Advanced scheduling software tools are making it more possible than ever to match labor supply with business demand.
But questions loom about whether the systems are leading to schedules so variable that they hurt workers and backfire for businesses.
Software products from a number of vendors can take into account such factors as sales data, foot traffic and hospital bed openings to let organizations arrange for the right number of workers, the right blend of skills and the lowest-possible labor costs. Vendors say their products lead to better business results including higher productivity, lower payroll costs, increased sales and happier workers. The tools in many instances give employees a chance to voice preferences or pick shifts.
Still, sophisticated scheduling software raises the specter of chaotic, constantly changing shifts that wreak havoc on employees’ personal lives and harm companies in the form of low morale, poor customer service and high turnover.
Today’s scheduling systems help fuel a just-in-time mentality that’s frequently taken to an extreme, says University of Chicago professor Susan Lambert, an organizational psychologist who has researched workforce management practices at 22 work sites.
Lambert says organizations are now monitoring their profitability in such narrow windows that workers often see their schedule change midweek or are even sent home midshift. She says such variability can dent sales effectiveness and force workers to quit—results that companies may not be measuring accurately.
"The kinds of things that this can undermine are hard to quantify and hard to capture," Lambert says.
'The benefit is there'
Demand-driven scheduling software products, sometimes called scheduling optimization tools or advanced scheduling applications, are being used by a fraction of companies, says consultant Lisa Disselkamp, president of advisory firm Athena Enterprises. She says the tools are challenging to put in place, partly because of resistance to changing the often-idiosyncratic ways managers schedule workers. But Disselkamp expects the systems to grow increasingly popular.
"You can actually balance the demand and supply," she says. "The benefit is there."
A study of retail executives published earlier this year by research firm Gartner and Retail Info Systems News found that 16 percent of respondents had up-to-date workforce optimization technology. An additional 10 percent had started but not finished workforce optimization projects, and 15 percent planned to begin such efforts this year.
Beyond retail, advanced scheduling applications have made inroads in call centers and airlines. Another industry tapping scheduling optimization products is gaming, where radio-frequency identification devices planted in betting chips allow casinos to track gambling demand closely, says Jason Averbook, head of HR technology consulting firm Knowledge Infusion. He says software to create ideal schedules often is highly specific to different business categories.
Lining up worker shifts in concert with business needs is an evolution of the just-in-time concept that has made organizations like computer maker Dell focus on efficient supplier networks. "Supply chain has set this precedent," Averbook says.
Demand-driven scheduling applications aren’t just part of an overall business trend, but the product of recent technological improvements. During the past five years, advances in computer hardware and software have allowed applications to take many factors into account in generating sophisticated schedules in a reasonable time period. Today’s tools can consider such inputs as wage-and-hour rules, worker certifications and employee performance. Software from Alpharetta, Georgia-based Infor allows managers to assign employees different scores for customer service, which lets companies schedule peak performers at peak times.
Infor and other vendors also tout the ability to include employee wishes in the scheduling process, often through a Web-based interface. Lawson software permits employees to bid for open shifts. Oracle’s scheduling software allows workers to plug in their preferred days, time of day and skills, such as operating a cash register. CyberShift lets employees identify second and third skills.
"We believe that a happy employee makes for a happy customer experience," says Morné Swart, vice president of product management at CyberShift. "We design our software with employee empowerment in mind while protecting the employer."
On the demand side, the applications weave in such data as sales information from point-of-sales systems. They also can accommodate information on customer traffic and shipments. In health care settings, the software can consider patient counts and sickness levels, allowing managers to better assign float staff throughout the day to different units. Call center scheduling software may take into account call volume.
By crunching all the data with formulas such as the ideal ratio of employees to customers, the applications predict labor demand—down to 15-minute intervals—and spit out schedules. Vendors say their tools typically are used to make schedules a week or more in advance. But some promise the ability to adjust in real time. CyberShift can create a more current schedule on the fly with the push of a button. Less than a year ago, Infor released an enhancement to its software that allows for a regeneration of schedules midweek.
A company with 100,000 employees can expect to pay anywhere from hundreds of thousands of dollars to more than $1 million for Infor’s software, says Sandra Rousseau, the company’s marketing manager for human capital management.
"It isn’t cheap," Rousseau says. "And no one’s going to sell it cheap."
But there’s evidence the applications can pay dividends. A 2005 report from investment bank Bernstein estimated that a schedule optimization tool, along with planning and forecasting software, could boost revenue by 1 to 3 percent at a retailer with $4 billion in annual sales, resulting in a
$2 million to $6 million rise in earnings. Bernstein also projected that schedule optimization and self-service tools would cut employee turnover by 1 to 2 percent, adding $1 million to $1.9 million to earnings.
Kronos says its forecasting and scheduling software helped a retail organization with more than $2 billion in sales and more than 20,000 employees lift sales 0.67 percent. Kronos declined to name the company, but it says the client’s sales per labor hour jumped 6.1 percent. Kronos says a smaller retailer, with 8,000 employees, used forecasting, scheduling and time-and-attendance software to achieve a 0.5 percent cut in store payroll while improving customer service.
John Anderson, director of retail marketing at Kronos, says retailers are operating in a hyper-competitive market, trying to offer appealing customer experiences even as they work to hold down costs. Ideally, he says, retailers would like to assign workers stints of just one or two hours to meet their peak demand times. But regulations impede such microshifts, he says.
"It’s unlikely to see less than a four-hour shift," Anderson says.
Even if employees are avoiding microshifts, there are concerns about the effects of demand-driven schedules on workers. Businesses looking to run lean are coming up against employees’ desire to have a measure of stability and income security built into their schedules.
In an essay published last year on the Web site of the Daily Herald newspaper in Everett, Washington, grocery worker George Keller lamented scheduling practices in his industry.
