Apr 27, 2004 - Australian Competition and Consumer Commission ...... Exempt employees are those whose weekly wage is equal to or greater than 125 per ...
CHECKING OUT SUPERMARKET LABOUR USAGE: THE NATURE OF LABOUR USAGE AND EMPLOYMENT RELATIONS CONSEQUENCES IN A FOOD RETAIL FIRM IN AUSTRALIA
Robin Anne Price Bachelor of Arts (University of Queensland), Graduate Diploma Adult & Vocational Education (Griffith), Graduate Certificate in Management (Queensland University of Technology), Bachelor of Commerce (Hons) (Griffith)
Department of Industrial Relations, The Griffith Business School, Griffith University
Submitted in fulfilment of the requirements of the degree of Doctor of Philosophy 27 April 2004
ABSTRACT This thesis examines the nature of labour usage within a market-leading Australian food retail firm and the employment relations consequences of the labour usage strategies employed by the firm. Retail employment is well established as a research subject in the UK, but has received comparatively little research attention in Australia. Given that retail industry employment accounts for 15 per cent of the Australian workforce, this represents a significant oversight. Within the retail industry, the supermarket and grocery sector employs 6 per cent of the Australian workforce. The sector is dominated by two major chains and is highly competitive, with a reputation for low profit margins, mundane jobs and low pay. The sector is recognised for an employment structure that is segmented with one segment holding full-time jobs with core employment conditions and the other segment, parttime jobs with poor working conditions. The dominant theory used by scholars to explain this employment structure is the dual labour market model and later iterations such as Atkinson’s flexible firm model. This research assesses the value of these models, in particular Atkinson’s flexible firm model, as a representation of the labour usage strategies of a market-leading Australian food retail firm. This analysis demonstrates that, in a general sense, Atkinson’s model has applicability to the labour usage strategies exhibited in food retailing. The research found that, contrary to the theories of dual labour markets, a strong internal labour market operated within the firm with short hours casual employment as the port of entry. The benefits of this practice for the organisation were flexibility in labour usage and substantial wage savings, while the negative consequences were recruitment difficulties, exacerbated by high levels of staff turnover. For the employees, the consequences depended on their position in the organisational hierarchy and their individual circumstances, but involved initially accepting limited working hours and low pay in order to gain entry into the organisation. The research undertaken for this thesis leads to the development of a revised model, the casual internal labour market model, which more accurately depicts the labour usage strategies within the case study organisation. Retail researchers argue that it is necessary to understand the dynamics of the industry in order to understand the structure of labour usage. Additionally, employment relations and retail researchers both stress the need to contextualise labour usage patterns within broader environmental constraints and supply side factors. In seeking to achieve this, this research examines business strategies, retail specific employment relations literature and the Australian employment relations context. Furthermore, this study addresses the issue of retail employment strategies at several levels within one of Australia’s marketleading food retailers: corporate level, store level and at the level of individual departments within the store. In doing so, this thesis highlights the differences in labour usage between stores and between departments within the stores and thereby provides a more detailed picture of the labour use practices within food retailers.
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STATEMENT OF ORIGINALITY This work has not been previously submitted for a degree or diploma in any university. To the best of my knowledge and belief, the thesis contains no material previously published or written by another person except where due reference is made in the thesis itself.
Robin Anne Price
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TABLE OF CONTENTS
ABSTRACT .....................................................................................................................I STATEMENT OF ORIGINALITY............................................................................. II TABLE OF CONTENTS .............................................................................................III LIST OF FIGURES.................................................................................................... VII LIST OF TABLES.....................................................................................................VIII ACKNOWLEDGMENTS............................................................................................ IX ABBREVIATIONS.........................................................................................................X CHAPTER ONE ............................................................................................................. 1 1.1 1.2 1.3 1.4 1.5 1.6
The Research Question......................................................................... 1 Significance of the Research Question................................................. 4 Justification for the Research ............................................................... 4 What This Thesis Does......................................................................... 7 Research Methodology......................................................................... 8 Structure of the Thesis........................................................................ 13
CHAPTER TWO.......................................................................................................... 16 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.4 2.5
Literature on Retail Business Strategies............................................. 17 Industry Concentration ....................................................................... 18 Supermarkets as a Retail Format and Marketing Strategies............... 22 Diversification .................................................................................... 25 The Supply Chain and Supplier Relationships................................... 26 The Retail Literature on Structuring Employment............................. 29 Centralisation of Operations to Enhance Financial Control............... 31 Relocation of Control from Stores to Head Office............................. 33 Increasing Complexity of Management Task..................................... 34 Matching Customer Demand and Labour Usage ............................... 36 Employment Relations Strategies in the Retail Industry.................... 39 Recruitment ........................................................................................ 40 Remuneration ..................................................................................... 41 Organisational Culture........................................................................ 42 Training .............................................................................................. 43 The Importance of Store Operator...................................................... 44 Conclusion .......................................................................................... 46
CHAPTER THREE...................................................................................................... 47 3.1 3.2 3.3 3.4 3.5
General Theories of Structuring Employment Within Firms ............. 47 The Structure of Retail Employment.................................................. 53 The Structure of Retail Employment in Australia.............................. 54 Segmentation of the Retail Workforce ............................................... 58 Part-time Employment........................................................................ 61 iii
3.5.1 3.5.2 3.5.3 3.5.4 3.6 3.6.1 3.6.2 3.6.3 3.6.4 3.7 3.8 3.9 3.10 3.11 3.12
Benefits of Part-time Employment for Employers ............................. 62 Costs of Part-time Employment for Employers ................................. 63 Benefits of Part-time Employment for Employees............................. 65 Costs of Part-time Employment for Employees................................. 66 Casual Employment............................................................................ 67 Benefits of Casual Employment for Employers ................................. 69 Costs of Casual Employment for Employers ..................................... 70 Benefits of Casual Employment for Employees ................................ 70 Costs of Casual Employment for Employees ..................................... 71 Feminisation of the Retail Workforce ................................................ 72 Deskilling ........................................................................................... 74 Youth Employment ............................................................................ 75 Turnover ............................................................................................. 75 Research Agenda ................................................................................ 78 Conclusion .......................................................................................... 81
CHAPTER FOUR ........................................................................................................ 82 4.1 4.2 4.3 4.3.1 4.3.1.1 4.3.1.2 4.3.1.3 4.3.2 4.3.3 4.3.4 4.4 4.5
Economic and Technological Change ................................................ 82 The Push for Increased Flexibility in Labour Utilisation................... 86 Regulatory Constraints on Australian Retailers ................................. 89 Trading Hours..................................................................................... 89 Independent Retail Shop..................................................................... 90 Exempt Shops ..................................................................................... 90 Non-exempt Shops ............................................................................. 90 Restrictions on Business Ownership and Practices ............................ 92 Industrial Relations Legislation.......................................................... 92 Trade Unions and Employer Associations in the Retail Industry ...... 95 Labour Market Change....................................................................... 97 Conclusion .......................................................................................... 98
CHAPTER FIVE .......................................................................................................... 99 5.1 5.2 5.2.1 5.2.2 5.2.2.1 5.2.2.2 5.2.2.3 5.2.2.4 5.3 5.3.1 5.3.2 5.3.3 5.3.4 5.3.5 5.3.6 5.3.7 5.3.7.1 5.3.7.2 5.3.7.3
Business Strategy of FoodCorp Organisation .................................... 99 Organisational Structure ................................................................... 101 Store Organisational Structure ......................................................... 104 Store Management Structure ............................................................ 106 Store Managers’ Responsibilities ..................................................... 107 Store Trading Managers’ Responsibilities ....................................... 109 Store Services Managers’ Responsibilities ...................................... 109 Department Managers’ and Assistant Department Managers’ Responsibilities................................................................................. 109 FoodCorp Human Resource Policies and Practices ......................... 111 Recruitment Policies and Procedures ............................................... 112 Induction........................................................................................... 114 Training and Development ............................................................... 115 Career Progression............................................................................ 118 Performance Management................................................................ 119 Dismissal and Turnover.................................................................... 120 Remuneration Policies and Classification of Duties ........................ 121 Exempt employees............................................................................ 121 Full-time employees ......................................................................... 122 Part-time employees ......................................................................... 122
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5.3.7.4 5.3.7.5 5.3.7.6 5.3.7.7 5.3.8 5.3.8.1 5.3.8.2 5.3.9 5.3.10 5.4 5.4.1 5.4.2 5.4.3 5.5 5.6
