Tanda Blog: Rota & Compliance UK

Rota & Compliance UK

5 Benefits of Using Time and Attendance Software

Every year, problems with tracking time and attendance (and ultimately, wages) cause governments to apprehend and collect millions of dollars in penalties. Planning shifts, creating rosters, managing leaves, and keeping track of employees’ clock in and out are some of the most important things a business manager does on a regular basis. While some still […]

Show Up for Success! A step-by-step guide to rewarding employee attendance

“I have always been a quarter of an hour before my time, and it has made a man of me.” – Lord Horatio Nelson (1758-1805) Improving employee attendance has always been a puzzle for business owners and managers. In a 2017 CareerBuilder survey, 29% of respondents said they came in late at least once a […]

All Work No Play in the UK? Taking a vacation matters for business – here’s why

A curious trend is sweeping across the country, and it’s even bigger than football. According to the Trades Union Congress (TUC), one in eight employees clock in more than 48 hours a week. Another statistic supports this growing workaholism: in the UK, the average employee takes just 62% of their annual leave entitlement. The latest […]

The Digital Workforce Success Revolution: Why you need to shift to cloud-based HR today

Automating HR can lead to significant cost savings for your organization, writes management firm Ascentis, especially when implemented in three key areas. These are: managing attendance, eradicating benefit errors, and automating compliance. Many businesses are taking heed of this finding. A 2016 survey by consultancy firm EY indicated that 92% of businesses intend to adopt […]

4 Tips to Maximize Table Turnover and Staff Productivity

The pressure is on to maximize table turnover and your entire staff’s productivity at your restaurant: on one end, you have no empty tables with more customers hanging out outside or by the bar, waiting to be served. On the other, your team is pushed to serve every dish and bus out every plate as […]

Your Guide to Parental Leave Laws

Today we’re going to take a closer look at how Australia, the UK, and the US implement maternity and paternity leave. Australia Parental Leave According to the Australian Fair Work Ombudsman website, employees are entitled to 12 months of unpaid parental leave when they or their spouse or partner gives birth. Regular employees are qualified […]

Encourage Staff to Come on Time With Cool Rewards (INFOGRAPHIC)

Having a person or two late for work means that some tasks can’t be done on time. And for businesses such as retail stores and restaurants, your staff will have a hard time covering for customers if some people are late for their shift. According to a CareerBuilder survey, 29% of respondents said that they […]

Improve Employee Attendance with a Rewards Program

Tardiness can be a pressing problem for businesses. Having a person or two late for work means that some tasks can’t be done on time. And for businesses such as retail stores and restaurants, your staff will have a hard time covering for customers if some people are late for their shift. According to a […]

Why Employees Love Tanda Workforce Success Software

Plenty of companies are using workforce management software to help them become more efficient and productive. But how can the same software help improve the lives of the team, the most valuable part of the business? We created Tanda with the whole team in mind, that means both employer and employee. Here are some of […]

Top 3 Leave Management Problems of Businesses

Employees do take time off work. That is why leave management is an important part of the business. It’s a tricky process regardless if you have five people or five hundred people on your team. This is especially true if you’re still using old-school methods such as using paper forms or Excel spreadsheets for leave […]

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