How to balance labor caps and experience needs

How to balance labor caps and experience needs

Sports teams aren’t the only ones with labor caps.

In the National Football League, the salary cap dictates that no team can exceed a total, or cap limit. This is designed to control costs, maintain some level of parity, and to prevent these organizations from stacking their rosters with all-star players.

Your produce department? It has a labor structure that follows some of the same thought process that must stick to a budget. 

Take, for example, when a new grocery store is getting staffed for opening. The produce manager is typically the highest paid employee. He or she is the key person, the one who handles the scheduling and training and is responsible for meeting sales, profit and shrink goals. 

The assistant produce manager (if there is one) is paid less, but more than the clerks and is held accountable for much of the produce managers’ responsibilities. 

After this level, produce clerks are usually divided into three levels: The senior, accomplished individuals whose salaries reflect the top end of the produce department; the mid-level clerks who are in the developmental stage; andm finally, the newly promoted or least-experienced clerks at the low end of the produce pay scale. In our new store setup example, the produce manager would love to have deep experience at all levels, but it is rarely granted.

The store director will usually instead instruct the produce manager: You need a balance of all three.

The biggest question, of course, is why? Why not stack a department with experience? For the same reason the NFL can’t: to manage labor — the single most controllable expense. 

Every produce department has the equivalent of this labor measurement, sometimes known as the effective rate. This is the total amount of labor dollars spent, divided by number of scheduled hours. The higher the salaries, the higher the effective rate. For example, suppose a produce department doing $80,000 of sales a week spent $6,400 on labor and used 320 hours. The effective rate formula would be something like this: projected sales ($80,000) x allotted salary (8%) = $6,400 for labor/320 hours = $20 per hour effective rate.

Many variables affect this scheduling formula. Too much experience may negatively tilt net profitability in a produce department, while staffing too little experience may cost a store in terms of lower productivity, fewer sales and higher shrink.

So it behooves a produce manager to seek some balance: experience to solidify certain areas (strong assistant and setup person) with moderately paid developing clerks, and newer yet trainable part-time clerks to complete the picture. The ideal balanced crew is ever-changing and growing. The resulting schedule can be aggressive, yet lean, dollar-wise. Still, wouldn’t we all love a top-to-bottom all-star produce team? 

Armand Lobato works for the Idaho Potato Commission. His 40 years’ experience in the produce business span a range of foodservice and retail positions. E-mail him at [email protected].

More from Armand Lobato:
The art of the produce manager transfer
The produce manager’s priority list
Unveiling retail standards for the produce department