Casual employees ............................................................................. 123 Trainees ............................................................................................ 123 Apprentices....................................................................................... 123 Contractors ....................................................................................... 124 Wage Rates ....................................................................................... 124 Apprentices....................................................................................... 125 Youth Rates ...................................................................................... 125 Additional Employment Benefits ..................................................... 127 Staff Dress Policies........................................................................... 128 Calculating Staffing.......................................................................... 128 Rostering Staff.................................................................................. 130 Calculating Staffing for the Front End ............................................. 131 Monitoring Working Time and Payroll ............................................ 133 Discussion......................................................................................... 134 Conclusion ........................................................................................ 135
CHAPTER SIX ........................................................................................................... 136 6.1 6.2 6.2.1 6.3 6.3.1 6.4 6.4.1 6.5 6.6 6.7
Characteristics of Retail Employment in FoodCorp Limited........... 136 Case Study Store A........................................................................... 138 Structure of Employment in Store A ................................................ 139 Case Study Store B........................................................................... 141 Structure of Employment in Store B ................................................ 143 Case Study Store C........................................................................... 145 Structure of Employment in Store C ................................................ 146 Working Time Arrangements........................................................... 150 Discussion......................................................................................... 157 Conclusion ........................................................................................ 158
CHAPTER SEVEN .................................................................................................... 159 7.1 7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 7.1.6 7.1.7 7.1.8 7.1.9 7.1.10 7.2 7.3
Characteristics of Labour Use by Department ................................. 159 Grocery or Dry Goods Department .................................................. 159 Bakery Department........................................................................... 163 Meat Department .............................................................................. 165 Delicatessen Department .................................................................. 166 Fish Department ............................................................................... 168 Perishables Department .................................................................... 169 Fresh Produce Department ............................................................... 170 Variety Department .......................................................................... 171 Front End .......................................................................................... 172 Non Trade Department ..................................................................... 179 Discussion......................................................................................... 183 Conclusion ........................................................................................ 186
CHAPTER EIGHT .................................................................................................... 187 8.1 8.1.1 8.1.2 8.1.3 8.1.4 8.2
Consequences of the Labour Use Strategies for FoodCorp.............. 187 Staff Turnover .................................................................................. 187 Recruitment Problems ...................................................................... 189 Resistance to Changes to Hours ....................................................... 191 Control Issues Related to Casual Employees ................................... 192 Consequences of the Labour Use Strategies for Employees ............ 194
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8.2.1 8.2.1.1 8.2.1.2 8.2.2 8.2.3 8.2.4 8.2.5 8.2.6 8.2.7 8.2.8 8.2.9 8.2.10 8.2.11 8.2.12 8.2.13 8.3
Employee Survey.............................................................................. 195 Survey Methodology ........................................................................ 195 Survey Sample Characteristics ......................................................... 198 Employment Status........................................................................... 199 Tenure............................................................................................... 200 Working Time Duration ................................................................... 201 Employee Control over Working Time ............................................ 203 Satisfaction with the Job and Organisation ...................................... 206 Pay .................................................................................................... 207 Work Intensity .................................................................................. 208 Working on Sundays ........................................................................ 209 Career Paths...................................................................................... 210 Performance Management................................................................ 211 Training ............................................................................................ 213 Deskilling ......................................................................................... 213 Conclusion ........................................................................................ 214
CHAPTER NINE........................................................................................................ 216 9.1 9.1.1 9.1.2 9.1.3 9.1.4 9.1.5 9.2 9.3 9.4 9.5
Key Findings and Implications......................................................... 216 Theories of Retail Business Strategies ............................................. 217 Theories of Structuring Employment ............................................... 218 Theories of Restructuring Retail Employment................................. 226 The Retail HR Literature .................................................................. 229 The Consequences of the Labour Use Strategies ............................. 231 Implications for Theory .................................................................... 235 Implications for Practice................................................................... 236 Limitations of the Research.............................................................. 239 Suggestions for Further Research..................................................... 239
Appendix A
FoodCorp Interview Schedule .......................................................... 241 FoodCorp Documentation ................................................................ 242 Supermarket Employment Survey.................................................... 243 Letter of Introduction........................................................................ 246 References ........................................................................................ 247 QGIG Cases and Decisions .............................................................. 265 Legislation ........................................................................................ 265 Awards.............................................................................................. 265 Certified Agreements........................................................................ 265
Appendix B Appendix C
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LIST OF FIGURES Figure 3.1
Atkinson’s Flexible Firm Model ............................................................ 50
Figure 3.2
Level of Full-time Employment, Food Retail, Australia........................ 55
Figure 3.3
Level of Part-time Employment, Food Retail, Australia........................ 55
Figure 3.4
Composition of Part-time Employment, Food Retail, Australia ............ 56
Figure 3.5
Composition of Employment, Retail, By Age, Australia....................... 57
Figure 3.6
Composition of Employment, Retail, by Hours Worked, Australia....... 58
Figure 5.1
FoodCorp Corporate Organisational Chart, 2002................................. 101
Figure 5.2
FoodCorp Regional Operations Organisational Chart, 2002 ............... 103
Figure 5.3
FoodCorp Human Resources Organisational Chart, 2002 ................... 104
Figure 5.4
FoodCorp Store Management Structure ............................................... 107
Figure 6.1
Hours Worked by Number of Employees, Store A .............................. 151
Figure 6.2
Hours Worked by Number of Employees, Store B .............................. 153
Figure 6.3
Hours Worked by Number of Employees, Store C .............................. 155
Figure 6.4
Hours Worked by Employees, All Stores, 2003................................... 157
Figure 7.1
Number of Employees by Hour, Monday, Front End, Store A, 2002 .. 174
Figure 7.2
Number of Employees by Hour, Thursday, Front End, Store A, 2002 175
Figure 7.3
Number of Employees by Hour, Saturday, Front End, Store A, 2002 . 175
Figure 9.1
FoodCorp’s Flexible Firm Model......................................................... 219
Figure 9.2
Dual Labour Market Model.................................................................. 225
Figure 9.3
FoodCorp Internal Labour Market Model ............................................ 225
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LIST OF TABLES Table 5.1
Store Manager Accountabilities and Key Performance Indicators .......... 108
Table 5.2
Wages by Classification, FoodCorp, at 23 November 2003 .................... 124
Table 5.3
Youth Wages, Percentage of Minimum Adult Rate ................................. 125
Table 5.4
Wage Comparison, Adult Grocery Employees, Store A, 2003 ................ 126
Table 6.1
FoodCorp Ltd, Employees by Employment Status and Gender, 1999..... 137
Table 6.2
FoodCorp Supermarkets, Total Employees by Employment Status and Locality, 1998........................................................................................... 137
Table 6.3
Total Employees Store A, 2002................................................................ 140
Table 6.4
Total Employees Store A, 2003................................................................ 141
Table 6.5
Total Employees Store B, 2002................................................................ 143
Table 6.6
Total Employees Store B, 2003................................................................ 144
Table 6.7
Total Employees Store C, 2002................................................................ 147
Table 6.8
Total Employees Store C, 2003................................................................ 148
Table 6.9
Average Working Time per Employee, by Store, 2002, 2003 ................. 150
Table 6.10 Hours Worked by Employment Status, Store A....................................... 152 Table 6.11 Hours Worked by Employment Status, Store B ....................................... 154 Table 6.12 Hours Worked by Employment Status, Store C ....................................... 156 Table 7.1
Hours Worked by Store, Front End 2003 ................................................. 173
Table 7.2
Number of Workers by Shift Length, Saturday, Store A, 2002 ............... 176
Table 8.1
Frequency Percentages, All Survey Respondents, 2003 .......................... 203
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ACKNOWLEDGMENTS I owe thanks to a number of people who have helped make this thesis a reality. First, thanks go to my initial supervisors, Cameron Allan and Kaye Broadbent, for getting me started. Second, my thanks and gratitude go to my ongoing supervisors, David Peetz and Rebecca Loudoun, who were there at the end. Thanks also to those in the Department of Industrial Relations who had the faith in me to fund my initial scholarship. I could not have done it without you. I would also like to thank Samantha Lynch, now at the University of Kent, with whom I published on the way through. The process of comparative research enabled me to clarify my thinking. Thanks also for allowing me to use ‘checking out’ in the title. I would also like to thank my partner, Michael, and my children, Alexandra and Kate, for putting up with the loss of household income, the condition of the house and my extended absences. Finally, thanks to the other long-suffering research higher degree students in the Department of Industrial Relations, especially Linda Colley, for the coffee, alcohol and other sanity saving interventions. Some of the material included in this thesis has previously been published: Price, R. (2004) ‘Flexible Workers in Supermarkets: Core-periphery HR for the flexible firm’ Refereed proceedings of the 18th Conference of the Association of Industrial Relations Academics of Australia and New Zealand, Noosa, Queensland, 3-6 February 2004. Price, R. (2003) ‘Reaping what you sow: the effects of casual employment on employers’ Refereed Proceedings of the 17th Conference of the Association of Industrial Relations Academics of Australia and New Zealand, Melbourne, Australia, 4-7 February 2003. Lynch, S. and Price, R. (2003) ‘Checking Out Flexible Working: A comparative study of UK and Australian Grocery Retailing’ Presentation to International Employment Relations Association Conference, University of Greenwich, UK, 8-11 July 2003. Price, R. (2002) ‘So many casuals, so little time; employee utilisation in supermarkets’ Refereed Proceedings of the 16th Conference of the Association of Industrial Relations Academics of Australia and New Zealand. Queenstown, NZ, 6-8 February 2002.
