As technology advances allow us to analyze every aspect of business operations, many companies are inundated with data. Although we celebrate the advances in technology, this “data revolution” has also blurred the line between valuable insight and mundane non-value added information. As a result, many companies are now buried in indecipherable numbers. To successfully pierce through the mountains of useless data and focus on the strategic insights, it is critical businesses have the tools to translate heaps of distracting data into useful information.
Posts from the ‘Labor Cost Management’ Category
Today’s guest post is from our board member, Mark Wales. Mark has over 30 years of retail experience both in the US, Europe and Asia with leading retailers such as Ralph Lauren, Williams-Sonoma, Selfridges, and Tesco.
A couple of years back I took my American wife back to England (my home country) to spend time away from our busy New York schedule. We visited a working agricultural museum that had been a workhouse for the poor and destitute of the local parishes from the 1700s through World War II. It then became an “Old People’s Home” providing care for the elderly until my father closed it in the 70s as being unsuitable by modern standards. This allowed the building and lands to be turned into the working farm museum we visited, which today continues to educate today’s generations on the rich local history.
I was surprised that in the midst of the steam tractors and other farming machinery was an early 1900s punch clock, which immediately jolted me out of vacation mode and into thinking about my modern role in Workforce Management. It made me realize that there is a link to my local history. Norfolk in England has a very long agricultural history. Caring for the land is important, and former British politician Thomas Coke promoted crop rotation to ensure that you could increase productivity through matching the right crop at the right time to increase yields by maintaining the right balance of fertility in the soil.
That lesson is as crucial for farming in the 1700s as it is for managing retail and hospitality in the 21st Century. Today too many companies treat their payroll as the largest controllable expense. They look at the numbers and, when they start to think how to make their business more profitable, they start to think of what they can take out and not what they have to put back to achieve productivity and profitability. Thomas Coke’s end goal was higher yields but he started with what he needed to put back into the soil to achieve that. For today’s executive, the conversation with their management teams should be:
“Is our investment in our employees giving us the right return?”
“Do we have the right people, at the right time, in the right jobs, doing the right thing?”
“Are we reducing turnover and increasing employee engagement to increase productivity and profitability?”
“Does our investment strategy align the values of the organization?”
If the answer to these questions is, “Yes,” then they will join the ranks of the admired companies that are out performing their peers because they have created the right culture which matches their company goals. An engaged employee will give that extra discretionary effort to meet the needs of the customer. When you have the right balance, that meets the needs of both your customer and your employees, you’ll have a better chance to develop a sustainable and profitable company.
It is a myth that payroll is your largest controllable expense, it is actually one of your most critical investment decisions.
In a recent New York Times Magazine article entitled Thinking Outside the (Big) Box, Adam Davidson (of NPR’s “Planet Money) talks about a great customer service experience he had at Ikea recently when he went shopping for a closet system. He found the staff to be both available and helpful. He was surprised given that he’d had a prior experience years ago that wasn’t so hot, so he decided to investigate what had changed. He spoke with an executive at Ikea and learned the following:
“This wasn’t a fluke. A couple of days later, Rob Olson, the C.F.O. of Ikea U.S., told me that since my last visit, the company had invested in a new (Kronos) work-force-management system that reminded me of much of Ton’s thesis. The software helps the company to better distribute workers throughout the store, so that there are more of them in the areas where people have the most questions, like closets.”
The “Ton” referred to above is Zeynep Ton, a business professor at MIT and author of the new book “The Good Jobs Strategy”. In the book (available next week) Ton argues that paying workers more and treating them better is better for the bottom line. In her research for the book, Ton learned that even low cost retailers can provide good jobs for their employees while keeping costs low for their customers. In the low cost retail sector, she found that the best employers operated on 4 key principles:
- They offered fewer choices to their customers
- They cross-trained their employees
- They standardize processes while empowering employees to do the right thing for the customer
- They “operate with slack”; i.e. they staff at levels that enable employees to spend time with customers
That last item is the one that workforce management software enables, providing employers with accurate data and predictive analytics about the staffing levels required to deliver a great customer experience.
If you’re interested in learning more about Zeynep Ton’s research: