How Retailers Can Best Address Critical Labor Challenges —Today and Tomorrow

By artfully applying technological advances in workforce management systems, retailers can minimize labor costs and maximize operational efficiency.

Executive Summary

Retail remains the strongest connection between

consumers who want goods and services and manu-

facturers who create them. Those companies that can

connect suppliers and buyers with a high degree of

efficiency and scale across channels typically prosper.

In today’s ever-changing retail environment, the role

of the store has pivoted, and the store manager must

now support multiple needs, including managing an

efficient store for walk-in shoppers, running a pre-

cise fulfillment and returns operation for customer

orders, and providing an engaging and experiential

environment for shoppers to immerse themselves in

the brand. This environment requires complex plan-

ning and management to ensure that the correct

staff with applicable skills are available across the

entire store operation. Expectations for service and

delivery quality are higher than ever before, even as

the cost of labor continues to rise globally.1,2

As a twin pillar of workforce management, employee

retention continues to be a growing challenge. Trends

indicate the 65% median turnover rate of part-time

retail employees is continuing to rise while prospec-

tive employees and existing staff are more interested

in a better work-life balance than an attractive hourly

rate.3,4 Retailers are responding by looking for ways

Cognizant 20-20 Insights | February 2018

COGNIZANT 20-20 INSIGHTS

Cognizant 20-20 Insights

How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 2

Trends indicate the 65% median turnover rate of part-time retail employees is continuing to rise while prospective employees and existing staff are more interested in a better work-life balance than an attractive hourly rate.

How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 3

to offer more flexibility and opportunities to their

employees. Companies that plan for and offer

this flexibility will have the pick of the talent pool

in the future.

Historically, many organizations have managed

labor using tools such as static workforce man-

agement software solutions and standardized

labor metrics. In some cases, these solutions

have been in place for many years without being

updated and, as a result, businesses are no longer

realizing the savings or efficiency increases they

could reap from modern, digital solutions.

This white paper offers insights into how your

organization can improve labor efficiency and

control costs by using a workforce management

(WFM) or labor management solution (LMS).

Instead of working on labor budgeting and plan-

ning with limited historical data and generic

store information, labor planning tools must rec-

ognize and include the current employees and

their skills, availability and preferences. Imagine

a store manager looking at the upcoming holi-

day season and trying to determine the types of

roles, the candidate availability and the number

of employees to hire. Today’s planning tools must

provide the manager with the ability to combine

the current store employees with the store’s

labor demand, or forecast across all activities and

skills required. The result would be a crystal-clear

picture of the store’s current and recommended

future staffing levels.

WFM/LMS SOLUTIONS OF TOMORROW

Many companies with existing WFM/LMS solu-

tions are seeking ways to build on those solutions

and realize additional value. Here are some ways

we recommend to layer on, transform or upgrade

existing solutions to gain value:

• Standards updates: One of the ways that

companies can get more out of their current

systems is to ensure their labor standards

are up-to-date and representative of current

processes. Taking the time to re-validate your

organization’s labor standards and spending

time on the floor with associates will allow

decision makers to tweak the current system,

which improves trackability and accountabil-

ity. As an added benefit, your team might

discover additional process improvement

opportunities.

• Standards as service (SAS): Standards main-

tenance can be expensive and time-consuming,

but partnerships can help mitigate some of

those factors. Retailers must decide whether

to continue to devote internal resources to

these, or whether there’s a business case for

a standards-as-service offering — allowing a

partner service provider to assume manage-

ment of some, or all, of those needs.

• Incentive programs: Incentive programs may

be the logical next step for organizations that

have a high level of maturity in their labor

standards. Implemented correctly, an effec-

tive performance management and incentive

system can boost productivity by an additional

10% to 30%.5 Successful incentive programs

typically have the following key attributes:

» Employees must understand the pro-

gram and know how the incentive can be

achieved.

» The reward must be valuable to the

employee and greater than the perceived

effort needed to achieve it.