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ABBREVIATIONS ABS
Australian Bureau of Statistics
ACCC
Australian Competition and Consumer Commission
AIRC
Australian Industrial Relations Commission
ARA
Australian Retailers’ Association
ASTEC
Australian Science and Technology Council
ATM
Automatic Teller Machine
AWA
Australian Workplace Agreements
AWU
Australian Workers’ Union of Employees
CEO
Chief Executive Officer
CGM
Chief General Manager
CODB
Cost Of Doing Business
DIY
Do It Yourself
EDI
Electronic Data Interchange
EFTPOS
Electronic Funds Transfer at Point Of Sale
EPOS
Electronic Point Of Sale
FQSCA
FoodCorp Queensland Supermarket Certified Agreement
FT
Full-Time
GM
General Manager
HR
Human Resources
KPI
Key Performance Indicator
NARGA
National Association of Retail Grocers of Australia
NLCC
National Labour Consultative Council
NRA
National Retail Association (was RAQ until May 2003)
OEA
Office of the Employment Advocate
PPT
Permanent Part-Time
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QIRC
Queensland Industrial Relations Commission
QGIG
Queensland Government Industrial Gazette
QRTSA
Queensland Retail Traders and Shopkeepers Association
RAQ
Retailers’ Association of Queensland
RFID
Radio Frequency Identification
RGICC
Retail Grocery Industry Code of Conduct
SCM
Supply Chain Management
SDA
Shop, Distributive and Allied Employees’ Association
2IC
Second-In-Charge
3IC
Third-In-Charge
UK
United Kingdom
UPC
Universal Product Codes
US
United States
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CHAPTER ONE Introduction
1.1
THE RESEARCH QUESTION
Food is a basic human need. In an industrialised society, needing food translates as the need to buy food. As such, most members of industrialised societies have some experience of food retailing. Food retailing is a major source of employment, yet retail employment has received comparatively limited research attention, especially in Australia. Existing Australian research focuses on labour usage at industry and firmlevel. This approach may hide variations in labour usage strategies between stores within the same company and within departments in stores. In order to develop a fuller understanding of retail labour usage, it is, therefore, of particular importance to examine the way in which labour usage is configured within stores. This research addresses this oversight by examining the labour usage strategies, and the employment relations consequences associated with these strategies, within a market-leading Australian food retailer. It does so by examining labour usage at firm, store and department level within the firm. Research into retail employment derives from a range of different disciplines, each of which adopts a somewhat different approach. The majority of retail employment research derives from the Institute for Retail Studies at the University of Stirling, Scotland. Academics at Stirling argue that in order to fully comprehend the nature of retail employment, it is first necessary to focus on the strategies of retail businesses, the structure of the retail industry and the nature of retail change (Broadbridge 2002b: 173-174; Dawson, Findlay & Sparks 1986: 349; Freathy 1993: 69, 1997: 413; Freathy & Sparks 1994: 499, 1996a: 180-181, 1996b: 14, 1997: 15; Sparks 2000a: 8-10, 2000b). The Stirling research examines retail business strategies and the structure of employment within the industry in considerable depth but, as Sparks (2000b: 19) points out, research attention has focused on the ‘measurement and description’ of retail employment, rather than ‘understanding aspects of work, employment or industrial relations’.
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Another body of research focuses on human resource (HR) issues, using retailing as a case example. This literature, designated here as the ‘retail HR literature’, delves into issues, such as recruitment, remuneration, training, and organisational culture (Deery & Mahony 1994; Lynch 2001; Marchington & Parker 1990; Mortimer 2001b; Ogbonna & Wilkinson 1988, 1990; Penn & Wirth 1993; Penn 1995; Turnbull & Wass 1997; Walsh 1990; Walsh T. 1991; Walsh & Deery 1999). Retail HR literature argues that retailers have choices in how they structure labour usage within their firms and how they recruit, remunerate and train their employees, but it generally overlooks structural and environmental factors that constrain retailer choice. Another, often overlapping, body of literature considers the industrial relations aspects of retail employment (Baret 2000; Marchington & Harrison 1991; Robinson 1995; Tam 1997; Walsh J. 1991; Walsh T. 1990, 1991). This literature broadens the research focus to incorporate factors external to the firm that are likely to impact on management strategy, such as union intervention and the regulatory framework that governs employment relationships. As a disciplinary area, industrial relations generally also involves consideration of the views of all major stakeholders in the employment relationship and highlights the consequences attached to employment strategies (Kochan 1996: 250). However, like the retail HR literature, this literature tends to overlook structural factors underpinning retail business decisions. This thesis combines the foci of all three bodies of literature. It considers: retail business strategies, industry structure and changes within the industry as advocated by retail business studies at the University of Stirling; the firm-level strategies on recruitment, remuneration and training and development highlighted by retail HR scholars; and, the broader industrial relations context of union intervention and state intervention in the employment relationship. The aim of this thesis is to combine these bodies of literature and their different research approaches in order to provide a holistic response to the question: What is the nature of labour usage and what are the employment relations consequences of labour use strategies in a market-leading food retail firm in Australia?
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For the purpose of this thesis, employment relations encompasses the combination of human resource management and industrial relations (Bamber & Lansbury 1998: 1). As such, employment relations includes: ‘rules, attitudes, customs, practices, policies and behaviour in and around the employment relationship’ and considers major stakeholders: employers and their associations, employees and their unions, and the state and its institutions (Bamber & Ross 2000: 3). As part of examining employment relations within the case study firm, a range of subsidiary questions arise: •
What are the business strategies of Australian retailers and in what way are these strategies likely to have an impact on employment?
•
What is the structure of retail employment?
•
Which external environmental factors affect the structure of retail employment and retail employment practices?
•
How is labour usage structured within retail firms?
•
Which employment relations strategies and policies apply within retail firms?
•
What do employees think about firm-level labour usage strategies?
Much of the academic research on retail employment has found that labour market segmentation and dual labour market theories, along with theories of flexibility (Atkinson 1985; Berger & Piore 1980; Doeringer & Piore 1971; Piore 1975), offer a useful, if incomplete, explanation for the structure of the retail labour force (Broadbridge 1997: 221; Freathy & Sparks 1994: 502; Freathy 1997: 414). To anticipate one of the conclusions, the research undertaken for this thesis leads to the development of a revised model, the casual internal labour market model, which more accurately depicts the labour usage strategies within the case study organisation. This model is presented in the concluding chapter of the thesis. It is necessary initially to clarify the main employment classifications existing in Australia. Full-time employees are those with permanent on-going contracts who are engaged for an average of 38 hours labour per week. Permanent part-time employees are those with permanent on-going contracts who are engaged for between 12 and 36 hours labour per week. The number of contracted hours is fixed by an award or collective agreement, but the location of these working hours across the week can vary. Casual employees do not have on-going contracts and as such are employed for one shift at a time (Creighton & Stewart 2000: 213). Casual employees can therefore labour for any number of working hours, from one three-hour shift to a 38-hour week.
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1.2
SIGNIFICANCE OF THE RESEARCH QUESTION
Supermarkets and grocery stores accounted for $50 billion of the $141 billion retail sales in Australia in 2002 (ABS 8501.0). Hence, retailing is an industry of vital importance to the Australian economy, and supermarkets and grocery stores an important segment within retailing. The industry is also a major employer. Retailing employed 15 per cent of the total Australian workforce as of November 2003, and food retailing 6 per cent of the Australian workforce (ABS 6291.0.55.001). As such, the nature of labour usage within the retail industry exerts a significant impact on the structure of the nation’s employment. Hence the retail industry, and food retailing in particular, are deserving of research attention. The food retail industry has a bifurcated structure with a small number of large retailers and a large number of small retailers operating in the industry (ABS 8622.0). Large firms with over 200 employees account for 85 per cent of supermarket and grocery store employment (ABS 8622.0). It is, therefore, large firms that are of primary importance to any examination of food retail labour usage.
