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By Steven Kramer, CEO and founder of WorkJam
Plans to bump up the minimum wage have kicked into high gear. Cities including Los Angeles, Seattle, New York and Chicago have already voted to increase the minimum wage to $15 by 2020. While these regulatory changes are a big win for the hourly workforce, they’ve added pressure to employers, especially grocers.
Wal-Mart is just one of the many large-scale grocers feeling the heat. Back in April, the company decided to take a gradual approach to the proposed minimum wage hike and raised its hourly starting wage to $9—but the move is starting to take a toll on operations and profitability. Profits are down and hours are being cut, and the company is blaming this partly on the wage increases.
The higher minimum wage revolution is here and grocers need to figure out how they can optimize labor to better manage their costs. Rather than reducing workers’ hours, grocers should instead focus their attention on improving their labor management processes. Most organizations use outdated and unreliable methods to manage their scheduling needs. Proper shift management can have a significant impact on a company’s bottom line. If grocers want to avoid additional overhead and operational costs, it’s time they consider upgrading their scheduling processes.
How rising wages can spark internal improvements
As wages continue to increase, growing labor costs have become a top concern for grocers, and understandably so. However, this regulatory shift should be seen in a more positive light. Increased wages give companies the chance to kick their hiring, retention and operational strategies up a notch.
In the past, grocers were typically left with two options when they wanted to keep profit margins in check: increase prices or lay-off workers to reduce costs. While these seem like reasonable solutions to control costs, they also put businesses at risk for increased operational inefficiencies and losing customers as a result of high prices. Before resorting to these options, grocers should first consider improving back-channel efficiency and internal cost management. Taking this approach may encourage grocers to re-evaluate their current operational planning.