A new study finds that businesses in the service industry may be grappling with the same internal issue across the board: scheduling hourly employees.
WorkJam, a company specializing in employee relationship management tools, is announcing the results of a new survey that shows retailers are suffering, often at their own hand. Poor scheduling practices often leaves them understaffed and with an exceptionally high turnover rate amongst employees due to inconsistent hours.
According to the survey, almost half of the retailer respondents (46 per cent) admitted they were frequently or sometimes understaffed, with 53 per cent of them saying this compromised their level of customer service.
“There’s a tonne of pressure on retailers from a margin perspective,” says WorkJam co-founder and COO Joshua Ostrega. “They have to be profitable, obviously, and they need to properly manage the operations of their business. The challenge is that labour counts for anywhere from 20-70 per cent of their operating costs. So the reality is that they need to optimize labour and use labour efficiently.”
Why is scheduling employees such a hassle for retailers and other service-oriented businesses? The study shed some light on a few potential sources of this issue. More than half (57 per cent) of the retailers surveyed said they manually created their employees’ schedules. And the large majority of the hourly workers surveyed (more than 70 per cent) said they still received their schedules on paper charts, oftentimes less than a week in advance (56 per cent). In Ostrega’s words: “It’s crazy that people are still posting pieces of paper on a wall in some back room for people to go check on, and they literally have to call in sometimes to check it.”
So it’s no surprise that these “on-call” type hours that result from last-minute schedule creation has helped lead to high worker turnover, which also costs these businesses a fair chunk of change. The study shows that more than a third of retailers experienced a quarterly turnover rate of 26 per cent for hourly workers, with another 33 per cent of respondents said that this number had noticeably increased in the last two years.
“This [on-call system] is creating extremely problematic lifestyle for the workers,” Ostrega said. “It could be Sunday night and you don’t even know what your schedule is for the week. And you’re in school, or have to take care of children or elder care or whatever it is. There’s no predictability and your life is going to be a nightmare to manage.”
And all this change in their workforce and lack of institutional knowledge can really hurts business’ bottom line. One report from the Institute for Research on Labor and Employment estimates that the costs of replacing a worker can be substantial — they average is about $4,000 overall and can be as high as $7,000 for highly skilled information sector positions.
So, what’s the solution? Ostrega suggests that in addition to investing in an enterprise-level schedule creation tool such as WorkJam, Kronos or Empower, he recommends boosting employee engagement above all else.
“There’s no magic solution,” Ostrega says. “But they have to… understand better what are the needs of their employees, specifically around availability, and focus on addressing them. If I’m able to, as an employer, meet 80-90 per cent of your availability then the likelihood of you staying with me and maintaining all that energy we put into training you and the experience you get, it’s going to be worthwhile.”
He also emphasized a few other takeaways for retailers and service-oriented businesses:
- Retailers should have a conversation with candidates on availability during the recruitment and hiring process in order to make good hires and start off that relationship on the right foot.
- Find a way to recognize employees. Businesses can put processes in place to motivate and reward workers for doing good work.
The Montreal-based firm recently commissioned the survey to study trends in scheduling hourly employees amongst retailers and service-oriented industries. The study compiled the experiences of 500 service managers as well as more than 700 hourly employees.