1.3
JUSTIFICATION FOR THE RESEARCH
The rise of large retail chains over recent decades has effectively restructured the retail industry, both in Australia and internationally (Dawson 2000; Fernie 1997; Lowe & Wrigley 1996; Pritchard 2000; Rosewarne 1983, 1984; Sparks 2000a). As part of this industry restructuring, retail employment has also been restructured. The numbers of part-time, female and juvenile workers within the retail industry has grown substantially. Since the industry provides such a high proportion of the nation’s employment, this employment restructuring requires examination. While retail employment has received considerable research attention elsewhere, comparatively few studies into retail restructuring and retail employment in Australia exist. A number of Australian geographers and historians have examined changes to the structure of the retail industry and strategies of retailers (Blizzard 1976; Burch & Goss 1999; Humphery 1998; Pritchard 2000; Rosewarne 1983, 1984), but it is more common to find material on these topics in the business press (Condon 1999; Ferguson 2003; Gottliebsen 2003; Heiskanen 2003; Jimenez 2003a, 2003b; Kirby 1999, Korporaal 2000; McCallum 2000). Additionally, Australian business school academics have
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highlighted aspects of retail change: the addition of financial services (Colgate & Alexander 2002); category management (Daparin & Hogarth-Scott 2003); store design (Merrilees & Miller 2001); and compared food retailer’s business strategies (Treadgold 1996). Retail employment has attracted nominally more academic research attention in Australia; however, existing studies generally fail to situate retail employment within broader discussions of retail business strategy. Retail employment first gained credence as a research area in Australia after the technological changes associated with the introduction of scanning technology in retail stores in the late 1970s (Carter 1986a, 1986b; Lansbury 1980, 1983; Maher 1986). Later, the impact of computerised technology on retail warehousing employment attracted research attention (Bamber & Runciman 1992; Wright & Lund 1996, 1998), as did the impact of technology on interactions between parties in the supply chain (Wright & Lund 2002, 2003). Few authors, though, have examined industrial relations within the retail industry in Australia in any detail. Hammond (1992) examined retail wages and working conditions in a comparative study of Victorian and UK supermarket workers under the old centralised Australian system of wage fixation. Carter (1986a, 1986b) examined the impact of technology on industrial democracy at industry level. Probert (1995) examined the impact of an enterprise agreement on flexible staffing in a Japanese owned department store, while Mortimer (2001a, 2001b) examined the effect of compulsory unionism within the retail sector. McCann (1994), Reekie (1987), O’Donnell (1984) and Jamieson and Webber (1991) all examined the feminisation and construction of women’s work in retail, while Strachan and Burgess (1997) examined the way in which women workers in female dominated industries were affected by equal employment opportunity legislation and enterprise bargaining. Bramble, Parry and O’Brien (1996) looked at the way in which management coped during a restructuring and delayering exercise in a large specialty retailer. The bulk of this research into industrial relations within the retail industry was conducted either prior to the introduction of enterprise bargaining, and associated changes in working time arrangements, or in the early stages of the change, but much has changed since then, hence there is a need for more recent research. Existing research has also largely neglected firm-level industrial relations strategy and patterns of change over time.
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A number of academic studies have specifically examined labour usage strategies in the Australian retail industry (Boreham et al. 1996; Deery & Mahony 1994; Jamieson & Webber 1991; Runciman 1992; Walsh & Deery 1999; Whitehouse, Lafferty & Boreham 1997). All of the studies were based on survey evidence and only Whitehouse, Lafferty and Boreham (1997) and Boreham et al. (1996) looked at grocery stores specifically, although Jamieson and Webber (1991) and Runciman (1992) included some supermarkets in their retail sample. Runciman’s (1992) examination of the social and economic processes affecting job tenure in the retail industry, prior to the introduction of enterprise bargaining, found that corporate strategy and management culture were the two most important factors affecting job tenure. All these studies highlighted the segmentation of the retail workforce, but their reliance on survey data means they provide a general overview. For example, Runciman (1992: 240) acknowledges that her research overlooks firm-level decisions. Little is known about how retailers actually use their labour within the firm. This research project therefore fills an important gap in the knowledge about labour usage in food retailers. Similarly, little is known about the HR practices of Australian retailers. Existing research is not only sparse, but also disparate. Patrickson and Hartmann (1996) examined the retirement intentions of a group of women over 50 years of age working in department stores. Horstman (1999) examined whether small retail businesses used enterprise bargaining to adopt improved HR processes and found that labour flexibility was more important than best practice HR. Whitehouse, Lafferty and Boreham (1997) and Boreham et al. (1996) examined labour use strategies with a view to making judgements about the quality of training and likelihood of career progression within the industry. They argued that changing employment status from casual to permanent parttime was unlikely to have any impact on the nature of the job performed or access to training. With the exception of these studies of distinct groups of employees and specific issues, little is known about the HR strategies employed by Australian retailers or how these strategies are operationalised. As far as the impact of employer strategies on employees, the only studies that have considered the employee perspective on flexible employment practices within Australian retailing are those by Deery and Mahony (1994) and Walsh and Deery (1999). These studies reported employee attitudes in relation to a strategy of relocating working hours in an Australian department store. Deery and Mahony (1994) pointed out
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the likelihood of certain groups of employees being both dissatisfied and disadvantaged by the proposed changes and argued that the outcome was essentially a result of the individual’s personal circumstances. This brief précis of the literature on Australian retail employment demonstrates the need for a systematic examination of the labour usage strategies of Australian retailers, and a need for in-depth qualitative research to more fully develop empirical knowledge of retail employment. While researchers and government statistics provide a picture of the structure of the retail labour force in general, little is known about the organisation’s motivations for structuring their workforce in this way. In particular, there is a need to focus on labour use practices within the firm because so little is known about how retailers actually use their labour. Indeed, this is true of the private service sector as a whole (Walsh 1990: 517). Likewise, with the exception of the Deery and Mahony (1994) survey, little is known about the consequences of labour use strategies for the employees who work in the retail industry. Given that, as a group, retail workers comprise 15 per cent of the Australian labour force, this forms a significant gap in our understanding of the Australian labour market.
1.4
WHAT THIS THESIS DOES
This thesis examines the nature of labour usage and the employment relations consequences of labour use strategies in a market-leading food retail firm in Australia. The case analysis occurs at three levels, head office or corporate level, store level and employee level. First, the research establishes the business strategies of the firm because decisions about which markets to operate in, service delivery, store size and format, and labour process, all exert significant impact on patterns of labour usage (Marginson et al. 1988: xv; Mortimer 2001b: 92; Wright 1995: 220). Closely related to the corporate level business strategies are the corporate level employment relations strategies that provide the framework governing individual store level management behaviour. Second, the store level labour usage practices of three stores within the firm are examined. In this analysis, labour usage is disaggregated to the level of the individual departments that constitute the store. Third, the employees are asked about how their labour is used and how this affects them, as well as their opinions of the firm’s employment relations practices.
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This thesis contributes to knowledge on labour usage in Australian food retail employment in a number of ways. First, the impact of changes in retail business strategies on the structure of retail employment in Australia has not previously been systematically examined. Second, Atkinson’s ‘flexible firm’ model has not been tested in detail in an Australian context and yet existing research indicates that the model may actually be representative of the internal labour market within Australian retail firms. Third, food retail research has been conducted at industry and firm-level and has failed to take into account the complexities of labour usage in departments within stores. By conducting research at departmental level, and using the firm’s staff rosters, this thesis provides a fuller account of how labour usage is organised and the internal labour markets within supermarkets. Additionally, by examining labour usage across three stores in very different environments, an assessment can be made about the degree to which store management exert influence over patterns of labour usage. Fourth, comparatively little is known about employment relations practices within retail firms and this thesis therefore adds to the body of knowledge. Fifth, casual employment is particularly prevalent within the Australian retail industry and as such, Australia differs from the UK. An examination of the costs and benefits of casual employment for the firm and the workers has the potential to shape employment choices in the future. Sixth, the nature of skill within the retail industry has not been the subject of research attention in Australia since the advent of Electronic Funds Transfer at Point Of Sale (EFTPOS) in the early 1980s. This thesis, therefore, provides a more recent assessment.
