Staffing is an ongoing challenge for retailers

All retailers rely on a pool of flexible workers. They employ large numbers of workers who mix work with caring responsibilities and studying. They often have a seasonal business which requires them to increase and decrease staffing during busy periods. And they have to run as lean as possible to compete with rivals on price.

But retail is having it hard at the moment. Bricks-and-mortar retailers are challenged with competing with lean rivals such as Amazon, that don’t have the same cost base, as well as one other. According to the British Retail Consortium, this means are now 85,000 fewer jobs on the high street than there were three years ago. This is in stark contrast to the wider UK economy, with the ONS saying that UK employment has increased by 0.3 percentage points in a year.

Asda demands more flexibility from its workforce

In the midst of this, UK supermarket Asda (the UK arm of US giant Walmart) has attracted some negative headlines, and reportedly risks losing up to 12% of its workforce, as well as alienating far more, by insisting employees sign a controversial new employment contract (Contract 6).

Initially, moving to Contract 6 was voluntary when it was introduced in 2017, but now the company has issued a memo to staff who haven’t signed saying they will be put into a 12 week review period if they fail to sign, with no guarantee there’ll be a job at the end of it – with staff interpreting this as a sign-or-sack choice.

The company says that the new contract will ensure that everyone is employed on the same terms and conditions, enable it to have the flexibility it requires in a competitive sector, and will mean 95% of employees are unaffected. It says its wage bill will actually rise by £80 million as a result of implementing the changes.

Contract 6 guarantees a new minimum wage of £9 per hour, which puts employees on a level playing field with rivals such as Aldi. However, in exchange for this, employees are having to become more “flexible” in terms of the hours they work, their breaks will become unpaid, they will be expected to work five out of eight bank holidays (rather than two), and night pay is being cut. Critics have pointed out that although a 79p per hour pay rise may see generous, it only put Asda in line with the expected national living wage for April 2020 and with rivals who already offer this. In other words, it’s no great shakes.

Asda counters that it will make top-up payments until 2021 for those who do lose out, and that no one will be forced to work Christmas or bank holidays, with these shifts being paid at double time for those who do want to work them.

However, like many other retailers, Asda employs a large number of women who work part-time around their family obligations. Most value the flexibility of their existing contracts far more than a modest pay increase. Both the GMB union that represents them, and individual staff, claim that their pay will go down rather than up and their valued flexible working arrangements will be in jeopardy – as it will be down to management discretion rather than contractual obligation (since Contract 6 requires staff to work any shift demanded by managers).

In the face of considerable negative publicity, Asda has tried to put oil on the water, saying that they don’t want any staff to leave. They also said they wouldn’t expect staff to “constantly move the time they work, their days or departments”.

What Omnisperience thinks

Omnisperience’s view is that while we understand that Asda needs more flexibility from its workforce to remain competitive, the way it has handled the introduction of the new contract has been risky and potentially damaging to its brand values (which historically saw it enjoying a reputation for treating its staff “like family”).

Today’s consumers are far more conscious of where they spend their money – increasingly linking consumption with activism – and retailers that appear to treat their employees unfairly risk their customers choosing to shop elsewhere.

Flexibility is also two-sided. Asda was able to attract large numbers of employees who valued flexibility more than a higher wage. By taking away the mutuality of flexibility, Asda has eroded the trust it enjoyed between managers and its workforce. Moving from paid to unpaid breaks seems like penny pinching, and removes much of the benefit of raising per-hour wages.

We believe that retailers need to automate as many tasks as possible to drive operational efficiency and enable them to compete with the likes of Amazon. However, where human employees are needed and add value, they should be rewarded fairly and generously in order to attract the best staff. One-sided, forced flexibility is a recipe for disaster that undermines the relationship between staff and managers and upsets the delicate balance that enables many workers with caring responsibilities to participate in the workforce. These workers are often the most loyal, simply because they value the flexibility provided by the employer.

Asda also seems to have forgotten that customers and employees are drawn from the same community, and there is considerable overlap between the two. By alienating one group, they risk alienating the other. In fact, one USP that sets a bricks-and-mortar retailer apart from the likes of Amazon is in how it treats its staff. Asda it seems has not fully understood how powerful a marketing message this is.

Advice to B2B service providers

Managing a flexible workforce to keep both employee and employer happy is challenging for retail businesses, but offers considerable opportunities for B2B service providers. Retailers still have a long way to go in terms of automation and the benefits they can deliver from increased use of technology. By putting employees where they add most value, and automating onerous tasks, it is possible for retailers to compete, treat their employees fairly, and make their working lives more enjoyable. Increased use of data, self-service shifting and so on, means there is a win-win here which delivers the flexibility that both employees and employers need.

How generous is the payrise?

  • 79p per hour raise over an 8 hour shift is £6.32.
  • Asda will now only pay 7.5 hours (as breaks are unpaid) or £5.92 extra
  • Unpaid breaks will see employees lose £4.10 on the old wage and £4.50 on the new wage.
  • Pay will increase from  £65.68 per shift to £67.50, making the loss of flexibility and holidays worth £1.82 per day or 23p per hour
  • Asda would have had to raise pay to £9 per hour in April 2020 in any case to remain consistent with their rivals
  • Asda’s move comes a year after rival Sainsbury’s made similar changes to its staff contracts.

Posted by Teresa Cottam

Teresa is the Chief Analyst at Omnisperience and has over 25 years' experience in the telecoms and technology markets. She is an expert on SME and enterprise telecoms, and has considerable vertical market expertise. Her research focus lies in helping B2B telecoms firms become more commercially successful by better understanding and meeting their customers' needs. She is a judge of the GSMA Global Mobile Awards (GloMo's) for customer experience and enterprise innovation, and for the UK Cloud awards. You can follow her on Twitter @teresacottam

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