MANAGING SMART

CHRISTINE BLANK / Additional reporting by Michael Garry

Over the past three decades, IBM has carved out a dominant niche in point-of-sale technology in food retailing. More recently, Big Blue has turned its attention to the human side of the equation, in particular, in-store employees.

Recognizing the need to help retailers get a firmer grasp of the processes and procedures involving their employees, IBM two years ago launched its On-Demand Workplace initiative.

Last summer, a survey of 1,000 consumers confirmed for IBM that knowledgeable and available employees were one of the critical elements driving consumer loyalty, noted Jan Jackman, general manager of retail on-demand, IBM, White Plains, N.Y.

Thus, the company has stepped up its On-Demand Workplace program, hosting best-of-breed software applications from several developers, including Workbrain (labor scheduling, time and attendance, and labor resource reports), Unicru (hiring), and StorePerform (task management and workload optimization), on a standards-based online portal. "Store employees, using any in-store device, can log in and it will give them only relevant information," said Jackman. Retailers pay based on usage so that "they can implement [the applications] incrementally vs. buying it themselves," she added.

Jackman said this new in-store platform is being tested by both food retailers and non-food retailers, though she declined to name companies. Supermarkets, focusing more on supply chain programs, are somewhat behind other retail channels at the store level, she added.

Still, IBM's leap into employee-oriented technology is a clear signal of the growing importance of these systems to retailers of all stripes. Food retailers, hit hard by the need to compete with low-wage Wal-Mart Supercenters, clearly recognize the need to get the most out of in-store employees, and are applying a wide range of systems to the task.

The systems are also saving store managers a huge amount of paperwork, giving them more time to spend with customers and be on the sales floor.

It Starts With the Hire

As any employer knows, hiring is probably the most important -- and least understood -- part of the employee equation. Therefore, many retailers over the past few years have been turning to automated hiring systems to tackle this challenging task and the paper-intensive processes needed to get a new hire started.

For example, Pathmark Stores, Carteret, N.J., last month became one of the newest users of a hiring automation solution from Unicru, Portland, Ore., which is a major vendor in this space and a partner in IBM's On-Demand Workplace. In addition to assessing applicants, the software streamlines the paperwork associated with job applications, Work Opportunity Tax Credits, and other forms.

"Besides reducing turnover, we expect that Unicru will help us improve customer service and productivity," said Bob Joyce, vice president of human resources at Pathmark.

The Fresh Market, Greensboro, N.C., has been using Unicru's hiring solution for two years, and has seen a jump in the number and the quality of applicants. Turnover declined 20% in 2003, too.

In the past, store managers interviewed nearly everyone who submitted an application. "Now we're able to screen for the most qualified applicants before we commit the time to interviewing," said Bill Bailey, vice president of human resources for The Fresh Market, which has 39 stores. The screening process includes two Unicru assessments -- one on customer service and one on dependability -- that the applicant fills out online, in addition to the application.

"That gives the store manager a pretty good interview guide right in front of them on one page," Bailey said.

The quick, automated information also helps managers hire employees on the spot, particularly in the case of new store openings, when The Fresh Market hires between 90 and 100 new employees at once.

The hiring software has also increased The Fresh Market's applicant pool, in part because the system is now visible in its stores. The chain places computers with the automated applications and assessments on antique writing desks at the front of the stores.

Using a different job application system, Ahold USA, Chantilly, Va., reduced employee turnover by 11% and increased its applicant pool by 54% at stores in its Giant Food division in Landover, Md., over the past two years.

Since then, Ahold has implemented the system, Manager and Associate Self-Service, from Framingham, Mass.-based Workscape, in all Ahold USA chains, except Bruno's (now on the selling block). Used with Reid London House technologies, the system allows applicants to apply via the Internet and streamlines the paperwork. Now when candidates apply for jobs, managers can view applications at their own store and at stores in nearby ZIP codes.

The size and quality of Ahold's applicant pool have increased significantly, according to Frank Bartsch, director of HRIS for Ahold USA. More than 80% of all candidates opt to have their application shared with other Ahold stores nearby.

Paperwork has been reduced and made more accurate through the system. Before, the job applicant filled out the paper application and, if hired, filled out more forms. "Often, the paperwork was not filled out completely, and was not filled out accurately," Bartsch said. The system uses edits on key fields to ensure the integrity of the data being entered. "Our system will not let applicants go on until they have filled out the required data elements," Bartsch said. For example, if the employee starts typing a Social Security number with letters, or too many numbers, the system sends an alert.

In addition, when new employees fill out forms, including I-9, W-4 and union forms, the information is automatically loaded into Ahold's HRIS platform and its electronic imaging system; data entered on one form are transposed onto all other forms.

Ahold's Manager and Associate Self-Service application also allows associates to view their paychecks online, change their W-4 form, and initiate direct-deposit transactions. Managers can handle promotions, transfers and terminations online.

Best Times to Work

Once they've hired the most promising employees, retailers need to figure out the best times for them to work, based on customer demand. Labor scheduling systems have long been used to schedule front-end checkout cashiers, but now those systems are being applied to other departments as well.

Shaw's Supermarkets, West Bridgewater, Mass., has been using Workforce Central scheduling and forecasting software from Kronos, Chelmsford, Mass., for about a year. "Scheduling the right person in the right place at the right time is crucial to service, quality of the offer, and maximizing sales while reducing shrink," said Kevin Morrison, manager of management, planning and training at Shaw's.

By factoring in sales history, the Kronos system forecasts customer shopping patterns down to 15-minute intervals, allowing staff to be scheduled to "maximize customer service," said Morrison. It also frees up store managers' time, he added.

