The Fallacy of Reducing Staff to Make Money [Part 1 – Retail and Hospitality]

Disclaimer: This is an opinion piece and does not represent the views of any company or university I am affiliated with.

In the current world of work, instructions from the top to ‘resize’ or ‘reshuffle’ staff is usually a bad omen for employees. The use of different buzzwords, no matter what they are, is a sign that the company is looking to reduce the amount of staff it is currently using. Depending on the company, this could mean non-negotiable or negotiable redundancy packages that encourage certain people to leave the company. These can also be voluntary. Unfortunately they are by no means fair, and the amount of money that a person receives for 5+ years of service versus 15+ years of service can often be exactly the same.

The ideal outcome for these companies, across many sectors but mainly retail, hospitality and public services, is that they make more of a profit. However, the amount of people using the businesses, due to a substantial lack of service and help, could decrease exponentially as a result. Customers in retail and hospitality want help. Help to find the right product, help ordering their meal, help trying their clothes on, help asking about a product, etc. When people are not there, and they look around to see an empty sales floor, there is something inside that says ‘why should I shop here, they clearly do not want my service’ and many will simply exit the place of business without looking back or ever returning. How much money is walking out the door when this happens?

The payment of less wages to workers to do the same amount of work does not work as a strategy. There is still stock to go out onto the selling floor, there is still customers to help, there is still deliveries to be unpacked and checked. There is still food to be prepared and orders to take. How does reducing staff actually help a company in the long run? As has been seen first hand, a steady reduction of staff is usually the first sign that a company is struggling.

Companies struggle with less staff. Full time contracts are a thing of the past in the current retail and hospitality world, so employees and employers alike suffer from an element of uncertainty. A casual employee has basically no rights, hours can be cut at any time without dispute and they may not get any shifts at all. For a full-time student or full-time parent, casual or part-time hours are good, but for someone who relies on as much work as possible it is an unstable lifestyle. The state of the current economy doesn’t give these people much choice though, as obtaining a new job with only minimal qualifications is incredibly difficult, as many of the over 50s age group are currently finding out. After working at one place or in one industry for many years, when that industry suddenly becomes irrelevant or out-of-date, the demand for workers with experience in that industry is minuscule.

Retail is in a state of flux. Between online and in-store, there are still plenty of customers, young and old, who enjoy going into a physical shop. However companies need to try and aim towards younger people. Younger people could become lifetime consumers if they receive good customer service. This cannot happen if there is no staff to help in the first place. Focusing on the future and making decisions that will benefit the business in the long run rather than on the immediate profit will ensure that in 20 years time there will still be stores to walk into.

Hospitality stories often include small business owners bleating that they cannot afford penalty rates for their employees. If they were efficient they would put their employees on part-time contracts and avoid this problem altogether. However most hospitality businesses such as small cafes and restaurants want the maximum amount of service by paying their workers the least amount of money. Sadly this also happens in big companies and franchises (eg: Grill’d, 7/11 both in the news). The basic part of the equation is: if a company does not have enough money to pay its workers fairly, it should not be existing at all. Do not expect to make a profit with terrible service and no workers available to help. It will only get worse in the future as more and more people turn to online shopping, sometimes as a RESULT of the terrible service they receive in store.

What is the solution? Keeping a loyal staff base and actually increasing the amount of contract workers keeps a company steady. Even during lulls and periods of downturn in the economy, a consistent and predictable staff roster is essential. Time, money and effort is being used to call casual workers week by week, many of whom are unreliable and expensive. Increasing staff to help customers may actually increase customer base at the same time. Instead of relying on the customer base to stay the same; looking to increase average spend per customer by having friendly, helpful and knowledgeable staff is a much more successful strategy.

Part 2 – The Public Services Crisis – Coming soon

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