Labor Standards Do Not Have to Be Complicated

Do Labor Standards Have to Be That Complicated?

Dan Bursik, Vice President of Product Management

The use of detailed, store-specific engineered labor standards has been a significant advancement to support labor modeling and planning for retail stores. Techniques vary, but the approach is based on quantifying work content to both plan and assess performance rather than reliance on more basic key performance indicators (KPIs) such as sales per hour (SPH) or wage percent. Standards are defined for each operation or task performed and may include store-specific customization to account for special equipment, travel distances and other store characteristics. Modeling can be rather complex, with some departments having hundreds of standards or variations across a large-scale enterprise. These tools have brought great precision to the techniques available to model labor. However, with this approach comes the challenge to create organization and store-specific standards to get started, plus the ongoing resource commitment to keep the standards accurate as the business evolves over time.

With so much at stake in managing labor both for the delivery of customer service and to manage retail’s #1 expense, labor standards and systems to leverage them in forecasting, staffing and scheduling are back on the priority list for most organizations. Those who successfully automated front end scheduling are moving to wall-to-wall scheduling (all departments), and others are working refinements to address weak links in their WFM ecosystem. Often that involves a full refresh of the labor standards and the opportunity to get more detailed and precise about how much time each operation and task takes.

But is this the only path forward?

What if your organization can’t afford the engineering studies required to build the standards? What if your organization is unwilling or unable to provide resources to keep your standards current? What if you barely have the talent on board necessary to oversee this ecosystem, identify and resolve outliers, and counsel stores when managers consider the hours inadequate to do the job? Or what if you are a 10-store independent that cannot even staff a dedicated labor specialist, let alone a labor team?

Do any of these factors mean that you are stuck doing planning and scheduling on pencil and paper or with the same tools you used 15-20 years ago? Is that good enough even when you face the same challenges as larger organizations in executing your format with less experienced managers and employees?

The answer is no. There is no reason that organizations with these constraints cannot benefit from the latest advancements in forecast accuracy, scheduling effectiveness, mobility, and real-time data flows to facilitate better store management. But it may take different approaches to the way you build and manage labor standards to make a better WFM ecosystem practical for your situation.

Empirical vs. incremental standards

The most advanced tools and features for standard development are designed to create empirical standards that quantify exactly how much time it should take to perform an operation, a task and—collectively—a department. It can take hundreds of operations in a single department to model all of the work. Some tasks are fixed, and others vary by work volume (items, customers, pounds, packages, cases, etc.) Empirical standards set out to quantify how many hours it takes, in a well-organized environment, for an average trained person working at an all-day pace to do the work. 

Incremental standards take a different approach. The best incremental standards also look at work in both a fixed and variable approach. A fully variable approach like SPH or a financial measure like wage percent is far less effective. Incremental standards recognize that we don’t necessarily know or need to know the endgame answer for how much time it really takes. Instead, it understands how much time we are currently taking and sets a reasonable goal to improve upon that. This approach accepts imperfection but is also built with the key change management consideration that you can’t move directly from your current state to the endgame all in one step anyway. Steady, incremental progress is not only more achievable, but it is almost always more sustainable.

Do the best forecasting, staffing and scheduling tools still work with incremental standards?

Taking the incremental approach to standards, whether you do that in certain departments or across most of your departments, does not negate the benefits of better forecasting and scheduling. In fact, it can often significantly reduce the time to implement a solution and get benefits flowing. And you always have the option of dialing up the details where you see the benefits in doing so. 

While resources are still required to deploy, train and manage the solution set, it can be done without huge engineering services or a staff of dedicated engineers to maintain your standards. Of course, the same underlying conditions for success must be present whether your standards are built for incremental steps forward or for a clear picture of quantified optimal performance. Management must be involved and engaged, and workplace conditions must be orderly. High-volume and highly repeated work processes should utilize the best, store-specific method to do the work safely and efficiently, and good management must be present and active in shaping expectations and facilitating training and performance. All of those conditions for success still apply, regardless of which approach you take for standards. 

The bottom line

The cost of creating and maintaining detailed engineered standards need not be a barrier for game-changing labor improvements in forecasting, staffing, scheduling and store execution. You have other options. The right system and configuration will allow you to leverage less detailed incremental standards to make improvements that help you serve your customers better than ever, while managing your largest controllable expense. 

And the best part of that news is that the latest systems and approaches can offer significant benefit potential not just for industry-leading companies, but also for smaller chains or independents—including those with 10 or fewer stores!