Employee scheduling can be one of the most challenging tasks retail managers face. And as new overtime and minimum wage regulations kick in, the task will get even more intricate and time consuming — especially for small businesses. This is a major issue, considering that employee compensation accounts for approximately 70 percent of a company’s total costs, according to figures from the U.S. Bureau of Labor Statistics. Moreover, scheduling is becoming a business imperative in order to more closely match staffing needs with sales.
Underscoring the need for more efficient methods, a recent research report by McKinsey and Company points out that activity-based labor scheduling and budgeting could help retailers cut labor costs up to 12 percent, while at the same time improving customer service and employee satisfaction. Even sophisticated retailers find room for improvement in this area, the report said.
“Off-the-shelf software and solutions — although useful for important tasks such as monitoring employee attendance and managing payroll — typically produce generic schedules that don’t take into account store-specific factors and workload fluctuations,” the report said. “The unfortunate results include high labor costs, inconsistent customer service and dissatisfied employees.”
The issues surrounding labor management are that much more intense for small, independent retailers. “Scheduling really was a headache,” says Daniel Brodsky, owner of The Point Skate Shop in Fairview, Texas, north of Dallas. “We were trying to keep current by using an Excel spreadsheet, but we ended up redoing it all the time.”
Many retailers use workforce management software to generate a weekly staffing schedule unique to each store, usually based on revenue forecasts; more employees work when sales are projected to be the highest.
What’s missing is a way to account for store-specific factors that affect how long certain activities take — such as the distance that an employee must walk to transport a pallet from a delivery truck to the storeroom or how many elevators employees can use for bringing products to the sales floor.
Brodsky, a lifelong skateboarder, opened the 3,500-square-foot store last May. The full-service skateboard shop sells a wide selection of boards, wheels, safety gear and apparel, and offers lessons on its 1,500-square-foot ramp. Brodsky is more passionate about skateboarding than labor scheduling, so he wanted the simplest, most efficient system he could get.
“The big advantage to Homebase is that it’s very basic and completely automated,” he says. “We can even carry over the previous week’s schedule. In fact, I can do an entire schedule for full- and part-timers in five minutes. It used to take me an hour.”
Homebase is online labor scheduling software that enables retailers to build simple time-saving templates that correlate sales and labor needs, and even bring weather forecasting into the mix to determine staffing requirements at any given time.
The system also enables the store to estimate wages for an entire pay period, track hours and measure payroll against sales on any given day. That means Brodsky always knows the percentage of sales to labor costs. “It’s just a very useful indication of whether to expand or cut back on hours,” he says. “Basically, you’re able to see what your wages are paying for.”
Design and usability
Alli McDonough, owner of Fido & Stitch in Grand Rapids, Mich., had much the same experience. The 1,500-square-foot store and full-service spa for dogs opened about seven months ago; right now the store has only two employees — a retail specialist and a full-time groomer — but the business is growing rapidly.
“Homebase scheduling service and all the options they offer is everything I need,” McDonough says. “I’ve used them from the time we opened and the online-based system is very easy to use. It’s saved me a lot of time and money. It syncs flawlessly with our POS system and I get weekly updates. It’s a lot easier than an Excel spreadsheet.”
That is exactly what Homebase is meant to do. “We built it to make life easier for hardworking business owners, managers and associates — not just those sitting behind desks at the big chains,” says John Waldmann, co-founder and CEO of the company.
Waldmann, who has a background in retail and tech, launched Homebase about three years ago, “but we took our time with the beta and didn’t publicly launch until last summer,” he says. “We worked closely with a handful of companies because design and usability of the product was incredibly important. A big reason other systems aren’t adopted is that they are difficult to use.”
People using the system don’t spend their entire day sitting behind a desk.
Consequently, the company focused on making things easier for managers — something Waldmann says other options lack when it comes to developing systems for smaller businesses like restaurants and stores. One reason is that people using the system don’t spend their entire day sitting behind a desk.
“Employee issues are more complex and time consuming for small retailers,” Waldmann says. “Just look at things happening this fall — changes in the minimum wage, overtime laws and continuing discussions about scheduling regulations. Small companies need the tools that will help them deal with all this.”
At the moment, most employees making up to $23,660 annually — $455 per week — must be paid overtime when they work more than 40 hours per week. Under new Labor Department regulations set to take effect in December, the level will rise to $47,476, or $913 a week. The dramatic increase means that many retail store managers and assistant managers who currently receive a fixed salary will have to be paid overtime.
The National Retail Federation says overtime expansion will likely reduce advancement opportunities for workers, and that retailers will be forced to offset the added payroll costs by reducing base hourly pay and limiting employee hours.
Homebase is being used at about 60,000 restaurant and retail locations across the United States. While the company’s largest customer has about 100 locations, most average closer to 15 employees.
“There’s no shortage of problems we can help small businesses solve,” Waldmann says.
“Recently, we added a performance manager that can automatically track where labor issues are cropping up. We are also pushing deeper into making scheduling easier, integrating with POS systems and developing forecasting tools — all the powerful things that large businesses have done for some time.”
It’s been estimated that up to 90 percent of retail and restaurant scheduling is still being done manually or in Excel. “It’s 2016,” Waldmann says. “No one should be managing their team or work life on paper.”
“Frankly, I haven’t used half of the features [Homebase] offers,” McDonough says. “Once the store gets busier and I hire more employees, I’ll be able to use features like emailing the team and enabling employees to switch shifts easily. The system is flexible enough to use long term.”