Is measuring ROI for labor the answer?
Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.
As consumers become increasingly more comfortable with ordering everything from soup to nuts online, the onus on bricks and mortar retailers to create a "value-added" in-store environment correspondingly increases.
As intuitive as that sounds, many retailers still regard training and employee retention as a luxury they cannot afford, as labor costs remain the "easiest" target for cost cutting. For those that continue to view labor first and foremost as an expense, the future is bleak. Conversely, for retailers who have structure and priority for training and retaining associates, your path is paved with satisfied, loyal shoppers.
It’s all about metrics. If retailers make a point to measure training and labor in a ROI model, instead of purely looking at it as an expense, they have at least put themselves in position to accurately track the fruits of their training efforts.
"Sales per labor hour invested," or "sales per labor dollars invested" are two measurements that can begin the process of considering store associates as "assets," rather than expense items. Further, most HR departments can measure, at least directionally, the cost of employee turnover. Without this number in the equation, retailers are just fooling themselves when they believe that cuts to benefits, hours, and full time status save expense without having any consequences on both the top and bottom line.
In my view, the HR and finance departments should team to own this process. Together they have the tools and the structure to affect training, compensate performance, and provide the financial impact to the P&L for training and retaining a productive team. Done correctly with sustainable commitment to associate training, bricks and mortar retailers will not only sell more soup and more nuts, they will attract the best people in the market to help them do it.
- Training and Retaining Associates is Key for "Bricks and Mortar" Retailers – Mark Heckman Consulting
What do you think about the value of creating a ROI metric around training and labor? Which metric – sales per labor hour, sales per labor dollars invested, employee turnover expense – will prove to be particularly revealing?