Labor Forecast and Human Resource Management Strategies for a Sporting Goods Franchise Case Study

Introduction

This report analyzes the labor forecast and turnover of a high-end sporting goods chain franchise owner, who is facing challenges due to the increasing prevalence of online sales and a decline in in-store foot traffic. This report aims to apply fundamental HR planning principles to forecast labor demand in both physical and virtual retail environments over three years. It will evaluate the overall HR supply, considering turnover rates, and identify any staffing shortages or surpluses.

Additionally, it will determine the requisite termination needs and suggest approaches for evaluating the supply of internal and external candidates (Fildes et al., 2022). This report aims to provide HR-focused strategies for training, Career Development, Total Rewards, and Turnover Management in order to address the expected labor surplus or shortage. The introductory section of the present report comprises a total of 140 words.

Background

The proprietor of a renowned sports merchandise franchise faces a formidable challenge due to the disruptive impact of technology on the traditional physical retail framework. The proprietor is experiencing a 20% reduction in brick-and-mortar store sales, while online sales have surged by 30%. Notwithstanding this tendency, the proprietor effectively managed all virtual transactions in the previous year, utilizing only five off-site employees.

Currently, the franchise comprises three establishments, each requiring the appointment of a store manager, an assistant manager, five department managers, and 20 customer service representatives. On average, these positions yield an annual revenue of $1,200,000. In light of these challenges, the franchise owner seeks to maintain each store’s productivity, as measured by the revenue generated per employee. Furthermore, the proprietor acknowledges the potential for expansion in digital commerce and is investigating strategies to capitalize on this opportunity.

Forecasting Demand for Labor

Both qualitative methods, such as expert opinion, and quantitative ones, including trend analysis, regression analysis, and workforce analytics, can be used to forecast the labor needs in the retail and e-commerce sectors. We can infer that the demand for in-store personnel will decrease while the demand for internet-focused staff will increase based on the data provided, which shows a pattern of a 20% decline in retail sales and a 30% increase in online sales.

Given the current trajectory, we can forecast the following retail and e-commerce employment needs:

• Year 1:
  • In-store customer care teams have 16 associates, 4 supervisors over various departments, and 1 manager.
  • 10 full-time telecommuting employees.
• Year 2:
  • Retail establishments employ 12 sales associates, 3 department supervisors, and 1 store supervisor.
  • 15 full-time telecommuters work online.
• Year 3:
  • Retail establishments employ 9 customer care representatives: 8 front-line workers, 1 supervisor, and 1 manager overseeing all departments.
  • 20 people working from home full-time.

A blend of qualitative and quantitative methodologies can be utilized to forecast labor demand in both physical and virtual retail settings. Qualitative methodologies can offer valuable insights into evolving customer preferences, market trends, and technological advancements that may impact labor demand (Lalou et al., 2020). These methods include soliciting expert viewpoints, organizing focus groups, and procuring customer feedback. The utilization of quantitative methods, such as the examination of previous sales records, observation of customer flow patterns, and monitoring of online sales trends, can aid in the assessment of previous outcomes and the prediction of future demand.

The available data indicate a significant decline in physical store sales by 20 percent, while online sales have increased by 30 percent. In the preceding year, a quintet of fully employed remote personnel oversaw an internet-based sales income of $300,000. The continuous expansion of online sales and the concurrent decline in in-person customers suggest a plausible projection of rising demand for labor in the online sector in the upcoming three years. On the contrary, it is plausible that the requirement for labor in brick-and-mortar establishments may further diminish, resulting in a prospective excess of personnel. The trends above underscore the importance of developing a comprehensive human resources strategy that addresses the enterprise’s evolving market conditions and workforce needs.

Estimating HR Supply

On the assumption that in-store staff turnover is 15% per year and online-focused employee turnover is 30% per year, we can estimate the following HR supply:

• Year 1:
  • Organizational Structure (1 Store Manager, 1 Deputy Manager, 4 Department Managers, 14 CSRs)
  • 10 full-time telecommuting employees
• Year 2:
  • Retail establishments employ 11 people: 10 sales associates, 1 supervisor, 3 managers, and 1 assistant manager.
  • 13 people working from home full-time online
• Year 3:
  • Retail establishments employ 6 customer service professionals and 7 sales associates.
  • 18 full-time telecommuters are working online.

To ascertain the human resources supply, it is imperative to consider the turnover rates of employees working in physical stores and those focused on online operations. Turnover refers to the rate at which personnel leave an organization, necessitating the recruitment of new staff. Drawing upon the existing data, an estimation of the HR supply can be made assuming an annual turnover rate of 15% for in-store personnel and 30% for online-oriented employees.

Accurate prediction of turnover rates enables businesses to effectively anticipate their staffing needs, thereby avoiding scenarios of over- or understaffing that can significantly impact overall productivity and profitability (Bassier et al., 2022). The Human Resources department can develop various approaches, such as talent management, retention policies, and competitive compensation packages, to reduce employee turnover rates and address potential labor shortages. Establishing a stable workforce can foster a favorable work environment, thereby enhancing employee well-being and job satisfaction, and ultimately leading to improved organizational performance.

Since retail turnover averages 15% per year, it means that every year a firm needs to hire new staff to replace that many workers. Similarly, if online-focused workers have a turnover rate of 30% per year, 30% of the workforce will need to be replaced yearly. Considering the starting number of workers in each industry and using the corresponding turnover rates, one may predict the HR supply for the following three years (Denning, 2019).

Accurately anticipating employee turnover rates allows businesses to better prepare for staffing gaps and invest in recruiting and training. Predictive analytics and insights from data may also help pinpoint the causes of excessive employee turnover and point the way toward solutions. By minimizing employee turnover, the company can retain its experienced workers, thereby boosting production and maintaining a competitive edge.