» The reward must be timely (given soon

after the results are achieved).

» The reward should be consistent and a

direct result of the individual’s behavior.

» The program must be self-funding over

the long term.

Cognizant 20-20 InsightsCognizant 20-20 Insights

Incentive programs may be the logical next step for organizations that have a high level of maturity in their labor standards. Implemented correctly, an effective performance management and incentive system can boost productivity by an additional 10% to 30%.

Cognizant 20-20 Insights

How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 4

How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 5

• Gamification programs: Gamification is the

concept of applying game-design thinking

to non-game processes. These programs

are very similar to incentive programs, but

without the monetary reward element, and

they provide a way to achieve high employee

engagement for low monetary input. Many

applications of gamification integrate with

existing employee recognition of incentive

programs. In addition, gamification programs

can offer a way for employers to decrease

employee turnover, improve productivity,

increase associate compliance and grow both

customer and associate engagement. Accord-

ing to the Harvard Business Review, “Studies

have shown that engagements typically fail

because lack of engagement and gamifica-

tion helps solve that issue.”6

• Implement or upgrade to advanced features:

Not surprisingly, many organizations are not

leveraging all of the features in their existing

WFM/LMS solutions. Taking the time to review

available features and functionality and better

understand which complimentary add-on solu-

tions are available can radically improve the

value your company gets from its current solu-

tion. One classic example in the retail space is

the company that assumes that one overarch-

ing solution from human capital management

system (HCM) to payroll is the best approach. In

many cases, using built-for-purpose solutions

will yield much more value. Some common

options include:

» Retail stores: Forecasting, advanced sched-

uling, employee self-service tools (mobile)

» Distribution centers: Advanced sched-

uling, forecasting, monitoring, employee

self-service

• Long-range staff planning: Truly advanced

WFM solutions often bring game-changing

innovations to the market. JDA, for instance,

recently introduced a long-range staff plan-

ning module that combines the labor model

described above with store-specific associ-

ate profiles and related data. This approach

allows an individual store to overlay its

current employees over a future period, and

see if a location is under- or overstaffed.

It also provides hiring and cross-training rec-

ommendations.

• Deploying a metric- and data-driven WFM

cloud solution: Modern WFM cloud solutions

bring to bear greater functionality, allowing

retailers to dramatically improve forecast-

ing and labor utilization. By combining the

metrics that drive each retailer’s business,

including forecasted events and SNEW data

(social, news, event, weather), it’s possible to

build dramatically improved labor forecasts.

These forecasts can then be used to create

more effective labor models and, ultimately,

the best possible schedule for each location.

• Additional advanced technology features: If

your company has already implemented some

or all of the items listed above, it may be time

to consider more advanced technology fea-

tures. By improving employee tracking and

metrics, organizations have the opportunity to

design more efficient processes and improve

employee productivity:

» Multivariable engineered labor stan-

dards are built around multiple key value

indicators (KVIs) that use advanced sta-

tistical analysis to set standards in both

distribution and retail environments.

The additional levels of detail available

for measurement can improve employee

traceability and improve forecasting and

scheduling models.

Cognizant 20-20 InsightsCognizant 20-20 Insights

Cognizant 20-20 Insights

How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 6

Modern WFM cloud solutions bring to bear greater functionality, allowing retailers to dramatically improve forecasting and labor utilization. By combining the metrics that drive each retailer’s business, including forecasted events and SNEW data (social, news, event, weather), it’s possible to build dramatically improved labor forecasts.

How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 7

» Location-based analytics utilize addi-

tional software tools to deliver and track

marketing materials, providing additional

clarification and insights into customer

movement and buying patterns. This data

can drive more accurate forecasting met-

rics which, in turn, can improve employee

staffing and scheduling.

» Connected forklift is a tool within the

distribution center environment allowing

for improved tracking of forklifts within a

facility. This allows engineering teams to

improve labor metrics as they are able to

validate actual travel time vs. calculated

travel time, allowing the development of

more accurate estimates and improved

employee tracking.

