After a dire set of trading figures for Q1 it is no surprise to hear that Steve Rowe is talking about how to cut premium pay costs in M&S. What is surprising is how this marries to the pledge for improved customer service in store.
Cutting overtime and unsociable hours rates, is going to save salary costs, and will in part cover the National Living Wage costs but it will also hit morale and therefore customer service. Staff have already been quoted as saying it is like giving with one hand (NLW increases) and taking away with the other.
To us this is a classic productivity modelling scenario. Tasks are identified that deliver the most value to the business and are optimised in consultation with employees to be executed efficiently and effectively. The result is cost savings and improved customer service levels.
Have M&S identified what their target customer (not necessarily their current customer) values most in customer service? Have M&S isolated the tasks that deliver those values? And have M&S identified the tools and a training to deliver it? We don’t know. But evidence would suggest that not all of those questions have been answered in the affirmative.
At the full year trading announcement Rose said “We will improve standards and offer better service by investing in more employees in our stores and improving our instore facilities. Some basic changes to the environment, coupled with great service, can turn a shopping trip into an experience.” Absolutely agree, but we are yet to be convinced that the way M&S is approaching this is the right way.
In our opinion it is short-sighted to only address pay rates without addressing what the staff are actually doing to add value to the customer’s shopping experience. A productivity modelling exercise cuts wasted effort, ensuring that the employee’s efforts are adding benefit and sales potential to the operation, which is very much more rewarding and motivating to the employee. In turn employees are more effective and efficient.
There will be more tough decisions for Steve Rowe to make but the easiest one is to implement productivity modelling and reap those benefits to invest in future growth and not let customer service and payroll be the reason for another quarter of poor trading results.