Surplus or Shortage of Employees

The initial estimations of demand and supply allow us to determine whether there will be a surplus or shortfall across the company and the years:

• Year 1:
  • One fewer customer service agent is needed in stores.
  • Online: nobody extra, nobody missing.
• Year 2:
  • There are two shortfalls in store management and two in customer service.
  • Two-person shortfall in online, remote full-time employment
• Year 3:
  • There are four vacancies in the retail industry: two department managers, two assistant managers, and two customer service representatives.
  • The 2-person shortfall in online, remote full-time employment

We can tell whether there will be an annual surplus or deficit of workers in each department by comparing the expected HR supply with the projected labor demand. A labor shortage will result if the demand for human resources exceeds the supply. When the projected demand for workers is lower than the projected supply of human resources, this is known as a labor surplus.

The company can optimize its staff and maintain production by quickly identifying and responding to labor shortages or surpluses (Cornwell & Kwon, 2020). Workforce redeployment, employee cross-training, and other forms of flexible scheduling can be utilized to address unexpected fluctuations in staffing needs. Labor shortages and surpluses can be mitigated by implementing a well-articulated talent acquisition plan to recruit and retain the best possible personnel with the necessary skills and expertise.

According to the statistics, a possible labor excess exists in retail due to the downward sales trend. However, rising online purchases might lead to fewer workers in the virtual marketplace. While an online labor deficit may lead to unhappy customers and lost business, an overabundance of in-store personnel can reduce productivity and increase labor expenses.

The franchise owner may handle the oversupply of in-store workers in several ways. These include providing voluntary redundancy payouts, cutting hours, and introducing flexible work schedules. The franchise owner has options for addressing the scarcity of digital workers, including expanding their workforce and cross-training existing staff. Likewise, in-store and online settings may benefit from effective personnel management practices that help balance the workforce and boost productivity.

Termination Requirements

Using these projections, we can determine how many workers will need to be let go each year and what kind of assistance they will require:

• Year 1:
  • There is no need for endings.
• Year 2:
  • 2 store-based division supervisors, 2 customer service agents, 2 permanent remote employees
  • Services, including outplacement assistance, career counseling, and severance payments, should be made available to workers who have been laid off.
• Year 3:
  • 2 department heads, two assistant managers, and 2 sales and support associates’ staff in each store.
  • 2 full-time remote employees working online
  • Former workers are entitled to the same level of support they received in year 2.

To balance the workforce with labor demand, the franchise owner may need to consider laying off some workers if there is an excess of workers. There are several valid grounds for terminating an employee’s contract, including but not limited to redundancy, poor performance, and policy violations. When firing staff, franchise owners must abide by all applicable laws and ethical standards (Arnold, 2019).

Franchise owners are responsible for ensuring that workers are terminated on legitimate and objective grounds and provided with enough notice and assistance during the termination process. Outplacement services and other assistance programs should be available to terminated workers to help them transition into other careers and cope with the emotional and financial challenges of job loss. Equally crucial is the prompt handling of any overdue payments or benefits, as well as the return of any business property.

The franchise owner should explore alternatives to termination when downsizing or restructuring, such as reducing hours or implementing voluntary leave programs. This may help maintain good relations with the rest of the staff while minimizing the adverse effects on the impacted workers. Generally, termination is a complex and delicate process that requires tact and expertise. The franchise owner can maintain the company’s integrity and good name by conducting terminations in accordance with established policies and assisting impacted workers.

Internal vs. External Candidates and Forecasted Labor Shortage Plan

Succession planning, talent mapping, and skills gap analysis may help us distinguish between internal and external candidates when determining supply details. By outlining the qualifications for each role, we can determine whether to train current employees or seek new hires. Time-to-fill and cost-per-hire are only two examples of recruiting metrics that may be used to gauge the success of our hiring efforts. Beginning in the second year, an online labor shortage is anticipated. The corporation may address this issue by enhancing its recruitment efforts, offering competitive remuneration packages, introducing new professional development opportunities, and implementing more flexible work arrangements.

Conclusion

In summary, the franchise owner of the athletic goods company must contend with the challenges presented by declining in-store sales and increasing online sales. To maximize productivity, control turnover, and retain top employees, businesses can utilize human resources (HR) techniques, including training, career development, effective incentives, and effective turnover management. Furthermore, the proprietor can expand the internet business and remain competitive in the digital era by utilizing efficient online marketing and sales strategies. Long-term success for the business depends on taking a comprehensive strategy that considers the demands of brick-and-mortar locations and digital platforms.

References

Fildes, R., Ma, S., & Kolassa, S. (2022). Retail forecasting: Research and practice. International Journal of Forecasting, 38(4), 1283-1318. Web.

Lalou, P., Ponis, S. T., & Efthymiou, O. K. (2020). Demand forecasting of retail sales using data analytics and statistical programming. Management & Marketing. Challenges for the Knowledge Society, 15(2), 186-202. Web.

Arnold, D. (2019). Mergers and acquisitions, local labor market concentration, and worker outcomes. Local Labor Market Concentration, and Worker Outcomes. Web.

Cornwell, T. B., & Kwon, Y. (2020). Sponsorship-linked marketing: Research surpluses and shortages. Journal of the Academy of Marketing Science, 48, 607-629. Web.

Bassier, I., Dube, A., & Naidu, S. (2022). Monopsony in movers the elasticity of labor supply to firm wage policies. Journal of Human Resources, 57(S), S50-s86. Web.

Denning, J. T. (2019). Born under a lucky star financial aid, college completion, labor supply, and credit constraints. Journal of Human Resources, 54(3), 760-784. Web.