President Obama’s recent proposal to increase the number of workers eligible for overtime pay has been stirring controversy throughout the retail industry this summer. As the salary threshold for workers who qualify for overtime pay would leap from $23,660 to $50,440, retailers will be strapped to find ways to account for this rapid jump in labor costs. Though many retailers have practices in place to mitigate hourly workers’ overtime costs, they’re often less equipped to handle costs associated with middle managers who tend to work more than 40 hours a week. With the majority of shift supervisors and store leaders earning within the new salary range, Obama’s proposal will leave retailers with significant increases in operational costs if changes aren’t made.
As this ruling comes into effect, it will be imperative for retailers to find new ways to better manage labor costs, budget manager time, maintain regulatory compliance, and avoid passing these increased costs on to customers. This means eliminating manual processes, reducing managers’ workloads and using a data-driven approach to improve workplace efficiencies.
1. Doing away with manual processes: Scheduling employees is a very cumbersome process that managers have to deal with on a weekly and sometimes daily basis. And with the majority of managers still handling the scheduling process manually with pen and paper or Excel spreadsheets, they either end up working extra hours to finish everything or allocating less time to more pertinent business tasks.
With managers’ hours now limited, retailers need to make an effort to reduce these time-consuming manual processes. One way to do this is by implementing a centralized system accessible by everyone that allows managers to automate schedule management and more effectively communicate schedules and manage shift changes with employees. This will not only speed up the schedule creation process, but it will also empower hourly workers to take ownership of their schedules, allowing managers to spend less time scheduling and more time on the floor.
2. Engaging employees to lighten the managerial load: Between scheduling, budgeting, training and handling customer and employee problems, managers carry a heavy load. Though their skills and expertise can optimize the customer experience, managers are often left dealing with back-end operations.
However, thanks to advances in technology, retailers can reduce the day-to-day responsibilities of managers by opening up communication channels with their employees. Adopting an integrated employee relationship management platform allows employees to take over some of their scheduling, training, and shift management duties, eliminating the need for managers to micromanage tedious tasks like coordinating shift changes. By implementing these tech-driven solutions, retailers can free up manager time for customer-facing activities while simultaneously benefitting from a base of more engaged, motivated employees.
3. Boosting workplace efficiencies: Since the overtime regulation puts newfound time constraints on managers, retailers must think seriously about how to optimize their operations. With labor contributing 20 percent to 70 percent of retailers’ expenses, they should take a deeper look at their company’s data to identify areas where they can cut costs. By taking advantage of data on trends, sales and employee availability, retailers can avoid superfluous costs from under- or overstaffing.
Though new regulations can stir anxiety throughout the retail space, implementing the right solution is key to overcoming these obstacles. The White House’s overtime proposal serves as an opportunity for retailers to rethink their traditional practices and seek out new tech-driven solutions that eliminate costs and produce optimal workplace efficiencies.