Expert Column: Is 'Sales Per Man Hour' Passe?

At Woods Market, a nine-store chain in Missouri, weekly store manager meetings now include fun competition where managers compete to get closest to 100 percent productivity while considering quality and service standards. The competition is not about trying to pay the least possible. The vision of this ideal surfaced when the CEO, Craig Easter, visited another chain store operation and experienced another way of looking at things.

A New Mindset

“He was casual about suggesting I look at this,” was Doug Haworth’s observation when describing the suggestion from his CEO that he look into a new labor optimizing program. As director of Loss Prevention, Haworth’s position at Woods Market has him involved in many projects that cross traditional organizational boundaries.  “When I first talked to Tom Droste, President of DROSTE Software the creator of DROSTE Workforce Management,” as a follow-up to my directive, “it took me a while to wrap my head around the new logic that  Sales Per Man Hour may not be the ideal metric for supermarket store management. I have spent an entire career thinking that maximizing the Sales Per Man Hour was the Holy Grail formula for success in supermarkets. However, when you stop and look at it the numerator of the ratio is fraught with ever changing variables and a built in inflation. It is not a measure of productivity; it is really a measurement of purchasing and pricing.”

Once Haworth began looking at the definition of "good" in a new way, Woods Market was ready to embark on the journey of maximizing productivity.

Workforce Management – The System

As Woods Market evaluated the “Workforce Management” system, it identified many features that met its needs.

Beyond sales figures, the system accounted for the time it takes for store and department tasks, including cleaning/sanitation/presentation activities, volume activities, productivity factors, and other activities related to delivering your standard practices of operation. These activities, coupled with the corresponding productivity measurements, provide a benchmark to better staff stores while still maintaining high levels of desired customer service.

The system calculates all data input and provides the user with the appropriate number of necessary payroll hours by day for each department of the store. These hours are then communicated to a scheduling module, allowing for automatic scheduling of available employees. The scheduling module then communicates the schedule to your time and attendance manager, ensuring time clocks are updated.

As Woods Market learned in its roll out, managers were spending an excessive amount of time daily and weekly juggling multiple tables of information to ensure effective scheduling. The system captured all of the information online. Labor scheduling matches the daily hours to your daily shopping pattern profiles and assures users are correctly staffed to meet cashiering, bagging, and carry-out demands on an hourly basis.

Woods Market took the program to the next level by leveraging the system's capability to integrate with time clocks to maximize the opportunity to keep track of employees' time on the job.

An example of goals each store should consider when introducing automated Workforce Management Systems are outlined as:

The Journey

Imbedding any new mindset or new system in a large organization has challenges. When you are talking about labor scheduling in supermarkets, it is passionate at the store level. Haworth now laughs about early meetings and the rollout of “Workforce.” “The fear, anxiety, and natural skepticism by store personnel were a challenge. As changes were introduced, the word 'DROSTE' became a verb where being 'DROSTEd' was familiar vocabulary. However, when opportunities for increasing staffing and realigning staffing were implemented, based on the statistics, people started to believe that the goal was productivity and not headhunting.  The initial introduction meetings included phrases like 'I have been here 30 years and I do not need a computer to tell me how to schedule' and 'you are just trying to screw me on hours.' Right out of the box we ascertained that the average store was spending 6 hours of management time just to schedule.”

Haworth further shared that, “despite our best intent we found that we were actually scheduling for employees and not for customers!” That is, many Woods locations looked at the availability of its current workforce and adjusted schedules to meet its employees' desires and availability.  This convenient, but less than optimum approach, created acceptance of an ongoing and regular call out for an 'all hands at the check stands' mentality. Although reactive to customers, this approach had us experiencing customer service which was not up to our desired standards and loss of productivity as we were constantly interrupting other work."

Woods started slow, one store first to test Workforce Management. Within months the process was rolling out to all stores' front ends and then to the department level within each store.

“One of the most amazing things we identified was the variance by store of similar or same work process.” Haworth used the various meat department inventory processes as the perfect example.  “Because stores were doing things and scheduling differently, there was an almost 300% variance from one store to the other in labor for this ongoing event."

Flexibility & Coaching

Haworth believes that two of the main reasons Workforce Management has been successfully implemented at Woods Market is flexibility and coaching.

He proudly describes how the system allows for great flexibility to test new approaches and actually creates schedules for them to be fully implemented. As an example he referenced a “meet and greet program” where time allocation was allowed to truly focus a staff member to thank and engage with each customer. Such programs are often nice when time is available but invariably more pressing tasks pull staff away. Schedules with Workforce Management are built so staff is available to make it happen.

According to Haworth, “the hands on coaching of John Connolly and the DROSTE team really made a difference. Experienced supermarket people talking to supermarket people turned the implementation from theoretical to practical. Store managers were being coached through implementation and learning.”

How Do You Measure Success

Haworth shared that “scheduling success at Woods is now continuous improvement toward 100 % productivity!” He described how this is ever changing. Each new trucking schedule change and each new seasonal offering changes the formula and presents new opportunities. He noted, “our labor expense is down compared to last year and we are giving better customer service. It really is about the right staffing at the right time.”

Tom Droste emphasizes that “each chain has different goals and different history.” Our experience has demonstrated that the medium-sized enterprise (sample 10 stores) should experience an overall .25 to .50 percent of sales reduction in labor expense. He is careful to point out that this usually includes dramatic shifts in allocation by store and department with many experiencing an increase.