Feb

9

The Burden of Retail Payroll: How to Lessen it in the Warehouse and on the Floor

Payroll is expensive no matter which way you slice it. Between paying everyone their salaries and annual benefits, you wind up shelling out a significant chunk of change just to keep the people necessary to run your business employed. Does it have to be that way, though? From your warehouse to your sales floor, there are various opportunities to significantly cut costs and lessen the massive strain that payroll puts on your bottom line.

In the Warehouse

Keeping salaried employees on payroll within the warehouse, particularly during slower periods, is both costly and unnecessary. To break it down into simple terms: The busiest times within a warehouse are generally when shipments are delivered. Outside of those deliveries, the amount of work to be done is fairly minimal. Therefore, paying a full-time warehouse employee for a 40 hour work week, when there is realistically only about 15 hours of truly productive work to be done, is (very expensive) overkill. To cut the cost, make the switch to part-time employees. This will not only relinquish you of the obligation to pay an annual set salary (and benefits!) but also improve your efficiency tenfold, due to only scheduling employees when their help is actually required.

On the Sales Floor

When it comes to the sales floor, utilizing part-time employees is equally as beneficial for your bottom line, but for different reasons. Losing the cost of the salary and benefits of any employee is obviously one selling point of switching to part time help. Beyond that, it should also be noted that part-timers have been proven to average a higher RPU (Revenue Per Up) than salaried employees due to higher reported job satisfaction – which is significant.

 To illustrate this point, let’s look at an example from an actual retail operation:

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This particular operation had three “top” salespeople. Roy, a part-time employee, greeted 116 people during a month and made $66,559 in sales. Therefore, Roy’s RPU was $574 ($66,669 / 116). Don, one of the stores full-time sales associates, had an RPU of $389. Finally, Alan, another full-time employee, had an RPU of $338.

When you look at these numbers, it’s clear that Roy is the best salesperson out of the three, but the question then becomes why. Because Roy is in the store for a shorter period of time, his energy and drive to greet and help every person who walks through the front door is sky-high. He’s fresh, excited, and in a time crunch to make the most out of his limited hourly shift. On the other hand, Don and Alan are at the store every single day for 8 hours. They’re burnt out, slightly less motivated than Roy, and their drive to make sure every person is greeted at the door is likely less due to being on salary.

To conclude: add a higher RPU for every part-time sales employee on the clock at any given time, while subtracting the cost of employee benefits and salaries. Then, subtract the salaries and benefits of your full-time warehouse employees, while adding increased efficiency due to making converting those employees to part time. What do you get? A recipe for significantly lessened payroll burden, increased cash flow, and a much happier work environment to boot.

 

Jackie Loeffler

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