The National Living wage – 5 steps to stop retailers going bananas

This week has seen a huge amount of coverage in the national press of leaked plans amongst some retailers to cut ‘Sunday premiums’ and ‘paid breaks’ in order to offset the impact of the new National Living Wage.

Big companies are taking huge risks

Chains as big as Tesco, Morrisons, B&Q and Wilco, it seems, are prepared to gamble with the incentive to work overtime, (often amongst those that need the work most), overall staff engagement and even staff retention, in an attempt to control what they see as growing costs and impacts on profitability. Lest they forget – competition in retail is hot, and Aldi have just announced the opening of 80 new stores, the creation of 5,000 new job opportunities and are explicitly targeting high flyers from their competitors!

Rewards worth reviewing

While we agree that the opportunity to review employee rewards is worth taking, to do so without considering the wider impact on productivity is to miss the point. Change can be a good thing, but change always has consequences. This kind of one-dimensional response, without reference to the analytics that reveals the relationship between workforce, reward and business performance, can only have unintended impacts across the business

Preparing for the Living wage

We believe that there are 5 simple steps, employing analytics, that can offer a much smoother and controlled transition:

  1. Collect the appropriate data on overtime hours, reward, absence, attrition and performance
  2. Analyse the performance of these metrics over time (days, weeks, months and years, if the data exists) in order to identify ‘optimal conditions’ where they exist and how they can be replicated across the business
  3. Bring together staff representatives and management to discuss root causes of performance peaks and troughs
  4. Turn these ‘insights’ into specific, targeted actions to address the opportunities identified – including whatever reward and pay changes are deemed necessary
  5. Track, assess and course-correct as actions are taken

Obvious benefits

A comprehensive approach like this allows employers to review the reward structure of their business and understand how productivity is likely to be impacted. And if time is of the essence, attrition and absence analysis often provide quick wins on how to increase capacity without the need for additional staff. This is critically important when changes to the reward structure may increase turnover of staff and reduce effective capacity on specific days of the week.

It has worked for Vodafone and Virgin Media

The GarnerHaines People Profit Management® methodology has helped a number of major businesses to improve workforce decision making.

For more details, go to to see how we helped Vodafone to build an action plan to reduce attrition and Virgin Media to reduce absence amongst customer-facing teams by up to 50%