Tanda Blog: Industry Insights UK

Industry Insights UK

UK Employee Confidence is Down – Here’s How to Attract Talent Anyway

Gartner’s Global Talent Monitor report for the fourth quarter of 2018 showed that employee confidence declined in the UK. For Brian Kropp, Gartner HR’s group vice president, this means that attracting talent is going to be particularly challenging. Employees will see more risk in changing jobs than staying in their current one, regardless if they’re […]

Braving “Blue Monday”: New Reporting Requirements for Small Businesses

April 1 was dubbed Blue Monday in the UK. Businesses nationwide need to comply with new costs and tax reporting requirements. Around 2 million small businesses were affected by the new rules on accounting under HMRC’s Make Tax Digital (MTD) program. One major change is the need for compliant software to track their finances. Many […]

Invisible Hand: The Direct Business Impact of Every Frontline Staff

It often goes unnoticed, but the barista who serves your daily cup of coffee has an invisible yet powerful and direct influence in the way you taste your drink. And we’re not just talking about the way they handle your order. “I’m sorry ma’am, I just have to assist someone else for a minute,” are […]

Why investing in employee wellbeing will help you retain talent

Workplaces are adapting at a fast rate, with seismic changes over the last decade. Businesses now, more than ever, realise the importance of employee wellbeing. The reason is simple: Happy staff members are more productive. This positivity also means your retention rates go up and they’ll stay on a long-term basis. This article explores how and […]

5 Ways a Work Chat App can Boost Productivity

Ever needed to talk to a staff member while they were working outside? Or needed to inform them about changes the night before an event? For many employers or managers, communicating with staff can be a challenge. In trying to reach employees through available channels like social media, details can fall through the cracks. They […]

UK Right to Work: A simple guide to check eligibility

Various changes are expected to occur in the UK as a result of the Brexit negotiations. Business owners anticipate that developments will affect labour and employment regulations across the country. While there will be no change to the rights and status of EU citizens currently living in the UK until at least 31 December 2020, […]

Brexit Business Impact: How to Future-proof your Trade

Major uncertainty has hit the United Kingdom since the 2016 Brexit referendum. This is despite few real changes in legal status, regulation, or tariffs so far. In the past two years, UK and EU citizens followed the development of the withdrawal agreement. This agreement will determine what comes next for both parties. But things are […]

Onboarding: The Employer’s Checklist

Employee onboarding is widely acknowledged by human resource experts to be an important part of building a great team. Hiring right is only the beginning, as integrating a new employee into the company is going to determine how successful they will be in their role, and how much they will be able to contribute to […]

Making Tax Digital with Xero and Tanda

Getting your taxes right costs money, but getting them wrong costs even more. Last October, the HMRC hit some of the UK’s largest businesses with fines for ‘careless behaviour’, totalling £59m. Some 115 Finance Directors and other senior finance executives failed in to comply and were also fined. Often, these errors result not from an […]

UK’s Millennials keep quitting their jobs – here’s how to stop them

Have you thought about changing jobs recently? Are you sending out resumes actively, even though it’s only been six months since you got hired? Statistically speaking, you’re not alone. In the UK, an alarming 59% of workers are looking to move jobs despite economic uncertainty, with hourly workers twice as likely to quit within six […]

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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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