1.5
RESEARCH METHODOLOGY
Food retailing was selected as the focus of the study because it is the retail segment examined in most existing UK retail research, and thus provides the potential for comparison. It is also a segment poorly researched in Australia, where researchers have preferred department stores as a research site. In order to investigate the nature of labour usage and the employment relations consequences of labour use strategies, it was necessary to use qualitative research methods initially. Qualitative research is well suited to investigations of complex social interactions, especially those which cross disciplinary boundaries (Marshall & Rossman 1999: 3). In particular, qualitative methods are recommended where the investigation seeks to establish ‘real, as opposed to stated, organizational goals’ (Marshall 1985 in
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Marshall & Rossman 1999: 57). Comparatively little research exists on labour usage in the retail industry and this also prompted the decision to employ qualitative research methods for the first part of the study, as they are better suited to investigations where design flexibility may be required (Marshall & Rossman 1999: 17). The primary method adopted is a case study of a market-leading food retailer. The study focuses on the firm’s South East Queensland stores. The decision to focus primarily on Queensland was partly a function of geographic proximity and cost reduction, but it also reflected the fact that the state retained centralised trading hours regulations when the research commenced and the introduction of Sunday trading was mooted. Queensland, therefore, provided the opportunity to examine the patterns of labour usage prior to the introduction of Sunday trading. Case studies enable contemporary events to be studied within their context (Yin 1984: 23). As such, they are an appropriate method for an examination of contemporary labour use strategies within an organisation. Indeed, case studies are an accepted approach to organisational and employment studies (Marshall & Rossman 1999: 60; Yin 1984: 14). This case study employs qualitative and quantitative research methods and therefore provides the benefits of both. Qualitative methods enable a holistic approach to a complex issue and provide the ‘richness and depth’ not often found in quantitative research (Feagin, Orum & Sjoberg 1991: 6-7; Gillham 2000b: 11). As such, qualitative methods establish the organisational policies and labour usage strategies existing within the firm. Following this, the use of a staff survey enabled the researcher to ascertain staff opinions and views about the organisation’s labour usage strategies. In this instance, the use of quantitative methods allows ideas to be tested across a broader population and provides an understanding of the proportion of participants who hold particular views (Bouma 2000: 174). One of the most common criticisms of case study research is its inability to establish relationships between variables, especially to indicate causation (Feagin, Orum & Sjoberg 1991: 15). This research does not attempt to establish causation. The number of factors which interact to shape the organisation of labour usage render this task beyond the scope of the present research. This research does, however, investigate the socioeconomic dimensions adopted by Baret, Lehndorff and Sparks (2000) for their comparative study of working time in food retailing. Investigation of the economic, the
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technological and social changes, the retail regulatory structure, and the industrial relations legislation situates the case study findings within their broader context. These socio-economic dimensions are discussed in Chapter Four and provide the Australian context within which the firm constructs its labour use strategies. Single case studies can also lack generalisability (Yin 1984: 68). In this case, the organisation’s dominant position as an employer in the food-retailing sector means that it is important to study this organisation in its own right, not only because of its size and importance but also because it may well have established, or be establishing, patterns that others would seek to follow. In this case, the true significance of generalisability is internal; to what extent are the findings of this research generalisable across the organisation or limited to one store? Accordingly, the firm’s labour usage strategies were examined across three stores to identify differences and commonalities in labour use strategies for the company as a whole. The three stores were chosen in consultation between the researcher and HR management in the organisation on the basis of differences in socio-economic environment, ownership history, store size and size of trade. Choosing three quite different locations within the organisation makes it possible to determine the extent to which firm-level labour usage policies are centrally dictated. While the findings of this study do not necessarily apply to all firms, it was not practical, in terms of time, resources or access constraints, to examine another food retailer. The decision was therefore made to study one firm in depth. Within the case study, a variety of data collection methods were employed: document and record analysis, interviews, participant and detached observations and an employee questionnaire (Gillham 2000b: 21). Employing a variety of research methods enabled the collection of a ‘chain of evidence’ as suggested by Yin (1984: 37) and allows for triangulation, which improves the reliability of the evidence (Gillham 2000b: 29). Initially, a search of publicly available information on the organisation and its strategies was undertaken. Evidence was collected from the annual financial reports to shareholders, interim financial reports, organisation’s internet site, organisation’s submissions to public inquiries, certified agreements, press releases, retail trade magazines and the business press. As FoodCorp was a major Australian organisation, this amounted to a voluminous amount of literature. Members of the organisation provided
additional
documentary
material.
This
included
job
descriptions,
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organisational charts, employment statistics, training package curriculum, staffing calculation forms, employee schedule reports (staff rosters), and transparencies from management training programs. Additionally, in the initial stages of the research, a union official was interviewed in order to gain a global understanding of employment issues within the industry, and to ascertain the union’s employment strategies. As Kalleberg (2001: 497) argues, data about how labour is utilised needs to be obtained from a range of informants at multiple levels within the firm. Following this, unstructured interviews were held with senior HR managers to establish corporate labour usage policies. These interviews were taped and transcribed on the same day. In many cases, follow-up phone calls were made, or emails sent, to clarify particulars or ask additional questions arising from the interview. These phone conversations were not taped because the researcher does not have access to a speaker phone. A complete list of the contact schedule is provided in Appendix A. Most HR personnel were interviewed several times over the course of the study. Data gathered in these interviews was then verified by semi-structured interviews with store level management and an examination of the rosters for the store, thus providing triangulation and improving construct validity (Yin 1984: 37). In-depth semi-structured interviews conducted with store management were taped and transcribed by the researcher within 24 hours (Bouma 2000:182). The questions asked of store managers emerged over time as Gillham (2000a: 21) suggested they should be allowed to do. In the early stages of the research, interview questions were designed to establish factors such as: store size, turnover, trading patterns, lines carried, store and departmental salaries to sales percentages, recruitment practices, training practices, division of labour, rostering practices, employee turnover and absenteeism, and to establish rapport with the researcher. Later interviews asked many of the same questions to assess whether changes had occurred and sought greater detail and opinions on how stores were constrained by head office, the effectiveness of HR practices, and how the nature of work was changing. Over the course of the study, each store manager was formally interviewed at least twice for around an hour each time. The researcher also had additional contact with store management while organising interviews, clarifying interview material, collecting roster documentation and organising the conduct of the survey.
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The management of only one store proved amenable to allowing the researcher to speak to department management and other employees. The other two store managers refused on the grounds that their stores, and their staff, were too busy. It was not possible to tape interviews with department managers, as they were conducted on the sales floor with the researcher following the employees around the store while they worked. The researcher was very conscious that employees were busy and in most cases ended up helping the employee perform tasks while interviewing them. In some cases, the researcher took field notes during the interview; in other cases, notes were compiled immediately after the interview. The researcher transcribed these notes. The content of transcribed interviews was analysed by reading through the interviews and highlighting key points manually (Gillham 2000a: 63). Since most interviewees had been asked the same or very similar questions, it was not necessary to use a data mining software package. Additionally, it became apparent very early in the research that many HR policies were centrally determined and store level management exercised little discretion, since managers across stores gave very similar answers. Where there were discrepancies in the information provided by different managers, further probing occurred to establish the rationale for the discrepancy. Repeating the same interview questions for different levels of management over time, as well as following up interviewees for clarification of issues that the researcher was unclear about, increased the rigour of the content analysis (Gillham 2000a: 72). Another method employed was unofficial observational research as the researcher consistently shopped in the stores concerned and spoke to staff while shopping. This qualitative part of the study highlighted a range of issues of importance to employees. As suggested by Bouma (2000: 174), the relationship between the two research methods was symbiotic. Issues identified in the qualitative stage of the research were then reframed as statements and included on a self-completion employee survey that was filled in with the researcher present across the three stores later in the research process. The survey methodology is described in detail in Chapter Seven. Ironically, sitting in the tea room surveying workers for a number of days proved more valuable as a research tool than interviews, since many employees were significantly more forthcoming ‘chatting over lunch and a survey’ than when interviewed on the sales floor. Notes were made of employee remarks and the researcher’s impressions during these discussions. These are reported as ‘comments’ and ‘personal observations’ in the
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text of the thesis. The employees of this organisation are identified as Manager or Employee and given a number in this thesis, in order to protect their privacy.
1.6
STRUCTURE OF THE THESIS
This section outlines the structure of each chapter within the thesis and how each contributes to an understanding of the nature of labour usage and the employment relations consequences associated with those labour use strategies. The literature review on labour usage strategies and their consequences divides across two chapters. Chapter Two examines the literature on retail business strategies, with a principal focus on food retailers. First, the international and Australian literature on retail business strategies is examined in order to establish the degree to which these strategies have an impact on the structure of employment within the industry. Second, the two most commonly employed models for describing the structure of retail employment, dual labour market theory and Atkinson’s flexible firm model, are introduced and analysed. Third, the retail industry specific literature on employment is reviewed. This body of literature identifies ways in which retail employment has been restructured and establishes patterns of labour usage across the industry which resemble Atkinson’s flexible firm model. This sets the parameters against which employment structures within the case study organisation can be judged. Fourth, the limited literature on the employment relations practices of retail firms is examined. Again, this examination enables industry specific employment relations patterns to be established. Finally, the literature on the importance of the individual store operator in deciding the structure of labour usage is investigated. Chapter Three examines the literature on the employment relations consequences resulting from retailers’ business and employment relations strategies. The structure of retail employment, both internationally and in Australia, is examined and growth in the numbers of workers employed in the retail industry is identified. More specifically, substantial growth in the numbers of workers employed on a part-time basis, and in casual employment, is identified. The latter part of the chapter explores the literature on the consequences associated with these shifts in the employment structure, both from the employee’s perspective and the employer’s, along with the literature on the feminisation and deskilling of the industry. As with Chapter Two, this review of the literature identifies patterns of labour usage that occur within the retail industry, and
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alerts the researcher to patterns of labour usage and employment relations practices that require investigation. Chapter Four provides the Australian context for the research. It examines: economic and technological changes within the retail industry; societal pressure for increased flexibility in labour utilisation; regulatory constraints on trading hours, business ownership and trade practices; legislative constraints on industrial relations; the activities of trade unions and employer associations within retailing; and, the nature of changes to the Australian labour market that have affected labour supply. No organisation is free from external constraints when making employment decisions, or free of its history (Bamber & Lansbury 1998: 28). This chapter identifies those factors that interact with firm-level employment relations’ choices. Chapter Five examines the business and employment relations strategies and practices of the case study organisation at firm-level. The organisational structure of the firm at corporate and store level is outlined. The responsibilities of store level management are defined, along with the firm’s employment relations philosophy and policies and procedures. The chapter establishes that a high degree of centralisation exists within this firm in relation to business and employment relations policies and practices. Notably, the firm operates an internal labour market with part-time casual employment as a port of entry. Chapter Six explores the nature of labour usage within the case study firm. The structure of employment is examined at organisational level, the supermarket division and across the three stores that comprise the case. This examination is then taken one step further in Chapter Seven and labour usage across individual departments within the stores is examined. These chapters show that, despite their different labour markets, the three stores have very similar patterns of labour usage. Permanent employees perform the bulk of working hours, but they are supported by a large number of casual employees who work short shifts at certain times of the week and in certain departments. For the purposes of this thesis, a short shift is defined as one of less than five hours duration. Chapter Eight focuses on the employment relations consequences associated with the firm’s strategies and practices outlined in Chapters Five, Six and Seven. The
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consequences for the organisation are identified as: high levels of staff turnover; recruitment difficulties; friction caused by staff resistance to changes to working time; and, control issues related to the use of casual employment. For the employees, the results of a staff survey show: a desire for permanent employment status amongst some casual workers; a time lag between being appointed as a casual and gaining permanent employment; a high proportion of staff who want longer hours; and, some dissatisfaction over the regularity of hours. However, the majority of workers were satisfied with their pay, which is perhaps indicative of the expectations of low waged workers and that for many workers this was simply a ‘stop gap’ job. All of these findings have implications for the ability of the firm to retain workers and capitalise on its internal labour market. Chapter Nine summarises the key findings of the case study and its implications in relation to retail business strategies, the flexible firm model, the retail employment literature, and retail HR literature. The chapter recapitulates the consequences associated with the labour use strategies employed by the firm and discusses the implications of these findings for theories of internal labour markets as well as for the organisation. The final section discusses the limitations of this research project and proposes areas for further research.
