Are you managing your people effectively?
Excessive wage costs in the Irish economy combined with the restrictive retail Joint Labour Committee(JLC) have resulted in extremely high and restrictive labour costs.
Print11 May 2010
People are the most valuable asset in retail because it is such a people focused business; however their associated cost must also be reviewed and managed in line with your business performance and requirements.
Most retailers currently have a pay freeze in place to try to keep wage costs under control and in some cases are renegotiating terms and conditions that are no longer affordable. Terms and conditions can only be changed with agreement, therefore, employee consultation and communication is essential to facilitate so that all the stakeholders know the financial position of the company and the importance of reaching agreement for long-term sustainability. Failure to reach written agreement may result in liabilities under the Payment of Wages Act, 1991.
Reviewing the business
The number of staff, the hours worked, overtime and the additional benefits enjoyed by staff now need to be reassessed in an effort to reach agreement and compromise with staff to reduce the cost base and ensure jobs can be saved and businesses can survive. Many businesses have put a freeze on recruitment and are only replacing key positions that are absolutely essential. Other hidden costs like absenteeism and sick pay etc must also be reviewed as these lost hours and expensive sick pay agreements are no longer viable.
Do you know your store’s wage percentage, sales per man hour, cost per hour, holidays taken year to date and absenteeism percentage? These are all essential key performance indicators for you to benchmark and manage on a weekly basis for your store. Do you budget and plan your rosters in advance, in line with your sales, and reflect the number of hours you roster based on this analysis? If not, you should – you now need to ensure that you give your payroll budget and planning the time it deserves. You should also ensure you are benchmarking your payroll KPIs in line with similar businesses to ensure you are competitive.
Multi-skilling staff
Employees need to be more flexible regarding what they do and when they do it in line with your store’s business requirements and multi-skilling your staff is an essential part of on the job training and maximising productivity that you need to address. Businesses are also offering employees additional unpaid leave and are offering them the option to voluntarily reduce their hours. Staff in some departments may need to be put on short time (employees’ remuneration is reduced by at least one half), laid off (full suspension of work), transferred to another department or in some cases they may need to be made redundant. It is important that your contract of employment reflects the provision to lay off or reduce employees’ hours via short time without pay. In an effort to make these options more attractive to employees it is important to remind them that they may be entitled to claim social welfare due to the reduction of their hours.
Get planning
A planned approach is key. How you manage and communicate these decisions to staff is crucial and it needs to be done correctly to avoid damaging staff’s morale and to ensure it is done in line with your legal obligations.
Throughout this process you need to ensure your staff remain customer focused and have some non-financial goals associated with customer satisfaction and their own department performance to reinforce the importance of driving sales and maintaining customer service standards.
Poor performers cannot be ignored
Staff performance and productivity must also be evaluated and managed. Poor performers need to be met and their performance issues discussed, corrective action documented and a process of regular review and monitoring should be agreed. If the performance does not improve, the disciplinary process needs to commence, but ensure you have a clear disciplinary and grievance process in place and that you document the process clearly and communicate in writing to the employee during the process in line with the rules of natural justice and your in house policy.
There is do doubt all businesses are currently reassessing their most valuable and expensive assets and their associated costs – managing your payroll cost is essential to ensuring business survival in 2010. However, remember to get advice to ensure your approach is in line with your legal obligations to avoid potential claims in the future. Many of the proposals outlined above would require employee’s consent and keeping your staff engaged and motivated during these times of change and uncertainty is crucial. Honest timely communication is an essential ingredient in achieving this transition smoothly.
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