In the end, it is not cutting labor, but rather investing in and supporting labor that will increase sales, and protect the profitability of stores.
Posts from the ‘Labor Cost Management’ Category
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.
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.