Tanda Blog: Industry Insights

Industry Insights

How Australian Businesses Are Using Technology to Detect Underpayments Before They Happen

Following the continued slew of high profile underpayment cases and sweeping changes to industrial relations laws, including the criminalisation of ‘wage theft’ in Victoria and Queensland, it’s clear that underpayments are a widespread problem amongst Australian businesses.  With so many high profile organisations being caught off guard, many industry leaders are left wondering how they […]

How COVID-19 is Impacting Australia’s Industrial Relations System

With new jail sentences in Victoria and changes to Modern Awards rushed through, COVID-19 is set to shake up industrial relations and employment laws. Despite industrial relations being federalised over 10 years ago, Victoria has legislated their own jail penalties for business owners and directors. Individuals who are convicted under the new Victorian Wage Theft […]

How to lodge a tax declaration form online (TFN)

This guide explains how to lodge a tax declaration form, to the Australian Taxation Office (ATO) online without having to print, type, or scan a thing.  Firstly we describe the traditional method using the ATO business portal. Then, a new, faster, and easier method using ATO compliant digital onboarding software.    Option 1 – The […]

Why is it so hard to pay people correctly in 2020?

Most people never have to worry about the payroll compliance process required to get someone paid. It’s not a hugely riveting subject; staff go to work, they work, they get paid. However, as Fair Work’s list of big names failing to pay minimum entitlements continues to grow, we’re often left wondering why it is so […]

Are casual employees entitled to paid annual leave?

The Federal Court decided, for the second time in two years, that an employee of Workpac was entitled to paid leave even though Workpac had classified the employee as a casual. The case doesn’t mean that all casual employees are automatically entitled to the same leave benefits as permanent employees. However, you do need to […]

Managing JobKeeper with Tanda

Since the JobKeeper legislation came into effect last week we’ve had an influx of inquiries of how to use Tanda to make JobKeeper payments. We’ve found the easiest way to manage this for most clients is using an allowance.  Businesses are able to add an allowance to staff timesheets on an ad hoc basis as […]

Why is it so hard to stay compliant in Australia? And what happens if you don’t?

Australia has one of the most complex labour regulations in the world. Of all its industries, the hospitality sector consistently receives the highest Fair Work Ombudsman disputes annually. In the 2018-2019 financial year, 36% of all anonymous reports were made in the industry. Data reflects trouble as well. The fast food, restaurants, and cafes are […]

Ensuring a Seamless Adoption of New Technology Among Frontline Employees

Technology as a business necessity In 2017, nearly half of all Australian innovation-active businesses spent on new equipment or technology, making tech the most common innovation expenditure — and rightly so. Technology has become a necessity for businesses everywhere, and the most competitive companies are always looking to upgrade theirs to improve productivity. However, it’s important […]

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 […]

Editor's Picks

Industry Insights    |   

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?

More Resources