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CHAPTER TWO Retail Business and Retail Employment Relations Strategies Literature
This chapter examines the literature on the business, labour use and employment relations management strategies of retail organisations. As noted in Chapter One, literature on the retail industry is located across a range of disciplines, each of which places a particular slant on the business and labour use strategies and employment relations practices of retail firms. This results in a disparate body of literature ranging from holistic approaches to the structure of the retail industry to highly focussed examinations of the strategies of individual firms. This chapter brings together this interdisciplinary body of literature. This chapter is divided into three sections. The first section examines the literature on the business strategies of retail organisations, with a primary focus on grocery retailers. This literature examines changes in business strategy, and changes in the organisation of business functions that result from these strategic changes. These changes in business organisation include: shifts in ownership and consequent increase in levels of concentration within the industry, changes to retail formats and marketing strategies, diversification, supply chain efficiencies and changes to supplier relationships created by increased concentration within the industry. Freathy and Sparks (1996a: 180-181; 1997: 7-12) argue that, in the UK, these changes in business organisation acted as a catalyst for improved efficiencies at store level and resulted in the restructuring of retail employment. The efficiencies that resulted from changes in business organisation include: changes to the number and size of stores and their location, computerisation, productivity gains and the refinement and rationalisation of labour usage. Initially, each section reviews the international retail literature, primarily from the UK, and then the Australian retail literature. In doing so, it becomes apparent that Australian retailers have replicated the strategies of international retailers, and that changes in business organisation within Australian grocery retailing have, as in the UK, prompted searches for improved efficiencies.
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The second section examines the retail literature on the restructuring of employment. Based largely on research by the academics at the University of Stirling, four inter-related arguments are presented. First, as retail businesses have grown they have centralised many functions. Second, the process of centralising functions has resulted in a relocation of control from stores to head office. Third, as stores have grown, the task of managing them has become more complex and the skills and flexibility demanded of store management have increased. Fourth, retailers need to match customer demand with employee supply in order to remain profitable. These four factors changed the nature of labour usage within the retail industry and resulted in a restructured retail labour force. The third section examines the limited literature on the employment relations practices of retail organisations. More specifically, the section considers the retail-specific literature on recruitment, remuneration, organisational culture, and training. Also examined is the debate within the retail literature on the influence of the store operator, or company operating the store, on the structure of employment within firms.
2.1
LITERATURE ON RETAIL BUSINESS STRATEGIES
At the outset, strategy is a nebulous concept that requires definition. Porter (1991: 97) argues that strategies are something devised by firms in order to align the company and its environment. This process of alignment can be derived through a rational planning process of goal setting, research into alternatives, selection of the best alternative and conscious implementation (Ansoff et al. 1970; Ansoff 1991). Alternatively, strategies may evolve or emerge through a process of learning and reacting to the environment (Mintzberg 1991: 405). This thesis does not specifically examine the process by which decisions are made within organisations. Instead, it takes as given that decisions are made at various levels within the organisation to operate in certain markets and to structure employment in a certain way. The concern of this thesis is with the outcomes of business and employment relations decisions, and with the consequences associated with these outcomes, rather than with the process. As such, for the purpose of this thesis, business strategy is defined as an articulated or executed pattern of decisions and actions adopted by an organisation to compete and survive in a market (Lundy & Cowling 1996: 23).
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Business and management researchers examine the retail industry from the perspective of how firms achieve competitive advantage. Porter (1991: 100) provides a framework for assessing the structure of industries, built around five competitive factors, which he argues contribute to profitability within an industry. These factors are: the threat of new entrants to the industry; the bargaining power of suppliers; the bargaining power of buyers; rivalry amongst existing competitors and the threat of substitute products or services (Porter 1991: 100). At the individual firm-level of analysis, both generic business strategy literature and retail business strategy literature identify a range of external environmental factors and internal organisational factors that have the capacity to shape a firm’s competitive advantage (Bigler & Kedia 1988: 181; Harris & Ogbonna 2001: 159; Hooley, Moller & Broderick 1998; Wilkinson & White 1994: 119). No individual business strategy emerges as preferable for retailers, although patterns emerge in the literature indicative of preferences in the business strategies of large grocery retailers (Helms, Haynes & Cappel 1992: 12; Lewis & Thomas 1990; Megicks 2001: 317). Researchers in the field of retail employment argue that changes in business organisation and business strategy acted as a catalyst for improved efficiencies at store level and resulted in the restructuring of retail employment (Freathy & Sparks 1996a: 180-181, 1997: 7-12). These business strategies are outlined in the following section. 2.1.1
Industry Concentration
The retail industry underwent considerable structural change over the twentieth century. There was a shift away from small family-owned retail businesses towards larger organisations and a rise in conflicts between the two (Dawson 2000: 121; Megicks 2001). The increasing concentration of ownership resulted in a shift towards salaried employment (Reynolds 1995: 28). The growth of large retailers was reflected in increasing levels of concentration, especially within food retailing. In the UK in 1950, food retail chains held 20 per cent of the market (Morelli 1999: 175). Since then, the largest retailers have grown in size and proportion of the retail market, much faster than general growth across the industry, by acquiring smaller firms and independent stores (Dawson 2000: 124; Ducatel & Blomley 1990: 219; Ogbonna & Whipp 1999: 81). Moir (1990 in Morelli 1999: 176) argues that this concentration was a deliberate strategy to erect barriers to entry and to ensure monopoly profits were not reduced through competition. Harvey (1999: 11) argues that, of the overall grocery market, the market share of the top four retail grocery chains in the UK declined from 57 per cent in 1991 to 52 per cent in 1996. Burt & Sparks (2003b: 241) argue that, in 1999, the market share
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of the top four food retailers in the UK was somewhere between 44 and 60 per cent, depending on the method of calculation. Regardless of the precise extent of the major chains’ domination of the market, it was apparent that the retail grocery market was a highly competitive one (Berry 2001: 137). The advent of foreign-owned discount retailers, such as the German discounters Aldi and Neto, in the UK grocery market is also an indication of the level of competition within the industry (Flanagan 2002: 14). However, Harvey (1999: 5) asserts that the discounters operate in a different market from the mainstream grocery retailers and that there is room for both retail formats in the market. Ogbonna and Wilkinson (1998: 79) and Grant (1987 in Morelli 1999: 176) argued that increasing retailer market share could reflect a more even balance of power between suppliers and retailers and that powerful retailers are able to reduce prices for consumers. Dobson and Waterson (1997: 428) claimed, however, that greater retail concentration provides retailers with ‘a simultaneous increase in buying and selling power’, which may lead to higher prices for consumers. In support of this view, large retailers have been accused of price fixing and placing pressure on manufacturers not to supply new competitors (Wrigley 1993: 1547). In the UK, there are limited regulatory controls on retailer ‘oligopolistic practices and mergers’ (Harris & Ogbonna 2001: 166; London Economics 1997). Consequently, Wrigley (1993: 1546) argued that abuse of market power is subtly condoned. Conversely, T. Walsh (1991: 106) argued that an abuse of market power does not extend to automatically passing on cost increases to consumers, due to the competitive pressures of the market. Fernie (1996: 143), however, argues that, on balance, after an adjustment phase, both consumers and retailers benefit from industry concentration. Either way, as Clarke (2000) stated, the precise impact of increased retailer power on consumer prices is under-researched and unclear. The situation in the United States differed. Under the Robinson-Patman Act of 1936, discounts provided to retailers by virtue of their size represent an anti-competitive form of price discrimination (Dobson & Waterson 1997: 419). This regulatory constraint hampered the development of large retailers in the US1 and as a result, the US has not seen the same degree of retail concentration as the UK. 1
A précis of American and British approaches to retail regulation appears in Shaw, Alexander, Benson & Hodson (2000).
