Eight Steps to a Successful Retail Optimized Labor Scheduling Implementation

As brick-and-mortar retailers are under siege by online competition, the criticality of having an engaged, well-trained, and effectively scheduled workforce has never been higher. Despite ubiquitous technology being infused into stores, a retailer’s workforce remains the best weapon for differentiating the brand and driving customer satisfaction and sales.

Many retailers have invested in, or plan to invest in, a robust labor scheduling software application to create optimized schedules. It is a logical expenditure, given the potential benefits and the fact that labor is a retailer’s highest controllable expense. Unfortunately, many retailers don’t fully realize projected ROI or desired business outcomes after implementation.

Based on over 25 years of workforce management experience, I wanted to highlight eight key steps that consistently ensure success. My definition of success is straightforward: high-end user adoption and the measurable realization of ROI and business outcomes.

Step 1: IT as a Strategic Business Partner

It is critical that IT and the business (typically Store Ops, HR, and Finance) work together to define the solution’s goals and objectives in order to create detailed requirements before initiating the vendor selection process.

Store Operations should own and drive the business requirements, while IT defines the technical requirements. Although budgets often reside within IT, Store Operations is the primary stakeholder and must have a strong voice throughout vendor selection, implementation, and ongoing optimization. Store Operations being asked to implement a solution that they had little or no say in the selection of is a recipe for disaster and, unfortunately, one I have personally witnessed too many times.

Step 2: Create a Cross-Functional Team

Optimized labor scheduling implementation touches so many functional areas of a retail business. Stores, Field Management, Corporate Store Ops Support, IT, HR, Finance, Legal, Loss Prevention, Marketing, etc., are all examples of business units impacted by the solution.

Many retailers frequently gather cross-functional teams too late in the process, and often omit critical stakeholders. This is a huge mistake and can be catastrophic to the project’s success. The implementation team needs to be built at the very start of the process, beginning with requirement definition, and progressing with vendor selection, design, testing, pilot, and full rollout.

Although all the roles identified are critical, I cannot emphasize the importance of having representation from Store Managers and District Managers on this team enough. They are the ultimate end-users, and their fingerprints must be all over the engagement from start to completion to ensure their concerns are addressed. This input from stores along the journey, on what will have a major impact on running their business, will be necessary to provide credibility.

Similarly, HR and Legal must engage early, particularly when defining business rules, to prevent costly redesigns later.

Step 3: Create or Refine Labor Standards

For an optimized labor scheduling application to be effective, it must accurately forecast the workload and schedule people to meet that demand by day of week and time of day. As a prerequisite, a retailer must have labor standards to create this forecast. Typically, this is done by creating an “activity dictionary” of all activity that occurs within a store and determining workload values for these activities. Normally, these activities are classified as either fixed or variable (although some retailers create an even more granular breakdown), and frequency is documented (daily, weekly, monthly, etc.). If an activity is classified as variable, a driver must be identified to forecast workload.

Examples may include the time needed to unload and stock a truck, based on the number of cartons or units received, or cashier hours, determined by the number of transactions. In these examples, cartons/units and transactions are drivers and must be forecasted to determine workload.

Do not fall into the trap of rationalizing too many activities as variable. This adds unnecessary complexity and can cause inaccurate workload determination. A litmus test for whether an activity should be fixed or variable is to be honest with yourself about your ability to forecast that driver. You can make a case that the driver for a store planogram is linear feet of shelf space, but if you can’t accurately forecast linear feet by store two weeks out, you will be better served using a fixed labor amount.

One of the biggest mistakes retailers make with labor standards is the trap of trying to be precise over accurate. Projecting retail workload is not a precise science, and the quest to achieve precision can be a killer in implementing labor scheduling solutions. If you already have labor standards in place, challenge yourself to assess whether they need updates, particularly if your business process has changed since they were originally created or you have implemented new technology to reduce the time required for an activity.

Step 4: Ensure Operational Readiness

Operational Readiness identifies the non-systematic processes and execution that a retailer must execute. If not quantified and addressed, they will destroy your projected ROI from your labor scheduling solution. Examples include:

• Schedule adherence – Are your people actually working the posted schedules?
• Associate availability – How flexible is your workforce to address peak and slow business periods by day of week and time of day?
• Full-time/part-time ratio – High full-time ratios create a very restrictive environment for an optimized labor scheduling solution to create an effective schedule that meets workload forecasts
• Cross-training – Have you invested in training your team to perform multiple functions within the store, and is this training documented in a system of record?

