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    COVER STORY: Human Resources: Seeking balance in the force

    Tchnology is the new labor management tool of choice for cutting costs, but it also has to keep employees and customers happy.

    By Jenny McTaggart

    If you want to know what your employees are thinking, read an Internet chat room or blog. You might discover store-level associates complaining that management never listens, disgruntled employees who can't seem to get vacation when they want it, or even union advocates soliciting new members.

    "Employee complaints are nothing new in retail or in any other industry, but blogging is a new way to vent and offers an extraordinary window into the minds of store employees," notes Michael Patrick, president of industry training firm MOHR Access, based in Ridgewood, N.J.

    Indeed, retailers would be smart to keep an eye out for what their associates really think.

    Yet ironically the same power that fuels these potentially negative online forums can be harnessed by retailers to address labor concerns more positively, in an era where supermarkets and other nontraditional retailers are competing for a shrinking labor pool.

    Whether it's the age-old dilemma of attracting good talent and making solid hiring decisions, or the growing need to balance employees' needs with providing stellar customer service, an increasing number of retailers are finding that there's a plethora of tech applications to suit their needs.

    Some examples: Food Lion in Salisbury, N.C. is using the Web to attract new employees and conduct virtual training sessions. Grand Rapids, Mich.-based Spartan Stores is fighting turnover aggressively by using hiring kiosks from Unicru, Inc. San Antonio-based H.E. Butt Grocery Co. is leveraging an online auction empowered by HighRoads to get better deals on its health care plans. And Milwaukee's Roundy's Supermarkets is developing labor schedules more efficiently than ever before, thanks to workforce management systems from Kronos.

    These retailers are taking action at a time when managing labor costs is perhaps more imperative than ever. "There's a major challenge in the supermarket industry today," explains Bob Haworth, c.e.o. of LSI Consulting in Sandy, Utah, a wholly owned subsidiary of United Kingdom-based WorkPlace Systems. "Gross margins are being hammered by the Wal-Marts and Costcos of the world, and supermarkets are required to start squeezing margins. "There's a relationship between gross margins and the costs of operating the store. And labor is the No. 1 controllable expense supermarkets have, so they have to lower labor costs."

    If costs were the only consideration, life would be easier. "It takes one call from a v.p. of operations to take costs out of labor," explains Haworth. "And all of a sudden you have customers running out the door. There are technologies in the market today that can help retailers lower those labor costs and better manage labor without running customers out the door, and without working employees 90 hours a week."

    Solutions for hire

    The technology that seems to be the easiest sell in the supermarket industry is in-store hiring kiosks coupled with employee-screening software from companies such as Beaverton, Ore.-based Unicru, Inc. The premise behind this solution is to attract more suitable candidates, and ultimately avoid turnover in the long run. Since its inception Unicru has signed deals with retailers including the Kroger Co.; Big Y Foods; Pathmark Stores, Inc.; and Farm Fresh.

    Spartan Stores, a grocery distributor that also operates 54 supermarkets and 19 deep-discount drug stores in Michigan and Ohio, uses the Unicru solution to cut the challenge of filtering candidates down to size. "Unicru, our Web site, and other Internet postings provide a timely and far-reaching catch of applicants," explains Beth Baumgartner, human resources manager. "The use of artificial intelligence from Unicru allows us to best capture the most appropriate, qualified candidates for the interview process. It doesn't do any good to have 300 applicants for a position with little time to narrow the choices appropriately."

    Unicru's technology also serves as a recordkeeper for Spartan. "Using Unicru as our recordkeeper over the past four years means that approximately 100,000 applicants can be confident that their personal information was maintained in a confidential and secure manner," notes Baumgartner. "At the same time, our stores appreciate not having banana boxes filled with old applications, filling up storage areas."

    Meanwhile large retailers find that the system helps them maintain consistent hiring practices companywide, says Steve Earl, grocery marketing manager at Unicru. "They can integrate background checks through a centralized system. We also help them with legal compliance, as the system provides reporting on EEOC [Equal Employment Opportunity Commission] requirements and other data at store level."

    Retailers that have stores in more than one location can use Unicru for applicant pooling, he adds. "Stores can share applications with other stores. We have found that that's really successful."

    Unicru has helped Spartan dramatically decrease turnover by 40 percent. Notes Earl: "The overall cost of hiring is always a hot button among our customers. We address that with the automation component of our system, which saves time with prescreening and interview guides, as well as the automatic creation of new-hire paperwork. Then, through our employee selection instruments, we help retailers hire better-quality workers, who are better fitted to stay longer and be more satisfied with the conditions of the job." What's more, Unicru assesses employee termination data from its clients to constantly tweak its assessment tools.

