Best Device to Clock-in

Providing an easy-to-access Time Clock device at all times is one of the most essential ingredients of implementing a successful attendance policy. For fixed location businesses, the Tanda Time Clock App installed on a tablet device is the best method to ensure that employees always remember to clock in and out of their shifts. Over […]

How to Understand the Pharmacy Award in Australia

By 2020, the Australian pharmaceutical industry will rise to $25.2 billion from $22.85 billion in 2016. According to GlobalData, this growth will be driven by good market access and subsidised cost of prescription medicines, among others. The pharmaceutical market is a knowledge-based, technology-intensive industry that employs tens of thousands of employees across Australia. Like many […]

5 Benefits of Using Time and Attendance Software

Every year, problems with tracking time and attendance (and ultimately, wages) cause governments to apprehend and collect millions of dollars in penalties. Planning shifts, creating rosters, managing leaves, and keeping track of employees’ clock in and out are some of the most important things a business manager does on a regular basis. While some still […]

Peak Season Rostering: How to use data to meet demand and raise profit

The number of festivals, trade shows, conferences, and marketing meetings is on the rise. According to Eventbrite Australia, 54% of businesses plan to host more events in the future. And with several major holidays like Easter and ANZAC Day just around the corner, businesses face an increased demand in products and services. Hotels, pubs, retail […]

Easter Penalty Rates 2019

Easter is always a tricky time of year to work out when the actual public holidays fall. For the Easter period in 2019, the only national public holidays are Good Friday and Easter Monday – all the other days vary between the states and territories. Keep in mind Anzac Day is the following Thursday the […]

How to Avoid Timesheet Mistakes (FREE Timesheet Calculator!)

Oliver, a manager at a local restaurant, is doing his payroll. He has 30 employees working different shifts at different wage rates. They had to do overtime a couple of days because the restaurant was pretty busy. A couple of people missed their shifts and he doesn’t know why. They have a time clock, but […]

How to pay staff for Australia Day 2019

The Fair Work Ombudsman sets out that when a public holiday falls on a weekend, it can be substituted for another day. This year, Australia Day falls on Saturday, 26 January.  Given this, the public holiday for Australia Day will be observed on Monday, 28 January across all states and territories. Public holiday penalty rates […]

What you need to know about the Casual Conversion Clause

On 1 October 2018, the Fair Work Commission announced that a new casual conversion clause will be included in 80+ modern awards across Australia. What does it mean? Casual conversion is a right given to regular casual staff to request for full-time or part-time employment status, given certain prerequisites. In the awards, a ‘regular casual […]

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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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