Tanda Blog: Industry Insights

Industry Insights

Maximizing Marketing Analytics to make Cost-efficient Decisions

In today’s digital world, marketing your business or product has become extremely easy not only due to the reach and connectivity of the Internet, but also thanks to all of the digital marketing tools that have been developed over the years. Tools provided by the likes of Google, Facebook, and Hubspot have been crowned among […]

William Gooderson’s 8 Characteristics of Good Managers

Finding good managers is one thing, but training them to be the best is another. In the second half of his talk at the Beyond Workforce Success Conference on the Gold Coast last June, William Gooderson outlined eight characteristics that good managers in any industry should have. Hint: age is not one of them! Gooderson shares that […]

Only a Matter of Time: Punctuality and attendance in multicultural workplaces

Multicultural workplaces are now the norm for many businesses. With more fluid borders, people are more likely to move to other cities, and even countries, for work. Some stay for short or medium-term contracts, while others relocate to capitalise on business and career opportunities. Either way, this movement has created culturally rich environments that is […]

Should you approve shift swaps at work?

If you run a service-oriented business, you’re all too familiar with staff requesting to suddenly change or drop shifts. It’s something that any business owner cannot control; staff will encounter unlikely situations and will get sick from time to time. What is shift swapping? Shift swapping is a need for staff to change the time […]

Achieving Workforce Success: Becoming a Data-driven Workforce

Achieving workforce success (WS) means being driven, open-minded, empowering, and the ultimate master of your work. In this part of the series, we’ll focus on being driven. WS Champions are driven because they are doers who maximise their resources in order to deliver quality outputs. One readily available, indeed ubiquitous, resource is data. How do […]

Shift Swapping has Arrived

It’s 7am on a Saturday morning, your busiest shift of the week. You hear the familiar melody of your ringtone and your heart skips a beat. A call this early usually means one thing. As suspected, one of your employees has called in sick. The doors are about to open for the morning rush, and […]

Achieving Workforce Success: Shift Swapping for Managers

Achieving workforce success (WS) means being driven, open-minded, empowering, and the ultimate master of your work. In this part of the series, we’ll focus on empowering. WS Champions are empowering because they help employees succeed – even when someone can’t make it to work. WS Champions know how work-life balance positively impacts productivity and loyalty. […]

Michael Barnard’s Step-by-Step Guide to Creating Customers for Life

The most important customers are “those that come back consistently and invite their friends,” according to Michael Barnard, General Manager of consultancy firm Customology. A speaker at the Beyond Workforce Success Conference 2018, he specializes in creating customers for life. And there’s a very good reason for that: it costs 10 times as much to […]

AU Exclusive: Free Superannuation Contributions Calculator now available

Figuring out the correct superannuation for your employees is effortless with Tanda’s free superannuation contributions calculator. This free super calculator shows you the correct contributions for multiple employees at once. Click here to try the super contributions calculator! Who qualifies for superannuation? In Australia, employers must pay super for any work casual, part-time, and full-time temporary resident employee […]

Taking Back Time: Solving the enduring wage theft problem in Australia

A spate of wage theft accusations has swept across Australia. It left in its wake damaged reputations and millions in back wages. From the small Barry Cafe in Northcote to cosmetics giant Lush, employment practices, especially involving overtime pay, have been called into question. Some smaller businesses have also come under fire, mainly in the […]

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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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