"I’ve seen co-workers lose their jobs when a prolonged illness meant they lost their place on the schedule. Even healthy workers have a hard time getting enough hours to make a living," Keller wrote. "Because the stores want to save money by cutting hours, the average work week for grocery workers in Puget Sound is 26 hours."
Retail giant Wal-Mart is at the center of the debate.
"Wal-Mart claims it schedules employees to coincide with customer demand, but the company’s application of this practice has a very negative impact on its hourly workers," says Stacie Lock Temple, senior director for strategy and communications at advocacy group Wal-Mart Watch. Wal-Mart expects workers to be available anytime it wants to schedule them, she says, making it difficult for workers to arrange child care, schedule family activities or attend church services.
Although employees can make their preferences known, blocking out hours can lead to workers getting less than a full-time schedule, says Lock Temple, whose group is funded largely by the Service Employees International Union.
Wal-Mart did not respond to requests for comment.
Lock Temple says Wal-Mart workers report that the company uses a scheduling software tool run out of its Bentonville, Arkansas, headquarters. Wal-Mart’s scheduling system is homegrown, says Infor’s Rousseau. "They are looking at ours, but [are] still far out from making a change."
Nationwide, underemployment is higher than it has been in recent years. The University of Chicago’s Lambert says software that takes employee preferences into account isn’t fixing this problem. Entering shift preferences doesn’t amount to flexibility for workers if they have no control over their schedules, she argues. In fact, Lambert says, software-generated schedules often are ignored because managers see their sales-to-expense ratio slipping and feel increased pressure to cut workers’ hours midweek or even midday.
"There are so many changes to them," Lambert says of schedules created by software tools. "They don’t deliver on the promise of increased stability and predictability."
CyberShift’s Swart concedes that organizations frequently rip up their schedules and generate new ones based on how their budget numbers are looking. "People do that all the time," he says.
Kronos’ Anderson says retail employees are facing greater variability in their schedules than in the past. He adds that store productivity becomes more important in a challenging economic environment like the current one. But workers benefit from the way demand-driven scheduling tools encourage companies to comply with regulations, Anderson argues.
"You don’t have to look too far for examples of retailers not following labor laws," he says.
Gretchen Alarcon, vice president of human capital management strategy at Oracle, says that using advanced scheduling software is an improvement from schedules done by hand, when workers faced variability that wasn’t grounded in business needs. "It lets us get away from having random changes to work patterns," she says.
One company wary of demand-driven scheduling is Costco Wholesale. The Issaquah, Washington-based chain of warehouse stores is in the midst of shopping for a schedule-writing software product, but labor optimization isn’t in the scope of the project, says Chris Rylance, Costco’s assistant vice president for application development. Costco is cautious about assigning shifts purely based on store demand.
"We’re dealing with people’s lives when we schedule them," Rylance says. "We’ve got to be sensitive to that."
Our Lady of the Lake Regional Medical Center in Baton Rouge, Louisiana, also aims to be sensitive to employee wishes in scheduling. The 740-bed hospital uses software from Lawson to let nurses bid on open shifts using the Internet.
"The nurses like the self-service," says Jason Rogers, nursing manager in the medical, surgical and critical care unit. "They don’t have to be at work to put their schedule in."
Rogers also creates schedules for nurses four to six weeks in advance, giving employees plenty of time to arrange their private lives.
Lawson tries to steer its hospital clients away from poor scheduling practices, says Jennifer Langer, the vendor’s global director for human capital management product management. Langer says Lawson advises health care organizations not to let nurses work more than four consecutive days of 12-hour shifts. Research shows that nurses exceeding four 12-hour shifts in a stretch are three times more likely to make an error, she says.
"It’s the responsibility of the software to ensure that you don’t create these schedules that are too difficult for the workers to meet," Langer says.
There’s also a clear, hard-numbers rationale for humane scheduling in health care. Given the high demand for
nurses and the high cost of contracting with temporary-firm RNs, an employee-friendly scheduling system is vital for hospitals, says Amy Every, Lawson product director for workforce management in health care. She says the second-most cited reason nurses give for staying in a job, after pay, is the schedule.
Effect on employees, profits
Even if advanced scheduling tools work for workers and employers in health care, questions remain about the impact of demand-driven scheduling on employees and profits in other settings. Lambert’s research found that just-in-time scheduling often corresponded with high levels of turnover, as workers couldn’t afford or arrange to stay at a job. In one instance, she discovered a 500 percent turnover rate at a package-handling organization.
Given the rule of thumb that replacing an hourly employee costs 30 percent of the worker’s annual salary, such levels of attrition are expensive. In addition, Lambert says, demand-driven scheduling can limit the amount of value employees can add to their organizations. Her research found that retail managers sometimes have to ask an employee to clock out, even if in the middle of a sale, so the store doesn’t go over the number of payroll hours assigned.
Lambert says it’s puzzling that in her research, she saw businesses making frequent adjustments to their staffing levels even though the demand was relatively stable. Her point is supported by CyberShift’s Swart, who says retailers can use historical data to build a sound schedule two weeks ahead of time. "You can come up with a fairly accurate schedule well in advance," he says.
To Lambert, companies are being penny-wise and pound-foolish by focusing on extremely short-term windows of performance and failing to reap the benefits of more stable schedules, such as better morale and lower turnover. She says businesses would do their workers and themselves a favor by taking a longer-term view on profitability and giving workers a complete or largely complete schedule a week or two in advance.
Advanced scheduling applications could be part of the solution, in her view. "It’s really a matter of the business model," Lambert says. Scheduling software "could be a great tool."
Workforce Management, October 6, 2008, p. 35-43 -- Subscribe Now!