Tanda Blog: shift swapping

shift swapping

Why employees love Tanda’s Workforce Success software

Workplace automation, including the use of artificial intelligence and robotics, is expected to surge in the next three years, according to multinational insurance broker Willis Towers Watson. This development is unsurprising, as automating HR can lead to significant cost savings for your organisation, especially when implemented in managing attendance, eradicating benefit errors, and automating compliance. […]

What’s New in Tanda – September 2018

This month we’ve been busy working on the first two manager features for the Tanda app. With full rosters and shift swapping, managers can step away from their back office and instead access the information they need to run a successful shift in their Tanda app. Read on to see the new features released this […]

Shift Planning 101: Optimising and Swapping for Success

It’s no secret that many businesses go under because of ineffective shift planning. When a shift isn’t staffed with the correct number of people, customers are disappointed and revenue is lost. Over time, your business reputation can go down the drain. This is especially true in the hospitality and healthcare industries, where the staff 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 […]

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. […]

3 Strategies to Master Your Wage Costs in 2019

Understanding your wage costs from a financial report is a bit like trying to piece back together a fruit smoothie that’s already been blended. Only a fraction of employers ever master their wage costs. Those who do are able to turn what’s viewed as a burden by their competitors into their best competitive advantage. A […]

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 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?

More Resources