Preparing for Data-Driven Labor Management

No matter how many robots, kiosks and shiny technology are readily available to improve the in-store experience, retail stores still need human power to operate and provide personalized customer service through store associates. After all, the human touch still gives brick-and-mortar retailers a key advantage over e-commerce merchants.



Labor management is key to ensuring each store has the right associates in place at the right time to provide this experience, without spending excessively on labor. If retailers can better predict the number and skill set of employees that each store needs every hour of every day each week, then customers receive prompt sales assistance, shelves are replenished in a timely manner, employees are neither idle nor overworked, and labor costs go down.



In fact, a data-driven approach to labor scheduling and labor budgeting often leads to significant cost savings AND improved customer service.



Understand Labor Management

Labor management is a set of integrated processes which affects the retail organization from the top down. It goes beyond managing employee schedules and allocating talent. It encompasses the entire process of aligning corporate financial plans with store labor budgets, and finally labor schedules.



Traditionally, at the highest level, corporate allocates a monthly budget towards labor. Often, the allocation is based on a percentage of sales which does not take into consideration the unique aspects of the individual stores, promotional calendars, etc. In many cases, this approach simply perpetuates past performance. A more data driven approach would base the allocation on unique key metrics such as traffic, tasks, promotional calendars, and store demographic attributes. Analysis of “time and motion” studies of key tasks are used to identify opportunities to improve the timing and productivity of “non-selling” tasks, with the goal of improving productivity around certain tasks to save or reallocate the labor hours into better customer service.



After answering the question “How do we allocate our constrained payroll dollars most effectively to minimize payroll costs and maximize sales?”, our labor budgets are generated on a weekly basis by store and/or department. Finally, hourly employees are scheduled based on their availability to meet those labor budget needs. “If I have x number of budget hours available for this store for this week, how should I schedule Mary Sue and Bobby Joe to cover those hours each day?” A data driven approach would look at historical patterns to optimize the scheduling.



Incorporate Best Practices

With a large number of complicated factors to consider in a data-driven approach, planners need to set and incorporate best practices across all areas of labor management. Best practices include:



• Forecasting