    Earl predicts that if retailers can get a better handle on linking employee performance to hiring strategies, human resources will gain credibility as more of a partner to operations, and a key driver of the business going forward.

    The digital pool

    The Internet is proving to be the primary pipeline for drawing new talent to Food Lion, especially as the Delhaize-owned chain expands into new markets in South Carolina and Washington, D.C. "We receive resumes by snail mail very seldom these days," says Darrell Johnson, s.v.p. of human resources. "A lot is done online."

    Food Lion received around 17,000 applications when it first opened up a system to let people apply for jobs online, according to Pat Fulcher, Food Lion's v.p. of associate services. Still, technology made that enormous response manageable. "We have good search engines, so we can look for people with specific skills, search by ZIP code, and find what position they're seeking," explains Fulcher. "There's also a process that archives the resumes."

    Even smaller independents are jumping on board with online hiring. Rouses Markets, an innovative family-owned chain of 16 stores based in Thibodaux, La., is writing its own software to create online and in-store kiosk job application systems. The chain is also offering a referral incentive program to bring in top talent, and is developing a system for job postings on its Web site.

    Rouses' labor pool challenges are particularly acute in the wake of the region's battering by hurricanes. "People have been displaced, and there's no housing available," explains Steve Galtier, Rouses' human resources director. "We've had to increase our pay rates. We've actually spent more money on advertising for help than advertising for our business."

    Healthy incentives

    In addition to offering competitive pay, Rouses has tried to keep its employee benefits on par with other companies, says Galtier. "We're paying 80 percent of the employee's premium and are on a PPO program. We'll be looking seriously at how to get savings both for us and the employee, [but] we likely wouldn't move to an HMO or try a multitier system, in which entry-level employees would receive less."

    Many retailers might not be aware, however, that there are technological tools to help save on health care costs as well. Regional operator HEB and several larger grocery companies have found an innovative tactic for saving on health care -- by building those savings upfront into the annual bidding process with insurance vendors. An enabler in this is HighRoads, a Woburn, Mass.-based technology company that facilitates online auctions in which insurance companies competitively bid for retailers' business.

    "The premise in founding HighRoads was to manage health care procurement more like the supply chain," explains c.m.o. Mary Haigis. "A couple of our early customers were from the grocery industry. We've found that for grocers, [employee] benefits are one of the top two or three expenses corporatewide. The cost for health care benefits is escalating between 9 percent and 12 percent annually. We can help them decrease these costs while maintaining the same, if not better, quality in benefits."

    For example, one of HighRoads' supermarket clients took five plans out for bidding, including a self-insured medical plan, an EAP, long-term disability, and a dental plan. Within eight weeks the retailer was able to reduce health care costs by $1.2 million, according to Haigis.

    The technology cuts costs on several fronts, including administrative fees that would typically go to a broker or consultant who would scout out insurance plans, and fees that typically go into the manual RFP (request for proposal) process.

    HighRoads typically works with companies that employ at least 5,000 workers, notes Haigis. However, in some cases smaller regional companies leverage their bids together, to streamline the process and attract vendors. "They previously wouldn't consider doing this because of the complexity of the process, but the technology makes it possible," she explains.

    In addition to the procurement process, HighRoads offers what it calls "benefits lifecycle management," which basically means it helps companies manage their health care information throughout the year. With this added feature, companies have ready access to the data they're required to include in summary plan descriptions (SPDs) that they give to employees, as well as necessary data to meet Sarbanes-Oxley and Department of Labor requirements. They can also monitor the performance of the vendor they've chosen.

    "It helps companies monitor the performance of their plans vs. what the vendor committed to. That comes in helpful the next year, when they go to bid again," explains Haigis.

    A growing number of retailers are using the Web to give employees quicker access to benefits information, while saving time and paperwork on their end, notes Rick Beal, managing consultant for human resources consulting firm Watson-Wyatt, based in Washington, D.C. "I was in a meeting the other day, and a number of people said their employees have either computers at home or iPods, and are setting up downloads for benefits information."

    At Food Lion, self-service via the Internet has saved the retailer's HR staff a lot of time and effort, says Johnson. "We have a lot of information available online that associates can access, including benefits. We plan to do even more of that in the future. Before, employees would have to call and ask us a question or ask us to send forms. We've found the self-service capability has been extremely helpful in managing the number of people we have," which currently amounts to about 72,000 associates.

    Back on schedule

    An emerging technological tool that's directly tied to retailers' operations is what's broadly known as workforce management systems. These systems are designed to optimize a retailer's resources to consistently achieve desired outcomes at store level. In simpler terms, when they're applied correctly, they address employees' needs while improving customer service.

