Service businesses are notorious for giving their workers unstable schedules — everchanging shifts and hours. This practice has contributed to the Great Resignation. But some companies, including Sam’s Club and Spain’s Mercadona, are proving that there is an alternative. By changing their operating model, they have been able to offer their workers stable schedules and improving their bottom lines.
Over the past several decades, the service industry has grown dependent on an always-available pool of workers willing to accept shifts on an as-needed basis. Thanks to forces unleashed by the pandemic, those days seem to be over. In a recent Pew survey, scheduling issues were three of the major drivers of the Great Resignation. But companies don’t seem to have gotten the hint: Despite labor shortages, hourly workers, including full-timers, continue to face inadequate hours and unpredictable shifts.
Companies offer unstable schedules under the pretext of lower labor costs — they strive to match labor supply to variable customer demand by releasing schedules in the last minute and by operating with a lot of part-timers who can work short shifts. In practice, though, this model hurts both workers and companies. And there is alternative: Creating stable schedules is possible and highly profitable, but it requires strong operations.
Unstable Schedules Hurt Workers and Companies
When service workers accept an hourly role, their schedule can be a black box: They don’t know how many hours they will receive, what shifts they will be assigned, or whether their time constraints will be factored into their schedule. A recent survey of service workers shows that more than half of workers wanted more hours and experienced shift-time changes, and around two-thirds received their schedule less than two weeks in advance. Retail trade and leisure & hospitality industries offer workers the lowest average hours (30 and 25 hours per week, respectively), which compounds the financial strain caused by their low wages. In our work, we have seen large retailers offering less than 15 hours per week to a typical employee.
Without adequate, consistent, or predictable hours, workers face sleep problems and psychological distress, and work-family conflicts (e.g., challenges arranging childcare). Income volatility and financial insecurity from unstable schedules also hurt workers’ cognitive functioning.
Not surprisingly, unstable schedules reduce employees’ ability to perform well on the job. They make more mistakes. They have attendance and tardiness problems. When they are assigned too few hours, they don’t have enough time to learn the job. At one specialty retailer, improving schedule stability increased productivity by up to 24%; increasing workers’ weekly hours (up to 24 from 13) had the largest effect.
Unstable schedules also reduce employee commitment and job satisfaction, leading to higher turnover. In addition to direct costs of turnover, including the cost of recruiting, hiring, and training, there are operational problems, including inaccurate inventory data, stockouts, inconsistent service or product quality, and higher waste. Managers working in this environment are fighting fires, spending more time filling in absences and dealing with operational problems than developing employees and finding ways to improve performance.
Finally, unstable schedules hurt customer service and sales. Saravanan Kesavan and his colleagues found that improving stability of scheduling in Gap stores increased sales by 3.3%. When managers offered consistent shift start and end times and adequate hours, employees put more effort into service and execution, increasing the shopping-to-buying conversion rate and basket size.
How Businesses Can Profitably Offer Stable Schedules
Conventional wisdom is that unstable schedules are inevitable in services because of variation in customer traffic. But in our work with companies, we have found that unstable schedules are often caused by supply chain, merchandising, and marketing decisions. Having a large menu or high product variety means more frequent and often inconsistent deliveries. Frequent promotions and last-minute display changes cause variability in workload. The stable schedule study at Gap found that 70% of variability was caused by self-inflicted last-minute choices, including changes to shipping dates/units, marketing/promotions changes, and visits from corporate leaders.
Successful service companies that offer stable schedules can do so because they minimize self-inflicted variability and design the jobs differently. At Mercadona, Spain’s largest supermarket chain, 85% of the employees work full time and get their schedule one month in advance. Operational decisions that make work more consistent and employees more flexible and stable include:
- Deliveries are predictable and arrive within a 15-minute window.
- Prices are stable. Without promotions, workloads are more stable and customer demand is more predictable.
- Employees are cross-trained, allowing them to shift between customer-facing tasks like opening a register and non-customer-facing tasks like cleaning the store based on customer traffic.
- Employees are well-paid, well-respected, and stay on the job (turnover is less than 5%). A stable workforce makes is easier to match labor supply with customer demand.
Mercadona is not alone. Sam’s Club moved to stable schedules in 2019 through a combination of people investment and operational changes. It increased wages for key roles by $5 to $7 an hour, cross-trained employees, made workload more consistent by shifting overnight employees to days, and introduced new tools to make workloads more predictable. In addition to enabling stable schedules, these changes helped Sam’s Club increase customer satisfaction and sales, improve productivity, and reduce turnover by up to 70%.
The good news is that stable schedules can improve workers’ financial, physical, and mental health and a company’s financial and competitive performance. And stable schedules can be achieved with smart operational choices. In a tight labor market with rising wages like the current one, offering stable schedules is one way for companies to differentiate themselves for employees and drive better customer service and performance.