Kathleen O’Reilly, Training Specialist
Jim Wegeleben, Senior Manager WFM Academy
Most of you understand “workforce management,” what it is and what it is about. We want to take some time to focus on what a minute is worth—on the importance and benefit of a slight shift in your mindset that can help realize a significant competitive edge for you and your organization in today’s retail environment. In this, our first post in a series about the value of informed and disciplined workforce management, we explore the costs of labor, centered around “What’s One Minute Worth,” and “What’s One Item Worth.” We want to show you how to first calculate those numbers and then offer some possibilities when it comes to capturing the savings.
There is an intrinsic challenge in getting an organization and its people to understand key labor concepts that support strategies for continuous improvements in productivity and on-the-job performance. Making sound data-driven business decisions depends on learning how to think about what the data is saying and how to best implement change used to manifest improved outcomes. More specifically, what is the time of your employees worth and what can you do to get your employees more involved and bring greater value to the organization’s bottom line. Easy to say, not so easy to get done.
What’s one minute worth?
Jim was introduced to this simple concept of worth back in his retail grocery days. The concept seemed too simple, but after viewing the data on a multi-store basis, it was evident. As technology progresses and your investment in it grows, it is absolutely critical to know more and more about what you are spending labor on and what you are getting in return. So, let us start by looking at a simple example of “What Is One Minute Worth.”
What would the labor hours and labor dollars spend be per year if you were to reduce every phone call answered by one minute? We want you to assume you have 50 phone calls per day, as an average, in your bakery departments, and your company has a total of 200 stores with an average hourly rate of $15.00. You will start by assuming you are reducing your total time for phone calls by 50-minutes per day. You will calculate that out to get the average hours per year, then by using the average hourly rate of $15.00 to figure the company average labor dollar per year.
Let us give an example to make it easier to follow and to see the impact. All the numbers are for illustration only. First, multiply the 50-minutes per day saved in phone calls by 7 (days in a week) then divide by 60 (minutes in one hour) to get to the store average hours per week. Then multiply that by the total number of stores in your company and you will get the company average hours per week. If you multiply that by the average hourly rate, you will get the company average labor dollar per week. Now, be sure you are sitting down before you do the following. Just take the company average hours per week and the company average labor dollar per week and multiply them by 52 (weeks in the year). You may either break the lead in your pencil or throw your calculator, but we do not advise doing anything to your laptop or computer because that would be crazy.
We want to show you the math:
Now that you have done the math, you can answer the question, “What’s one minute worth?”
What’s one item worth?
Now, let us talk about how much money could be made if customers were encouraged and purchased one extra item per shopping trip? A conversational purchase recommendation can realize big profits. Suggestive selling is an acquired skill you can teach to your frontline workforce. Take the following for example.
The thought process is like the first concept, but this is to get you thinking about what one more item per customer trip per week for a year would equate to both in sales and additional hours and not to mention the opportunity for great customer service. We want you to take your average customer count for one week and multiply that by, let us say $2.00 for the price of one item. To keep it simple, take your average weekly customer count and double it and multiply by 52 weeks in one year. Now, if before you fall to the ground, we are telling you it would be best to sit on the couch where it is softer for a landing. When we did this before, we could not believe what one additional item per customer equated to.
Ok now, this is good stuff, and we must show you in a chart:
We do not know about your organization and what you are doing in your role as a labor manager or a store manager or even a corporate manager, but who cannot use a sales lift? One way to think about how you can get to that idea is to imagine what works in your location. Knowing your clientele is a start, but we would refer you to your point-of-sale system to identify what are the top purchased items by department. This will let you know what the larger percentage of your customers are purchasing, and all you do then is identify something to complement it.
A couple of examples from our past involved a challenge in the store or a contest around suggestive selling. We did something every week, and all we had to do is mix it up a bit. Think about these ideas and see what your own conclusions are.
Hot freshly baked chocolate chip cookies fresh out of the oven! Who doesn’t want those if given a little encouragement? The first thing was to determine our daily goal using our customer count and we backed it up from there with a plan, which included a baking schedule to follow of how many and what times during the day. Then we needed to communicate the plan to the bakery team. If my goal was to sell 200 dozen cookies per day, we needed the inventory. Then we backed-up the additional sales with more labor to get the product baked. Each manager had a time they would walk around the store with a shopping basket full of hot fresh chocolate chip cookies. In-store announcements were made every time a batch was ready. YUMMMM! You can smell them now, right?
We also did things with hot fresh French bread, candy bars, local bakery breads, “Don’t forget hotdog and hamburger buns” in the summer, “Got Ice?” in the summer, and even each department having a contest amongst themselves.
The best results were when we made it competitive, and through any of these we could not believe how our customer service scores soared, the attitudes of those involved to win the contest, and just the comradery of our employees. It benefited not only our sales, but our customer service levels in all areas of our store.
In our next post in this series, we will continue down the path and continue to explore “What’s it Worth.” We will be focusing on the savings if you were to remove one second for every customer and every item going through your front registers. Remember in the workforce management arena, you need to be thinking how is this possible first, but mostly how can you see it in your bottom line. It does not happen because you change a trigger in your registers, it is all about how you plan, educate and communicate with your workforce. Stay tuned.