We’ve all heard of the phrase, “Customer is King.” In this video, I challenge that notion and explore how one company’s policy shift that placed a focus on improving employee conditions resulted in increased productivity and higher overall sales.
“Clients do not come first. Employees come first.
If you take care of your employees, they will take care of the clients.”
Sir Richard Branson
The global retail industry is experiencing disruptive forces that is forcing many retailers to either adapt to these changes or to completely shut its doors. As retailers compete with a market of consumers whose spending patterns have been changing over the last few years, stores have been putting a lot of pressure on its sales floor staff to increase its revenue.
What is the status quo for retail workers?
Retail workers in the US, specifically, have what is known as flexible hours. But while flexibility is considered an employee perk—that cannot be said about what flexibility means to retail. In the US, it has become the norm for retailers to hire as many retail staff as they can to ensure that sales staff levels on the floor are optimized every time.
What does this mean? This means that there will be enough sales staff assisting customers at any time of the day—more staff during peak times, and fewer staff during downtime. To achieve this, managers need to be able to schedule properly—and the easiest way to do that is to hire a large pool of sales staff they can call on in case activity peaks in the store. This is similar to the Australian practice of having a casual pool of labour.
The downside of this practice is that retail workers get less hours and, as a result, less pay. Furthermore, since their hours depend on store activity, most of them do not work on stable schedules and are often only informed of their schedules a week at a time. This puts retail workers in a bind, often having to grapple with their changing schedules to match schedules for childcare, personal errands, and even other jobs.
What happens if we change the status quo?
A 35-week study conducted by professors from the University of Chicago and University of North Carolina, and working in partnership with the retailer The Gap, showed that changing this status quo benefits both the retailer and the employees without making their customers suffer.
For this study, the researchers divided Gap stores into two: the experimental group where managers assigned their workers stable schedules and the control group where managers were asked to continue their traditional scheduling system. The researchers found that stable schedules had an effect:
- Improved employee retention
One of the things that the study observed was that when employees were given stable schedules, they were more likely to stay with the company. This was particularly the case for workers who have been with The Gap for a long time.
It’s easy to plan our lives when we can predict our schedules—it allows us to plan our activities for the week, month or even year. For workers with families, this becomes especially important—planning out childcare, school activities, errands, etc. is a priority. Stability was found to be very important to he employees—having stability encouraged employees to commit with the company.
- Improved productivity
Workers who have been with the company longer usually have greater knowledge of products and processes—which in turn boosts productivity. They spend less time trying to learn the products and processes, and allows them to focus on selling.
But there’s another reason how stable schedules improve productivity—when we have stable working hours, this lends to stable schedules on our personal lives. Thanks to consistent schedules and planning, we are able to better focus on work. We are better able to compartmentalize our time and focus our resources—time and energy—to the task at hand.
- Improved sales
This $30,000 experiment resulted in $3 million in revenue for The Gap, representing a 100 fold return over a period of 35 weeks.
We help our employees when we help them plan their lives. We give them less things to worry about, and this allows them to focus on the things that matter the most. When we take care of them, as Branson said, they will, in turn, take care of our customers. When we make them feel important, it will be easier for them to make our customers feel important, too. This cycle contributes to the business’s overall productivity and extends towards the bottom line.
If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.