Insights

Forget ‘Art or Science.’ Workforce Management is About Profit

BY John Orr, Ceridian

While consultants have argued for decades that workforce management (WFM) is a mixture of art and science, it is neither. It comes down to profit and applying practical – not over-engineered – workforce management practices that enable higher performing retail operations.

Retailers that think of WFM as a scientific endeavor often employ engineering to meticulously capture and analyze hundreds of labor drivers and standards, yet never express anything in business terms. This over-engineered approach is flawed from the start. It ignores the realities of selling and the perpetually dynamic nature of the retail business.

Unfortunately, this approach loses sight of the complete end-to-end process of plan to schedule. In addition to taking an incredibly long time to deploy, business opportunities are missed, the market and operations change, and a nightmare of administration and maintenance is delivered to the business.

Compare the scientific WFM approach to that of a more practical, profit-oriented approach. These retailers choose to review time-task studies and labor standards against their business and then aggregate these standards into deployable performance policies. Instead of drilling too low into a lean manufacturing view of service, they use the labor standards to help inventory the work required and then aggregate to a meaningful, deployable, labor model for their organization.

Some of the benefits of applying a performance-based, profit-focused labor model:

• Easy to explain and convey in business and performance terms that managers understand;

• Preserves the intimacy of the business curves, mix, timing, and volume of each location for every 15 minutes of every day throughout the year;

• Significantly reduces configuration maintenance;

• Provides greater overall value to the business in much less time;

• Significantly improves performance and speed of the WFM system;

• Avoids non-statistically significant labor standards processing;

• Significantly reduces the logic, gyrations, and redundant thrashing of data; and

• Avoids creating “decimal people” and the academic procrastination of determining what to do with the leftover seconds and minutes.

While the simpler, practical approach flies in the face of deep scientific reasoning, it produces better results. In a recent workshop with one of the largest global grocery retailers, we were able to show that by reducing the number of standards and drivers from over 350 down to 30, the business benefits were achievable much more quickly, the team was able to deliver to the business on time and within budget, and the relative difference at the end of the process of going from driver forecast to labor creation to compliant schedules was not material to the business.

Reality check.

Retailers are in the business to make a profit, but that doesn’t mean losing sight of the human beings that make up your workforce. Employees perform certain activities to make up their work. These activities can be shared across departments and jobs and require a compliant, fair and predictable work schedule.

Workforce management is a series of processes that need to be optimized: planning and forecasting business drivers; capturing work and customer demand in collaborative labor models; distributing labor spend with that demand; ensuring proper shift coverage; and optimizing the people and skills assignment. If you drill too deep in one area, the entire process will be missed along with delivering value to the business.

Instead of choosing the combo “science and art” approach to workforce management, focus on modeling the service levels that are part of your retail brand and commitment. Remove every form of over-engineering from the academic and apply a sanity check to the degree your labor model delivers profitability to the business. This is the key to thriving in today’s retail environment.


John Orr is senior VP of retail at Ceridian, a provider of human resources software and services.

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DESIGN/CONSTRUCTION

Off-pricer continues to expand

BY Marianne Wilson

The Dallas area is getting its sixth Nordstrom Rack store.

Nordstrom said it will open a Nordstrom Rack at The Centre at Preston Ridge in Frisco, Texas. The approximately 33,000-sq.-ft. store is scheduled to open in fall 2017. The property is owned by Brixmor Property Group.

"Off-price retail is a rapidly growing segment that is highly desired by our consumers," said Brian Finnegan, executive VP of leasing for Brixmor Property Group. "Our redevelopment of Preston Ridge, driven by the addition of best-in-class retailers such as Nordstrom Rack, Saks Off 5th and J. Crew Mercantile, allows us to further strengthen the center's appeal and to better serve the Frisco community.”

Nordstrom operates 329 stores in 39 states, including 121 full-line stores in the United States, Canada and Puerto Rico and 200 Nordstrom Rack stores.

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MOBILITY

Unusual online player seeks to crack dollar store segment

BY CSA STAFF

Online retailer Hollar is looking to take sales away from a segment that, to date, has proved relatively immune to digital growth: dollar stores.

Founded by two entrepreneurs, both veterans of online retailer The Honest Company, Holler was launched in November 2015 with $5.5 million in seed funding and a seasoned team of e-commerce veterans, according to a report by CNBC.com. It deals in low-priced, mostly impulse goods as opposed to essentials. Although nothing sells more than $5, the site has a $10 minimum order threshold.

“At the crux of its strategy are two tactics: playing into consumers' love for a treasure hunt, and finding ways to ensure the orders they ship are additive to its bottom line,” the report said.

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