How Poor Workforce Scheduling Costs Retail Companies Millions (and What to Do about It)
Effective employee scheduling is a multi-faceted challenge for the modern enterprise. The process needs to balance dynamic business demands, transparent communication, and flexibility, in order to synchronously drive business value and keep employees loyal.
Still, many enterprises rely on legacy workforce management systems that are based on manual scheduling tools, such as spreadsheet software. Although it might seem simple to use, the primary purpose of this tool isn’t shift scheduling, especially not dynamic, flexible scheduling based on fluctuating employee availability and business demands. The shortfalls of manual scheduling are evident not only in lower productivity, with unexpected absences and missed shifts, but also in the bottom line, through costs of overtime work and employee turnover.
Why manual scheduling is not the right solution for shift-based work
Firstly, static scheduling tools fail to give insight into the labor budget and employee availability, so managers end up having to consult multiple employee data sources before they even start assigning shifts. Regardless of how thorough the supervisors are, making mistakes is almost inevitable, as there’s no way to instantly resolve scheduling conflicts or unexpected absences.
Considering that the employees have limited capability to participate in the scheduling process, or even just view the latest changes, it’s no wonder that last-minute schedule updates go unnoticed, resulting in missed shifts. Moreover, without accounting for relevant indicators of business dynamics, manual scheduling often results in chronically over- and understaffed shifts. In the retail environment, research has shown that aligning staffing levels with store traffic can result in a 6.15% savings in lost sales and a 5.74% improvement in profitability. Instead, the labor costs get artificially inflated with staff having to work overtime or employees being assigned to shifts without actual business necessity.
Worse yet, the resulting poor schedule isn’t the effect of managers’ lack of commitment—static tools steal hours from their work day—but the method itself is inefficient.
On the administrative side, decentralized, manual scheduling makes it difficult to keep complete and accurate records of employee attendance. These inconsistencies put companies at risk for being penalized for labor law violations—another hidden cost of poor scheduling, but one that can result in both financial repercussions and damaged reputation. In 2015, 13 major retailers, including Gap, Sears, and Target, were scrutinized for their on-call staffing practices that leave “too little time to make arrangements for family needs, let alone to find an alternative source of income to compensate for the lost pay”.
How poor scheduling affects employees
Each time an employee must face overtime or cover an understaffed shift, their engagement drops as they feel they’re unfairly carrying the weight of the business. Actively disengaged workers not only lack the commitment and loyalty toward the organization’s goals, but they also undermine the entire team. In customer relations, they can act detached, borderline unkind, which keeps potential buyers away and does a disservice to the company’s reputation.
For employees relying on multiple part-time jobs or short-term projects, irregular shift schedules put a significant strain on their work-life balance. If they don’t have control over their working hours, sooner or later they will be forced to miss work, even if they’re dedicated to the job.
On the flip side, the “hire and fire” policy comes at a high price in the long run— replacing an employee can cost from 30 to 400% of their annual salary, depending on seniority. It’s clear that scheduling optimization is a smarter investment, particularly in industries struggling with employee retention, such as technology, retail, and media.
The specialized solution instead of a subpar tool
Deploying a cloud-based software specialized for employee shift scheduling can sidestep all of these issues. Humanity offers a system that accounts for employee’s skills, preferred working hours and absences, so managers can create conflict-free schedules more efficiently and keep employees in the loop in case of changes. Real-time monitoring of labor budget ensures effective cost control, while instant warnings pertaining to regulatory requirements enable supervisors to keep their schedules compliant. Humanity is also integrated with the industry-leading Human Capital Management companies, so all key employee data is available in a single system of record.