Where have all the workers gone?
d unemployment rates everywhere, causing supermarkets to get more creative in attracting, managing and keeping employees. More retailers are looking at labor management software for the front-end, the warehouse and transportation.
But the most pain is being felt in information technology departments. Technical professionals are in high demand and supermarket companies aren't always their first choice as an employer.
Among the strategies retailers are using is to train non-technical people from within their companies and hope they stay put, and to call in outside consulting firms.
SN: How is the labor shortage affecting supermarket IT departments?
PINK: Obviously, it is a nightmare to get and keep people. What has helped a little bit recently is the spectacular failures of some of the dot-coms, because they are crashing just as loud as they took off. So that makes some technical people a little nervous, but to attract and maintain IT talent, it is a very difficult market, and it is impossible for me in my position to compete with a dot-com moneywise. So we try to keep their skill sets current. We try to do a lot of training for our folks. We try to keep them involved in new technologies so they understand that we value them as associates. We probably do a disproportionate amount of training for our IT people to try to keep and attract them.
What we have to do is get people who are new in the IT business, and do our own training and hope that they fit into the culture well enough that they don't want to leave. So we have a tendency to have people who are not as experienced working in most of those positions, and do the training ourselves. Sometimes we have a Lotus Notes programmer who could probably go out onto the open market and earn much more than she makes now, but we trained her from the ground up -- she didn't come from a programming perspective, we saw some potential, and now she feels loyalty to the organization. That's the only way I can compete, by making my IT people feel like they are contributing to Harmons success and to keep their skills current and to continue to train them.
We do lose some, just like anyplace else. I lost a couple of Oracle programmers in the last year and it has been painful. It's hard to replace them. It's a nightmare. But that's our strategy. I can't pay what a dot-com is going to pay somebody, so we try to look for our own people or people new in the industry with potential and train ourselves.
MILLER: It is increasing our costs. The database administrator (DBA) costs in this area are unbelievable. In our environment, we are competing against pre-IPOs. With Silicon Valley and the dot-com start-ups, that represents a very difficult challenge for us. We are taking the approach of developing talent from within. We are taking some good, high-quality employees that don't quite have the experience I would otherwise desire and are bringing them up in the IT environment. It is representing a challenge for us. With the amount of time it takes to get them productive, we are paying for it in lost efficiencies right now.
There is a different angle on this labor shortage, too. We even have difficulty finding hotel rooms for vendors coming in because these dot-coms and pre-IPOs are bringing employees from out of the area because they are having a hard time finding people. They are using up all the hotel rooms during the week, so our vendors have to stay 30 or 40 miles away sometimes.
HERMAN: It is getting harder and harder to find qualified IT professionals, especially in the application programming area, and in particular with new technologies. Companies are continuing to rely more and more on contracting firms to make up for the shortfall. The primary advantage of doing that is, when you have an important project, you are able to find qualified resources to move forward. The negative is, clearly, that you have to spend more money to make that happen.
BUTLER: It has been tough. Last year, with Y2K, our focus was on resolving all those issues. Coming out of Y2K, we've got a big backlog of needs. At this point in time, it kind of hampers our development. We may have to use more consultant services than we have in the past in order to chip away at our backlog. The pros of using those services are, you can get some of your projects completed quicker, and the negative is the cost and the effect it has on your current staff. The consultants are working on some newer technologies than your internal staff, so it is viewed as the consultant is getting the opportunity to do something that the internal staff is not. Frequently you bring in a consultant to help you on something you don't know too much about. So rather than teaching your staff, you are relying on consultants, and you have to be cautious. From our perspective, we don't do much of that, we try to be self-sufficient and use our internal staff wherever possible.
SN: How can supermarket organizations make themselves more attractive to good IT people?
HERMAN: The problem is not necessarily that we can't attract the people where other people can. Obviously, the Web and e-business companies are a lot more attractive because of the leading edge technology and the projects they can offer. Our challenge is to train our existing people in the new technologies and find ways to bring new people into the technology work force.
It's an issue of investing in training and understanding that there is a long time period from when you start to train somebody to when they are going to be a fully effective member of your staff. It doesn't solve the short-term problem, but it is probably one of the better ways long-term to deal with this issue.
SN: How is labor management software affecting supermarket staffing issues on the front-end and perishable departments?
PINK: Harmons has not implemented labor management software. We have purchased it, but we haven't installed it yet. The purchase was driven by the same issues as front-end technologies: The market is getting more competitive and we need to manage labor better for customer service reasons. Harmons is a high customer service retailer with a wide variety of items. We have a lot of SKUs in our stores, which are pretty large. We average about 70,000 square feet.
Variety requires labor to keep it going. And we are a very customer service-oriented organization, which is why we think we can compete against the Smith's and Albertson's and Wal-Mart's of the world. We think there is a place for a high customer service, high quality, wide variety supermarket chain out here, and we try real hard to make that happen.
We are doing labor scheduling because we need to more effectively take care of our customers in peak times. It's more than trying to cut dollars, which we don't really expect. We expect to shift the dollars around so that we have the right people with the right level of customer service in the stores at the right time, particularly on the front end. As far as the customers are concerned, the front end has a huge impact on their overall experience in the grocery store, and we need to do a better job there than we did in the past. We have some very good store directors and department managers now who do a lot of that in their head, and we are just trying to help them by formalizing that and having them understand that, as we have turnover at the store director level, we want to make sure that we can maintain that level and improve the level of customer service that we have. That's why we have purchased the labor management software.
HERMAN: Labor management software does a good job of estimating front-end staffing needs and scheduling of the front of the store. Progress is being made in other areas, like perishables and other non-checkout operations in the store, but at least at this point in time, it is limited. Checkouts lend themselves to this type of technology because of all the data that you have. Based on the point-of-sale systems, you can monitor things at 15-minute increments, and it is a lot easier to use that data to figure out what the needs are. It allows you to provide the right number of people to meet the checkout demand and to optimize service. It does not change the process except to minimize scheduling more cashiers than you need throughout the day.
BUTLER: We are not using a labor scheduling package. We are doing some internal things to help our store management in staffing, but it is homegrown and that's where we want to start. It's internally developed software that is going to give our store management some tools to help them better schedule their staff.
MILLER: We don't have a labor application in place at this time. I'm not sure what the impact would be if we did. Our labor market is so tight that we have a hard time even staffing our stores. But it's not one of our value drivers at this point. We've got some other priorities and we do have probably in the fiscal year 2002 the plan to roll out the next generation of employee time clocks, and our labor productivity software will be part of that rollout at that time too.