From fixed to variable: The simple solution to reducing labour costs
You don’t have to be an industry insider to know that Britain’s wounded high street is causing considerable pain for retailers and casual dining businesses of all sizes. Sweeping store closures for retail stalwarts like Poundland and House of Fraser, as well as restaurant chain, Prezzo’s, company voluntary agreement — to name a few — were all widely publicised.
If you do happen to work in these industries, you’ve no doubt experienced first-hand the key pressures contributing to the squeeze; bigger overheads, competition from online alternatives and reduced footfall are all frequently singled out by sector leaders.
Feeling the heat on the high street
It’s true that online competitors are chewing into sales (and footfall). A BBC news article lays some responsibility for this on a shift in consumer tastes; More people are showing preference towards e-tailers offering better value, convenience and experiences.
Another threat is the rapid rise in fixed costs. Skyrocketing rents mean it’s more expensive than ever to occupy space on the high street. Similarly, business rates continue to increase — the same BBC article states that many companies are expected to pay an additional £2 bn over the next three years. And, as is to be expected, the steady annual increase in workers’ wages has had a considerable impact too.
Naturally, the growing pressure within the industry is forcing employers to cut fixed costs in order to adapt to this shifting landscape.
Scaling back
When tackling fixed costs, reducing the number of staff (or moving people to part-time contracts) is the favoured move of employers. After all, it’s a straightforward method of cutting labour spend.
The knock-on effect of this approach, however, can greatly impact staff retention and a company’s ability to provide the same level of service, both of which add their own costs over time.
Pick up any article about millennial workers and you’ll find that this new breed of employee wants flexibility — and they’re not afraid to switch jobs if they don’t get it.
For this reason, working in an understaffed team and getting infrequent or unreliable work are likely to increase churn among young workers — which in turn leads to more time (and money) spent recruiting part-time staff.
Similarly, understaffing places a cap on a business’s ability to earn and also has a visible impact on service levels — because in spite of everything, brands still need to hit sales targets, or provide guests with the same high standards people have come to expect.
Embracing agile staffing
Simply cutting the number of fixed staff stops short of the most sustainable solution. The next step after that for employers is to embrace agile staffing.
As Catapult’s co-founder, Oli Johnson, points out, “staffing… is an area where employers actually have flexibility, whether they realise it or not”.
In his piece, Is a flexible workforce the solution to the casual dining sector’s woes?, Johnson suggests that “employers can save money by recruiting fewer permanent part-timers” and instead introduce a pool of on-demand workers when they need to flex up.
Put simply, he proposes fewer staff overall and more staff at the right times.
Put simply, he proposes fewer staff overall and more staff at the right times.
Thanks to the growth of the on-demand workforce, it’s now easy for employers to cater young workers’ eagerness for flexibility, all while reducing their fixed labour line, and avoiding costly over-staffing.
It’s a step in the right direction for high street business — with the added bonus of gaining genuine flexibility during peaks and saving time and money on recruiting permanent part-timers.