Shaw's recently deployed the Kronos system to schedule labor in fresh departments, also factoring in labor standards for specific tasks (see story, this page).

Kash n' Karry and Hannaford Bros., both divisions of Delhaize USA, recently began using Kronos for labor scheduling. Hannaford Bros., based in Scarborough, Maine, is using Kronos software for centralized workforce management of all employees in its 122 stores. It started using the system to schedule employees at the front end, and will soon expand to other customer-facing departments, including pharmacy and deli.

"A lot of retailers pursue a phased implementation," said John Anderson, retail industry manager for Kronos. "The front end tends to be a primary target, due to its size in terms of the number of employees, the high percentage of part-time and full-time employees, and the high degree of customer contact."

The benefits Hannaford has gained at the front end "convinced us that we needed to leverage them at other points of customer contact as well," said Bill Homa, chief information officer at Hannaford.

In forecasting sales for each store, the software incorporates a variety of factors, including historical sales, seasons, special events and holidays. The system also takes "employee work-life preferences" into account, scheduling employees for the number of hours they prefer to work.

Another division of Delhaize, Food Lion, Salisbury, N.C., has deployed a different workforce forecasting and scheduling solution from Timera, Irving, Texas, which was recently acquired by JDA Software.

Food Lion switched from an in-house, mainframe application to Timera's Enterprise Workforce Management solution in 2002. A pilot project in some stores that preceded a rollout chainwide showed a "better level of front-end staffing, especially during the peak sales times each day," according to Jeff Lowrance, spokesman for Food Lion.

"We were able to gather more detailed front-end data down to the 15-minute level, rather than for the entire hour, which allowed for increased accuracy in scheduling to meet the demand," Lowrance said.

Although Food Lion employees had previously worked shifts that started and ended on the hour, they are now scheduled to start at 15, 30 or 45 minutes past the hour, based on demand. Although it has taken associates a while to get used to the scheduling change, it has been successful, Lowrance said.

Other tools used in concert with scheduling applications include time-and-attendance and employee self-service. Atlanta-based Workbrain, one of the vendors associated with IBM's On-Demand Workplace, offer these applications in its retail suite, adding labor scheduling over a year ago.

Winn-Dixie and Big Y are two of Workbrain's U.S. food retailer customers that use a different labor scheduler along with other Workbrain modules, according to John Orr, Workbrain's senior director, retail.

Workbrain's employee self-service system enables Winn-Dixie employees to manage shift trading and vacation requests, according to Workbrain. Orr said the system can provide managers with dashboard alerts when exceptions arise on such things as missing time-clock punches or if minors are approaching workload limitations. "Anything we track can trigger a notification," he said.

Reducing Stress

One of the newer breeds of employee-focused technology is being marketed by two-year-old StorePerform Technologies, Denver, another partner in IBM's On-Demand Workplace. StorePerform is aimed at ensuring that strategies developed at headquarters, such as new product introductions or resetting shelves, can be adequately carried out at the store level based on the amount of labor available.

"Often, too much work is sent to the store without visibility to the workload," said Manav Misra, director of corporate development.

StorePerform offers three modules: Task Manager, which provides directions to the store and tracks progress; Workload Optimizer, which makes sure that work sent to a given store matches available labor; and Feedback Manager, which audits employees and customers.

With Workload Optimizer, retailers could "move a project by a week to a low workload period, and still get it done without stressing out the stores," said Misra. The conventional process leaves it to store managers to prioritize workloads arbitrarily sent by headquarters.

According to Misra, a "top five" food retailer has completed a pilot of StorePerform's systems and plans to announce a chainwide rollout in about a month. Outside food retailing, StorePerform's customers include Sears, Lowe's and Best Buy. Sears has reported saving store managers three hours per week in back-office labor, he said.

Setting Labor Standards

One of the questions retailers are asking about their employees is: How well are they really doing their job? For the answer, they are turning to systems and consultants that specialize in creating standards for retail workers.

Shaw's Supermarkets, West Bridgewater, Mass., recently evaluated its labor scheduling for its LaCarte fresh departments and set new labor standards. Consulting firm Labor Solutions International, Sandy, Utah, evaluated each task in the department using its RetailEase software.

LSI was able to determine how much time each task should take, enabling Shaw's to do better scheduling. Shaw's entered the new standards into its Kronos scheduling software.

"The new standards, coupled with proper forecasting and scheduling, have made it possible to accurately allocate hours in order to maximize customer service while ensuring that our associates are efficiently scheduled," said Kevin Morrison, manager of management, planning and training at Shaw's.

Food Lion, Salisbury, N.C., has also engaged a labor standards specialist, H.B. Maynard, Pittsburgh. According to Tim Krueger, Food Lion's director of retail labor management, the relationship began in 2000, when Maynard assisted Food Lion in developing labor standards for checkout lanes using the MOST (Maynard Operational Sequence Technique) system.

Toward the end of last year, Food Lion decided to use the MOST system again as it updated labor standards for all departments. The chain asked Maynard, along with Cap Gemini Ernst & Young, to train its associates on "how to use the MOST system to develop standards," Krueger said.

Food Lion has just completed the standards work, and is in the process of gathering workload data to apply the standards against, Krueger said. "We will use this information to develop the 2005 labor budget for all 1,200-plus stores in the company."

To help retailers improve cashier performance, NCR, Dayton, Ohio, and its Atlanta-based Teradata Retail division introduced a Cashier Management System, and has tested it at a general merchandise retailer.

The system includes time-and-motion studies using video, productivity analysis, a scoring algorithm to establish standards for scanning throughput and accuracy, and exception reporting, said Susan Terry, director of retail business intelligence, for Teradata's center of excellence.