Inventrak Blog

For retailers, labor cost represents a large portion of operation cost. Operating at the critical front lines of the operation, a retailer’s employees are a crucial component of the customer’s shopping experience. Optimizing your staffing satisfies your customers and adds value to your ROI (return on investment). However, it requires careful staffing planning/adjustment and effective labor performance management.

Staffing Planning/Adjustment

Are you afraid of losing potential sales because you are understaffed during peak periods? Do you want to avoid being overstaffed?Here is a solution: Based on your sales reports by hour, calculate your labor cost budget and keep staffing levels at optimum levels.

·          Have your sales report by hour on hand.

·          Set your labor cost budget for each hour. Many large chain store managers set their labor cost budget as a percentage of sales.  You can use your industry standard as a reference, for example, 10% of your sales in the hour.

·          Then schedule your employees for each hour based on your hourly labor cost budget. Ultimately, adjust your staffing based on weekly sales reports by hour.

Performance Management

Every employee’s productivity is different. To increase your whole team’s productivity, your labor performance management needs to be effective. The first step for effective labor performance management is accurate labor performance evaluation.  You can calculate every employee’s performance ROI to evaluate his performance.  For a sales clerk, his performance ROI can be calculated by gross margin he contributes over his wage. For a store manager, his performance ROI can be calculated by gross margin at store over his salary. Then, you need to create motivation (e.g. compensation) to retain your best employees and keep their passion for your business.