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Dawson (2000: 127) argued that the only realistic method of expansion for large retailers in the UK is by merger and acquisition. Yet most large retailers do not expand their operations across more than three countries, since entering new markets presents problems of ‘different institutional frameworks, a new supply base, unknown consumer demands with little market research and an under-developed logistics system’ (Dawson 2000: 125). Recent research suggests that retail internationalisation is fraught with failures (Burt, Dawson & Sparks 2003). Where Australian retailers have expanded overseas, this expansion has not extended beyond New Zealand (Pringle 1993: 309). Grocery retailing in Australia, however, is more concentrated than grocery retailing in the UK or US (Burch & Goss 1999: 336; Treadgold 1996: 7). The growth in large retail chains, that characterises the retail industry in the UK and US, also occurred in Australia. In Australia, from 1975 onward, a profusion of mergers and acquisitions resulted in a concentration of ownership within the industry (Rosewarne 1983: 24). The major chains, Coles Myer, Woolworths and Franklins, increased their grocery market share from 40 per cent to 80 per cent (NARGA 1999a: 31). Somewhat prophetically, Carter (1986a: 4) argued in 1986 that the dominance of Coles and Woolworths was such that the retail industry ‘may be thought of as basically Coles Myer and Woolworths’ (Carter 1986a: 4). By 2002, Coles Myer (20 per cent) and Woolworths (19 per cent) together accounted for 39 per cent of all retail sales, not just grocery sales (Mead 2003: 55). Australia now has a bifurcated retail industry structure, with a large number of very small retailers and a few very large retail chains (ABS 8622.0). The deregulation of shopping hours across many states during the 1990s added to the dominance of the major chains (Pritchard 2000: 214). On a broader industry scale, the success of supermarkets as a retail format was reflected in the proportion of retail sales that passed through a supermarket, which grew from 31 per cent of all retail sales in 1983 to 37 per cent in 2002 (Mead 2003: 54). When this research commenced in 2000, there were three major supermarket chains, Coles, Woolworths and Franklins, operating a range of retail brands which accounted for 76 per cent of all grocery sales in Australia (AC Nielsen 2000: 21). There were, however, regional differences in the dominance of the major chains. In Queensland in
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1999, Woolworths’ market share was 39 per cent, Coles’ market share was 27 per cent and Franklins’ 15 per cent. So, together the big three chains comprised 81 per cent of Queensland grocery sales (AC Nielsen 2000: 22). The major chains contest that the AC Nielsen methodology overstates their market share; however, an independent quantification of national market share by the Australian Bureau of Statistics calculated Coles’ share as 27.5 per cent, Woolworths’ share at 36.9 per cent and Franklins’ share at 11 per cent (ABS 1999: 184-6). This represented a total of 75 per cent of the Australian market for the three majors. Regardless of the precise size of their market share, it is quite clear that when this research commenced the three major chains dominated the market. In mid 2001, the Franklins chain declared a $90 million loss and its parent company, the Hong Kong-based Dairy Farm International, divested itself of the chain (Korporaal 2001). This left Franklins’ 270 Australian stores available for sale (Flanagan 2001a). The sale was subject to approval by the Australian Competition and Consumer Commission and eventually independent retailers purchased half the stores, but not until Woolworths had purchased 72 of the highest turnover stores (Ban 2001: 4; Woolworths 2002a: 4). Coles later purchased 20 Franklins stores (Flanagan 2001b: 3). The end result was a duopoly in the retail grocery market with similar rationalisation in the wholesale grocery market (Wright & Lund 2003: 140). By the end of 2002, Woolworths had 41 per cent of the grocery market nationally and Coles, 28 per cent (AC Nielsen 2002: 11). The growing dominance of major chains led to calls from small retailers for the market to be regulated by government and market shares of the big chains capped (Joint Select Committee on the Retailing Sector 1999: vii). As a result of these calls, and a government inquiry, a Retail Grocery Industry Code of Conduct (RGICC) was developed (RGICC 2000: iii). While it may be too early to make a final assessment of the effect of this code on the practices of large retailers, to date no effect is apparent. Further claims of unfair competition and misuse of market power prompted another inquiry into competition within the retail industry (Mudgil 2003a; Switzer 2003). This inquiry commenced in October 2003. Despite the degree of concentration within grocery retailing, profits of the major Australian grocery retailers fluctuated between 2 and 4 per cent of earnings before income tax throughout the 1990s and early 2000s (Ferguson 2003: 31). Large grocery
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retailers in the US achieved profit margins of around 4 per cent, whereas in the UK profit margins were around 5 to 6 per cent (Burt & Sparks 1997: 133). Australian grocery retail profit margins were, therefore, low by international standards (Pringle 1993: 308). Given the limited size of the Australian population, when compared to the population of the US or UK, Australian retailers were, and still are, limited in their capacity to achieve growth in traditional markets except by capturing greater market share. 2.1.2
Supermarkets as a Retail Format and Marketing Strategies
As well as retail businesses becoming larger over the last two decades, the size of stores also grew. The concept of a superstore grew in popularity from the 1980s in the US (Christopherson 1996: 167) and in the UK at the same time (Dawson 2000: 121). The superstore was a large supermarket that incorporated a range of non-food or variety merchandise. These non-food categories included services such as pharmacy goods, dry cleaning services, newsagency products, as well as variety products with higher margins than foodstuffs. In the UK and US, these superstores were usually established on inexpensive land on the outskirts of towns. More recently, Fernie (1997: 389) suggested that in the UK, since the mid 1990s, the location of superstores ‘out of town’ may be slowing. He cited a hardening of planning policy and political support for the redevelopment of town centres as the reasons behind this change. As a retail format, the ‘out of town’ superstore was not adopted in Australia (Humphery 1998: 107). Instead, major supermarkets, of slightly smaller size than superstores, became the anchor store for suburban shopping centres. Supermarkets became physically larger, as did the range of merchandise sold, in line with the American ‘one-stop shopping’ format (Carter 1986a: 14). Another means of growing a retail business and achieving greater market share was to broaden the retail offering into a number of ‘brands’ with varying store formats (Fernie 1997). This strategy is based on the principle of ‘niche marketing’, where companies seek to attract different target markets within the consumer population as a whole (Pringle 1993: 308). In the UK market, Dawson (2000: 130) cites the example of Tesco which, in 1998, operated retail food outlets under a variety of formats. In Australia, from mid 1995, Woolworths emulated the Tesco strategy of creating smaller stores that formed a middle ground between a traditional supermarket and a convenience store
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(Pritchard 2000: 208). This strategy was a direct result of shifts in consumer population associated with the gentrification of inner city suburbs (Condon 1999; Kirby 1999; Pritchard 2000: 210). Coles Myer, the other major Australian supermarket retailer, adopted a similar strategy from mid 1997 with its Coles Express stores (Pritchard 2000: 208). Pritchard (2000: 208) argued that the central purpose behind these business strategies was to shift from the provision of meal ingredients to supplying ‘meal solutions’. By shifting their role in the marketplace, retailers sought to capture sales from take away and fast food stores (Pritchard 2000: 208-9). Whereas historically it was the manufacturer who provided the brand name, by 2000 retailers had also become marketable brands (Dawson 2000: 130). From the 1970s, large grocery retailers in the UK began selling their ‘own label’ brands (Lowe & Wrigley 1996: 11; Morelli 1999: 181). These own labels acquired significant market share, especially in price sensitive markets. As a result, grocery retailers were able to exert influence over the nature of the products manufactured and to squeeze out national brands from shelf space allocation (Ducatel & Blomley 1990: 221; Lowe & Wrigley 1996: 11; Marsden & Wrigley 1996: 35; Morelli 1999: 181; Ogbonna & Wilkinson 1998: 81). The vast quantities of sales data captured by Electronic Point Of Sales (EPOS) systems gave retailers an edge in assessing and predicting consumer demands for products (Lowe & Wrigley 1996: 11). This information about consumer purchasing patterns and preferences became a source of considerable power for retailers (Ogbonna & Wilkinson 1998: 81). Such is the power of large retailers that if they choose not to stock a new product line, then the manufacturer ‘may as well not bother marketing it’ (Randall 1985 in Ducatel & Blomley 1990: 221). More recently, this power has been enhanced by new technology, in the form of Radio Frequency Identification (RFID) (Mudgil 2003b). RFID tags or ‘smart labels’ replace bar codes and provide retailers with the ability to track individual customer purchases and provide promotional offers especially tailored for the individual customer’s needs (Mudgil 2003b). This technology also has the capacity to tally the sale and arrange payment, thus effectively eliminating the need for a cashier or checkout operator (Bonsor 2004; Grayson 2004). RFID tags are currently quite expensive (Bonsor 2004), but major retailers such as Wal Mart have instructed suppliers to place them on merchandise (Mudgil 2004), so the potential for the elimination of the cashiers role exists.
