Managing Your Labor Model: Do Productivity Goals and Customer Service Need to Compete?

Brian Monaco
Vice President, Retail Services

For most retailers, it is one or the other. Operators either pursue low-cost products or high customer-service levels, but the prevailing theory among retailers is that building a brand with both is impossible. Does it have to be that way? Some organizations are breaking the status quo and providing exceptional customer service with low-cost options to consumers. In this three-part series, we will discuss some ways that successful organizations accomplish this. Like most things in retail, there are many factors to consider while balancing, even optimizing, productivity goals and customer service. One of the most effective ways to do this is through proper labor allocation. Let us take a closer look at some basic questions to ask as you begin this process:

  • How current, relative, and accurate are your organization’s labor standards?
    • Are they representative of the work completed at store-level?
    • Are they aligned with the most recent technologies, processes and programs?
  • Are your labor standards reflective of your standard operating procedures (SOP’s)?
  • When was the last time your organization completed a value versus non value-added review?
    • Are there any wasteful labor tasks included in your SOPs?
    • Are you and ultimately your customers willing to pay for non value-added labor?
  • How can your organization redesign, reorganize or remove non value-added work?
    • Have you validated standards to determine if they have a positive ROI?
    • Are your standards fulfilling perceived needs or are they proven concepts?
  • Have you included time for customer service in your labor standards?
    • Customer service, like any labor task, requires labor allocation. Are you providing it?
    • If you are, are you sure you are providing the right time to correlate with your vision and brand?

Let us speak to the last item in more detail. Many organizations view adding time for customer service as an unnecessary expense. Retailers vying for space in small-margin industries consider allocating customer service labor as superfluous. It is the first expense to go in the budget, if considered at all, because it is not necessary for survival. Other organizations view customer service as an investment that reinforces consumer focus and brand values. In my opinion, customer service does not have to mean additional costs to your organization. If you are serious about answering the questions above and removing waste from your system, your investment in service will simply reallocate already misused funds. In my experience, it can actually save your organization labor down the road.

If your organization is already successful in reducing waste, you are a few steps ahead of most. However, this is only the first phase in optimization. Maybe customer service labor is budgeted at the highest operational levels. How does your organization ensure it is being assigned correctly to each store location? Let me ask in a different way. Does your organization line up competent employees with appropriate schedules at preferred locations to complete value-added tasks? In my following blog posts, I will outline my experience with tools that help in this process. For instance, predicting customer demand (i.e., forecasting) predicates customer service planning. Then, ensuring your associate preferences and store needs are balanced (i.e., demand staffing) prepares employees for customer service. Finally, translating available labor to utilized labor…this is effective scheduling.

Thanks for tuning in. Be on the lookout for future blogs around how you can be a low-cost, customer-pleasing retailer in your generation.