Even the most sophisticated software cannot correct structural constraints. As part of the process of a successful labor scheduling implementation, retailers must develop a baseline, quantitative score of where they are and immediately develop an action plan to improve in all areas prior to full implementation.

If your organization lacks the discipline to work the schedule, you may have hired too many people with restrictive availability. If your staff has not been trained to perform multiple job functions, the system will be constrained from fully utilizing its functionality.

Step 5: Invest in Change Management

One of the most common themes I hear at labor scheduling user conferences and when retailers tell the story of their experience implementing solutions is that they underestimated the change management impact on the organization. I have personally witnessed during my years in industry, as well as a consultant, the impact of changing an hourly associate’s schedules, even slightly, is dramatic, stressful, and highly emotional.

You need a proactive plan to mitigate risks and ensure user adoption. Your change management team must be part of the project team from the beginning and utilize tools such as stakeholder risk analysis, communication plans, executive alignment, and project goals (are we doing this to reduce costs, drive productivity, increase sales, increase the customer experience, etc.).

Unfortunately, for many Managers and Associates in the field, the term “optimized labor scheduling project” is synonymous with cost reduction and spurs fear and anxiety. I have been involved in implementations where the business is strong, and cost reduction is not the objective, and others where it is. In either case, it is critical that honest messaging and risk mitigation plans be implemented.

Your organization also must decide how aggressive it wants to be in the balance of migrating from associate-centric schedules to customer-centric schedules. Although in almost all cases there is a desire to move the needle towards customer-centric schedules, each retailer must determine where ‘too far’ lies. Saturdays and Sundays may be your busiest days of the week, but do you really want your full-time associates to work every weekend without ever having a full weekend off? Do you “grandfather” in long tenured, loyal associates and allow them to maintain their current schedules, or will the new rules apply to all?

There are no simple answers, and they will be different for each retailer, but questions like these must be addressed as part of an effective change management plan.

Step 6: Define Your Analytic Strategy

As you embark on the journey of a labor scheduling implementation, now is the time to determine your analytics strategy and requirements. Many organizations have fragmented reporting and KPIs across the organization. This is your opportunity to evaluate and determine what the true metrics you are going to utilize to ensure you are achieving desired targets in critical areas such as productivity, cost control, conversion, and customer satisfaction.

Most likely, as a result of your implementation, you will have access to data that was previously unavailable to the organization. You also must evaluate the benefits and downsides of developing custom reports above and beyond the “canned” reporting provided by your software solution partner.

Now is also the time to consider leveraging a separate, robust analytics module designed to maximize data from your WFM application and develop reporting that provides actionable insights.

Step 7: Adopt a Phased Implementation Approach

I would be cautious about using a “big bang” approach to rolling out labor scheduling across all stores at once. A thoughtful, phased implementation plan is typically the best practice. Your initial pilot store group needs to be small and selected by creating a matrix of store attributes, such as sales volume, store size, urban vs. suburban locations, manager tenure, and state-specific labor laws (for example, California).

These pilot stores will be your lab and will require hands-on attention to ensure the software is performing as designed, edits are kept to a minimum, and change management concerns are properly addressed.

A critical part of this phase is the delineation between a true configuration issue and natural operational adjustments. For example, you get additional hours for stocking on Tuesday, but you receive your weekly truck on Thursday, which signals a configuration gap. By contrast, if the schedule feels “off,” the underlying issues may simply be that people are now working days and times they didn’t in the past to meet customer traffic patterns.

Once issues have been identified and addressed, you can now begin a phased rollout to the remaining stores in the chain and use the pilot District Managers and Store Managers as advocates.

Step 8: Create a Culture of Passion for Labor Management

The journey doesn’t end after the last store goes live on the new application.

You must continually follow up and monitor your stores to ensure compliance, and your leadership team must be trained on how to manage with new metrics. You will now have a quantitative score of scheduling effectiveness, and the goal should be to partner with your Store Managers to find the root causes of low scores and provide coaching and guidance on how to improve.

If the issue is the availability of associates, it may take some time, and you will need to develop an action plan. The culture must change, and you can no longer settle for just “meeting payroll budget”. Having the right person, in the right place, at the right time, doing the right thing, will ultimately help drive a great customer experience that cannot be duplicated online.

Summary

The benefits of a successful optimized labor scheduling implementation are significant, and your workforce has become the key differentiator in effectively competing in an omnichannel retail environment. However, the risk is high, and the consequences of a failed implementation are severe. Following these eight steps will provide your organization with the roadmap necessary for benefit realization and risk mitigation. To learn more about optimized labor scheduling, drop us a line!