    While more retailers are getting on board with automated scheduling, which is one of the best-known components of workforce management, observers agree that there's plenty of room for growth.

    "I'd rate the supermarket industry's adaptation of this technology a C+," says LSI's Haworth. "In my experience very few retailers are putting it all together and doing it as effectively as they should be. But I think the industry is moving in that direction."

    Part of the challenge is that these are complex systems that affect every store and associate, he says. "It takes a commitment from senior management." Sometimes they get the commitment from a retailer's IT department -- but not operations, he adds. "Those initiatives driven by operations are typically more successful."

    The primary elements involved in the demand-driven workforce management system from Chelmsford, Mass.-based Kronos, Inc. include planning, allocation, execution, and analysis, notes John Anderson, director of retail marketing. "With planning, the system helps retailers do long-range budgeting by store. When you go to schedule workers at a store for the upcoming week, what's your forecast of the business? The allocation component estimates the optimum way the workforce should be allocated to best meet the needs of the business and its customers. Execution is keeping track of time and attendance, managing employee leave and absence. And analysis comes at the end of the process, when you can budget and forecast based on the wealth of information you have."

    "The entire system can be managed centrally," says Anderson. "It's now completely Web-based, and is a full end-to-end suite, including budgeting, forecasting, scheduling, time and attendance, absence management, and business intelligence."

    Roundy's Supermarkets, Inc. has completely deployed the Web-based suite for all of its stores and employees, notes Anderson. "The data resides in a single database, and the system is accessed from a Web browser or terminals at store level. This simplifies deployment, reduces administrative effort at the corporate level both during and after deployment, and facilitates the retrieval of sales and productivity data for all levels in management."

    For instance, Roundy's employees can use Kronos' system at store level to punch in and out, or to put in a request for vacation. Managers can use the system to forecast business, create optimal schedules, and stay on top of sales and labor costs.

    Flexible schedules

    From an employee's standpoint, labor management technology is providing much better ways for employees to communicate with their managers about wanting time off, observes Haworth. "These systems allow students and other employees who need flexible time to make their requests. It also eliminates the old sweetheart issue, where employees feel that they aren't getting the best schedules because they aren't the manager's favorite. Today's systems also take into consideration labor union rules, which typically involve seniority. When employees feel a schedule is fair, that plays a big part in retention."

    Across the pond in the United Kingdom, flexibility in working schedules is now seen as a necessity for retailers that want to attract the best workers, notes Ian Lenagan, chairman and c.e.o. of WorkPlace Systems, a provider of workforce management systems in Britain. "In some European countries, the unions are quite developed, and companies' human resources policies are catered around listening to what employees want. So the issue of matching schedules with what employees prefer is becoming quite valuable. We call it the 'happiness factor.'"

    That happiness factor could easily become more of an issue among U.S. employees as the workforce here becomes more nontraditional, and as younger employees put more emphasis on a life-work balance. That may be one reason that Lenagan decided to approach the U.S. market with his company's solution. "We've worked successfully with Metro, the third-largest food retailer worldwide. They've got the same challenges in terms of labor that any supermarket has. You have to get better cost savings, better utilization of your people while keeping them happy."

    Metro tapped WorkPlace Systems to help meet its goal of providing enough cashiers on checkout 100 percent of the time. "We found that there was a significant time where the retailer didn't have the right staffing," recounts Lenagan. "Even worse, we came across situations where there were too many people working at one time." In the past six months WorkPlace's systems have helped Metro achieve its goal of the "one-plus-one philosophy," which means that there will be no more than one customer ahead of another customer in line at any time, he notes.

    Planning ahead

    Perhaps the most powerful capability that technology affords supermarket operators is analysis. "The industry has spent lots of money over the last few decades on transaction systems like POS systems, computer-assisted ordering, pharmacy, and pricing," notes Haworth. "The key now is to take the data generated from those transaction systems and run better stores."

    He sums it up in even simpler terms: "Most any retailer can tell you down to the penny how much they spend on labor. The key is, do they know how much labor it takes to run their stores?"

    In the future, technology might even be used to help supermarkets with another looming industry challenge: succession planning. "We're looking to address how to link good hiring decisions with the business impact even more as we go forward," notes Unicru's Earl. "Succession planning could be the next big step."

    Meanwhile, down in Salisbury, it seems that Food Lion has already caught on to the potential. "One thing we're doing now is using our technology systems to see which employees are getting ready to graduate and who's going to college," notes Johnson. "Once you have that data, you understand better who your future talent is."

    By Jenny McTaggart
    • About Jenny McTaggart

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