COLLABORATIVE APPROACHES, REAL RESULTS

With industry leader JDA Software, we are pro-

viding an inclusive approach to addressing the

challenges of deploying, managing and advanc-

ing current WFM environments. Because of our

innovative new software offerings and our collab-

orative approach, our mutual clients are realizing

greater value from their WFM solutions and posi-

tioning themselves to truly meet the needs of

connected consumers in whichever channel they

choose to shop.

For more information, please contact info@jda.

com or inquiry@cognizant.com.

Our mutual clients are realizing greater value from their WFM solutions and positioning themselves to truly meet the needs of connected consumers in whichever channel they choose to shop.

Leslie O’ReganManager, Cognizant’s Stores Line of Business in Cognizant’s Retail business unit

Leslie O’Regan is a Manager within Cognizant’s Stores Line of Busi-

ness in Cognizant’s Retail business unit. In this role, she uses her

WFM/LMS expertise to help clients optimize their labor force. Leslie

has spent time leading efforts to help clients define and improve

their business processes and has worked with clients in the retail,

grocery and supply chain sectors to define, configure and calculate

engineered labor standards to improve efficiency. She received a

degree in industrial engineering from Purdue University. Leslie can

be reached at Leslie.ORegan@cognizant.com | LinkedIn: www.linke-

din.com/in/leslieoregan.

ABOUT THE AUTHORS

Martin ReynoldsVP of Retail Solutions at JDA

Martin Reynolds is a VP of Retail Solutions at JDA with over 30

years of direct retail experience. Bringing together a passion for

technology with deep roots in retail, Martin understands firsthand

the challenges facing retailers and how they can chart a path for-

ward to deliver real, sustainable results. Marty is most recognized

as a retail technology evangelist, and focuses on solving the evolv-

ing business challenges facing retailers with a keen focus on retail

store operations. He can be reached at Martin.Reynolds@JDA.com.

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How Retailers Can Best Address Critical Labor Challenges — Today and Tomorrow | 8

FOOTNOTES

1 According to RSR Research, differentiated customer service was identified of the top three sources of competitive advantage

for 47 of retailers surveyed. See “Retail Insights 2016: Moving Beyond Omnichannel,” page.10, www.rsrresearch.com/research/

retail-insights-2016-moving-beyond-omnichannel.

2 In a recent survey of over 350 global retail and consumer goods CEOs, 46% said that omnichannel fulfillment had led to some

increases in labor costs while an additional 14% said omnichannel fulfillment had led to a significant rise in labor costs. See

JDA CEO Viewpoint 2017 survey, slide 13, www.jda.com/knowledge-center/collateral/2017-retail-ceo-survey-presentation.

3 “Retail Employee Turnover Up as Black Friday and Holiday Shopping Season Nears, According to Korn Ferry Hay Group Survey

of Top U.S. Retailers,” November 16, 2016, www.kornferry.com/press/retail-employee-turnover-up-as-black-friday-and-holiday-

shopping-season-nears-according-to-korn-ferry-hay-group-survey-of-top-us-retailers/.

4 Rainer Strack at TED@BCG Berlin, “The workforce crisis of 2030 — and how to start solving it now,” October 2014, www.ted.

com/talks/rainer_strack_the_surprising_workforce_crisis_of_2030_and_how_to_start_solving_it_now.

5 “Does Incentive Pay in the Warehouse Work?” Supply Chain Digest, June 2006, www.scdigest.com/assets/News-

Views/06-06-01-2.cfm?cid=717.

6 Karen Robson, Kirk Plangger, Jan H. Kietzmann, and Ian McCarthy, “Game on: Engaging customers and employees through

gamification,” Harvard Business Review case study, January 15, 2016, https://hbr.org/product/game-on-engaging-custom-

ers-and-employees-through-gamification/BH714-PDF-ENG.

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