Tanda Blog: Industry Insights

Industry Insights

June 30 Reminder: Check your Superannuation Contributions!

Superannuation underpayment is a significant problem in Australia. An estimated 2.85 million Australians are being short-changed. On average, they have 50% less in their super balances than those who are being paid correctly. Further, analysis of ATO data has shown that the average underpayment is $2,070 — that’s $80 per fortnightly pay. Young, blue-collar workers […]

Four Ways to Keep your Managers on the Frontline

Managers juggle different roles throughout the day. They set goals, coach employees, monitor performance, and control budgets and expenses. When they don’t do it effectively, employees become frustrated and can’t perform their best. In fact, a worldwide survey revealed that 40% of employees are dissatisfied at work due to a lack of help and support […]

Forging the Workforce of the Future: Why frontline employees matter

Think back to the last in-store purchase you made. Were you promptly welcomed or was the store too busy for you to get their attention? Did staff assist you while you were looking for items, and given advice on deals or discounts? Was the cashier polite or uncommunicative? These small interactions with frontline employees often […]

From Hiring to Monitoring: How to use Free HR Templates and Forms

Successful workforces always have an effective HR team at the helm. They are responsible for everything from recruitment to training and development. This entails many processes and paperwork that can be too much to keep up with. In fact, creating and tracking documents is difficult without templates. Templates let you save valuable time so you […]

Australian Manufacturing Back on Track: How to ride the sector’s trends

It’s a good start for Australia’s manufacturing sector. According to Australian Industry Group’s (Ai Group’s) Chief Executive Innes Willox, Australia’s manufacturing sector strengthened in February 2019. It faltered at the end of 2018 but indicators for production, sales, exports, and employment all improved this year. Currently, the industry accounts for 6% of Australia’s economy. While […]

Biometric attendance: Can staff say ‘no’ to fingerprint scanner use?

Whenever business owners come to the point of growing their company, they naturally begin to think about managing people during shifts they can’t be physically present. One of the first puzzles managers solve is tracking employees’ time and attendance. From the get-go, this is the most basic yet the trickiest administrative task to keep up […]

Facial Recognition vs Fingerprint Scanners for Time & Attendance

The last 10 years have been an exciting time for businesses. The growth and adoption of cloud technology have presented huge opportunities for business optimisation and increased profits. One of the most popular categories has been the adoption of Workforce Software. This type of software has been used to manage shifts, monitor staff, and ensure […]

Bringing in the Next Generation: Apprentices and trainees in Australia

“Instead of just learning something at school and getting thrown off the deep end sort of thing, you get that chance to really be immersed in your field and learn everything from the bottom to the top.” – Colin Wilson, Certificate III in Hospitality (Commercial Cookery) Apprenticeships and traineeships in Australia are employment arrangements which combine […]

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% […]

Why Fingerprint Scanners Don’t Work for Time and Attendance

The ability to quickly identify and verify individuals has been a crucial skill in human society, since the start of civilisation. Where previously face-to-face recognition would have sufficed in tribes and small villages, thanks to today’s rapidly growing global population we require more tools to quickly identify who someone is. In the workplace, the need […]

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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 labor 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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