Latest / The Scott Townsend Show / #262 It's Not Personal. It's Payroll.
Transcript
- riverside edit retail scott m townsend's (1): Welcome to the Scott Townsend Show, brought to you by Diet Soman Productions. If you've ever worked in retail, you've probably experienced this. Business is booming, you're working thirty, maybe thirty five hours a week, the store is busy, customers are everywhere, and there's more work than people to get it done. Then almost overnight something changes. Your schedule comes out, and instead of thirty two hours you're getting twenty four, maybe twenty, maybe even less. And naturally you're upset. But I've often wondered how many employees really understand why retailers cut hours during certain times of the year. Is it greed? Is it poor management? Or is there a legitimate economic reason? And here's another question I want to explore today. What responsibility do we as employees have in making sure the company we work for remains productive and profitable? Let's start with what I think is one of the biggest misunderstandings about retail. Sales and profits are not the same thing. When you hear that a major retailer generates a hundred billion in annual sales, let's say, that doesn't mean the company made a hundred billion in profit, not even close. That revenue has to pay for merchandise, transportation, distribution centers, employee wages, benefits, rent, electricity, insurance, equipment, technology, and dozens of other expenses. Whatever is left after all those expenses is profit. And depending on the retailer, that amount can be surprisingly small compared with total sales. Let's make this easier to understand. Imagine you operate a retail store that generates one hundred thousand dollars in sales during a typical week. Let's say the merchandise you sold cost you seventy thousand. That leaves thirty thousand in gross profit, but you're not finished. You still have payroll, rent, utilities, insurance, and other operating expenses. For our example, let's say those expenses cost twenty five thousand dollars. Now you're left with $5,000 in operating profit. Not bad. But what happens when the busy season ends? Let's say your sales drop from $100,000 to $80,000. Using the same merchandise cost percentage, you're now generating $24,000 in gross profit. But what if your operating expenses are still twenty five thousand? You're losing $1,000. Think about that. Your sales dropped twenty percent, but your operating profit went from a positive five thousand to a negative one thousand. And that's because some expenses don't go down when business slows down. The landlord doesn't reduce the rent because fewer customers walk through the door. The insurance company doesn't give that store a discount because sales are down. Those bills just keep coming. So retailers have to find ways to adjust the expenses because they can control. And one of those expenses is payroll. The challenge is finding the right balance. Now here's where I want to turn the conversation in a different direction. We've talked about the company's responsibility to manage expenses. But what about the employees' responsibility? Because I believe there's something we don't talk about nearly enough. If you're getting paid for an hour of work, You have a responsibility to make that hour count. Now I'm not talking about running yourself into the ground. I'm not suggesting employees should skip breaks, rush through assignments, or work at some impossible pace. I'm talking about being productive, being engaged, taking personal responsibility for the work you've been paid to perform. When a company schedules you for eight hours, it's making an investment in you. And the company is expecting something of value in return. Maybe you're helping customers. Maybe you're stocking shelves, correcting inventory problems, cleaning your department, or making sure merchandise is properly displayed. Whatever your responsibilities are, you're contributing to the operation of the business. But what if you're spending a significant portion of your shift standing around and doing nothing? What if you're constantly distracting other employees with gossip and unnecessary small talk? Now you're not only wasting your own time, you're taking productive time away from somebody else. And somebody still has to do the work that isn't getting done. What about employees who don't follow procedures? They do something incorrectly and somebody else has to come behind them and fix it. Or they take shortcuts with safety. Now they've potentially created a dangerous situation that could result in injuries, damaged merchandise, lost productivity, or expensive disruptions. All of those things cost money. And here's another thing employees can do to increase their value. Get cross trained. If you only know how to work in one department and that department is slow, there may not be many hours available for you. But what if you know how to work in three departments? What if you can help customers in several areas of the store? What if you've learned additional systems, developed new skills, and earned the proper equipment certifications? Now you've become more flexible, and flexibility has value in retail. When managers are trying to cover an entire store with limited labor hours, and somebody somebody who can contribute in multiple departments may have more scheduling opportunities. Now let's address something else. Are retailers cutting hours just to increase management bonuses or send more money to shareholders? It's true that some management bonus programs are tied to financial performance. Controlling expenses can affect profitability and profitability can sometimes affect compensation. But the existence of a financial incentive doesn't prove that every payroll reduction is being made for that reason. Sometimes a manager is simply following a labor budget based on projected sales. Sometimes sales really are declining. And sometimes the company is responding to broader economic conditions. We should be careful about assuming motives without knowing facts. Management has responsibilities too. They should work to create schedules that are as predictable and fair as possible. They should communicate honestly when business conditions require fewer hours. They should recognize employees who contribute and provide opportunities for people to learn additional skills. And they should make sure they're not cutting so many hours that the remaining employees are overwhelmed. After all, there's a difference between operating efficiently and simply operating understaffed. And businesses should continually look for other ways to save money. Better inventory management, less waste, fewer operational mistakes, more efficient processes, and smarter scheduling that puts employees where customers need them most. Cutting labor hours may sometimes be necessary, but it shouldn't be the only solution management ever considers. Employees deserve to be treated fairly. But I think there's a corresponding responsibility. Employees also owe their employer an honest day's work for an honest day's pay. They should show up ready to contribute, work safely, learn, improve, and understand that the business has to generate enough revenue to support the expenses of operating it. But I think employees benefit from understanding the bigger picture. And I think there's something even more important to consider. Instead of asking only why won't this company give me more hours? Maybe we should also ask, What am I doing with the hours they're already giving me? Am I making every minute count? Am I doing quality work? Am I helping customers? Am I learning new skills? Am I making things better or am I contributing to the problems? Those are questions worth asking ourselves. Because ultimately the success of a retail business isn't determined only by corporate executives or store managers. It's also determined by what happens on the sales floor every single day. And here's the thought I want to leave you with a profitable business needs productive employees, and productive employees deserve a business that deserves their contribution. Those two things should go hand in hand. Because managing payroll isn't simply about cutting hours, it's about making every hour count. Thanks for listening to the Scott Townsend show. Have a great day. Everything's gonna be alright. And we'll talk to you later. For more episodes, visit the Scott Townsend Show YouTube channel, listen on Apple Podcasts, or wherever you listen to your favorite shows.