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The growing power of retail chains to dictate what was sold and the conditions under which products were sold were common to the Australian market as well (McIntyre 2002: 60). In the case of RFID tags, Woolworths issued a similar edict to their health and beauty product suppliers and have trialled self-checkouts (Mudgil 2004). Increasingly, retailers marketed products under their own ‘private brands’ or ‘generic’ labels (Burch & Goss 1999: 335). Coles started this practice in Australia in 1964 with the introduction of its Farmland brand (Burch & Goss 1999: 338). By selling cheaper versions of products and sourcing globally, retailers were able to achieve higher gross profit margins. An example of the impact of this practice was Woolworths’ decision to put its supply contract for house brand milk out for tender. The drastic economies imposed on dairy farmers were consequences of the predictable behaviour of two powerful duopolists (Coles joined Woolworths) driven by competition to provide low prices to consumers and also to pay maximum dividends to shareholders. Woolies took $500 million out of the pockets of its suppliers. It passed on some to its customers and pocketed the rest for its shareholders. The exercise in market power also did great damage to the brand names of the three processors, Dairy Farmers, National Foods and Pauls Ltd…These brands that once dominated sales of fresh milk, accounting for about 63 per cent of sales in the 500 million litres a year market before the Woolies tender in August 2000, command only a quarter of sales today (Westfield in Gottliebsen 2003: 25-6). Burch and Goss (1999: 337) argue, that as a result, the practice of retailer own brands has restructured production relationships. Australian retail research shows that successful retailers have ‘clear market positioning with flexibility of overall retail strategy’ (Miller & Merrilees 2000: 61). Woolworths rebannered their business ‘the fresh food people’ during the 1980s (Pritchard 2000: 206). This strategy announced a shift from retailing pre-packaged goods to fresh goods and helped Woolworths capture a larger portion of the ‘share of stomach’: the proportion of total consumer spending made in supermarkets (Pritchard 2000: 207). This strategy paved the way for increased competition between the major retail chains and also led to the demise of many small fruit and vegetable stores. In 1992, Australia’s third largest retailer, Franklins, followed Woolworths’ fresh food strategy and began opening ‘Franklins Big Fresh’ and ‘Franklins Fresh’ stores (Pritchard 2000: 207). This strategy represented a dramatic departure from their previous ‘value for money’ strategy which revolved around packaged groceries and extensive use of the ‘No Frills’ generic brand (Blizzard 1976: 220; Humphery 1998: 147). Arguably, this change in retail strategy led
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to Franklins’ downfall since it moved the retailer upmarket and opened the way for foreign discount retailers, such as Aldi, to enter the Australian market with their limited range discount offering (McCallum 2000). In late August 2003, Woolworths announced its intention to develop pharmacy stores within supermarkets, in much the same way as superstores do in the UK (Jimenez 2003b). The company also announced plans to examine the viability of increasing the breadth and depth of newsagency merchandise and hardware carried in stores. These strategies demonstrate that as well as growing the business by operating a range of retail formats, developing own brand products and broadening the range of products carried, grocery retailers are also diversifying into different product markets. 2.1.3 Diversification As well as experimenting with a range of different retail formats internationally, retailers have also diversified their business interests to new sectors such as banking, petrol, food service and travel (Dawson 2000: 130). Recently, for example, there has been a growth in the number of retailers offering financial services (Colgate & Alexander 2002: 2). In the UK, grocery retailers focused on building loyalty with customers through store branded charge cards, loyalty cards, credit cards, insurance and personal loans (Colgate & Alexander 2002: 5). While not all retailer financial services were profitable on their own, these financial alliances provided the ability to capture information on consumers, which could then be used to target marketing campaigns (Colgate & Alexander 2002: 7). Retailers in the UK also diversified into e-retailing, the impact of which is difficult to quantify (Burt & Sparks 2003a: 284; Dawson 2000: 137). Fernie (1997: 394) suggested, that ‘food and drink retailers may use this channel of distribution to regain some of their lost power in channel relationships’. Similarly, retailers might use e-retail as a means of eliminating ‘boring, low-margin, bulky items from their shelves’ (Fernie 1997: 394). In the UK, by 1999, Tesco had 200,000 customers home shopping and Asda and Sainsbury were also investing heavily in e-retail in an attempt to capture market share (Harvey 1999: 11). Major Australian supermarket retailers replicated these strategies of expanding into other retail markets and other retail formats, such as wholesaling and petrol and liquor
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retailing. Woolworths’ foray into petrol retailing has proved very profitable (Ferguson 2003: 31; Jimenez 2003a: 17). Offering discount petrol enabled the organisation to even out trading peaks and stimulate sales in traditionally slower periods, as well as capturing increased market share. Coles replicated Woolworths’ strategy by forming an alliance with Shell in July 2003 and this strategy appears to be paying rewards for the organisation (Jimenez 2003a: 17). Initially, Woolworths developed or purchased petrol sites, but in August 2003 announced a co-branded joint venture with Caltex (Elliott 2003: 17). Independent grocers have since replicated this petrol strategy, so that most Australian grocery retailers now have a petrol discount offer (Sanderson 2003). Australian retailers emulated the British strategy of diversification into financial services. Coles Myer built relationships with a number of banks, such as Suncorp Metway, Colonial and Westpac, allowing them to operate automatic teller machines (ATMs) within their stores (Colgate & Alexander 2002: 2). Woolworths, on the other hand, established a relationship with the Commonwealth bank and launched its own Ezybanking product range. Ezybanking includes traditional banking services (savings accounts, cheque books, credit cards) as well as a reward points program. Gottliebsen (2003: 22) asserts that this alliance makes Woolworths unique in the world because the system is based on Electronic Funds Transfer at Point Of Sale (EFTPOS), not Automatic Teller Machines (ATMs). The bank owns the EFTPOS network and pays transaction fees to Woolworths. Similarly, both major Australian retailers have an e-retail presence. Woolworths first trialled internet shopping to a group of Sydney suburbs in 1998 (Shoebridge 1999a: 45). The distribution side of e-retail proved quite expensive, due to the labour required to pick and pack orders. Coles Myer launched e-retailing in 1997 and have experienced similar problems with costs (Gottliebsen 2003: 222). As these examples show, Australian retailers adopted the same diversification strategies as their British and American counterparts, not always with success, in an attempt to grow their businesses and achieve greater market share in a market with otherwise limited growth potential. 2.1.4 The Supply Chain and Supplier Relationships As well as business strategies designed to increase sales, retailers pursued business strategies designed to reduce costs. One of these strategies was the centralisation of buying, which also played a role in increasing the power of retailers (Harvey 1999: 7).
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As large retailers began to deal directly with manufacturers they were able to exert more pressure over the production process (Dawson 2000: 135; Harvey 1999: 7). At the same time, retailers in general, and grocery retailers in particular, centralised their distribution by building large warehouses for receiving stock from manufacturers (Ducatel & Blomley 1990: 220; Fernie 1997: 390; Harvey 1999: 7). The ability to negotiate volume discounts reduced the price for retailers. In addition, backup stock could be stored at the warehouse or distribution centre, and delivered to stores on an ‘as needed’ basis, thus reducing both overall levels of stock holdings and the storage space required in stores (Ducatel & Blomley 1990: 220; Fernie 1997: 391; Harvey 1999: 3; Lowe & Wrigley 1996: 9). The major chains either erected purpose-built distribution centres or enlisted the services of major logistics companies (Harvey 1999: 7). Most major grocery retailers currently operate with a combination of both. The practice of delivering large quantities to retail distribution centres, rather than to hundreds of stores, reduced the overall cost of the goods to retailers. At the same time, retailers passed on more of the uncertainty costs associated with grocery lines back to the manufacturer (Marsden & Wrigley 1996: 35). In most cases, the large retailers operated on ‘negative working-capital cycles’ (Norkett 1985 in Marsden & Wrigley 1996: 35). This meant that retailers purchased goods on credit and sold the goods before the manufacturer required payment, thereby improving retailer profitability at the expense of manufacturer profitability. Large retailers also began to source their merchandise from a broader range of countries, in part mimicking manufacturers’ search for low cost producer countries (Dawson 2000: 121). This practice has stimulated attacks from sweatshop critics (Adams 2002: 147). As a result of the increasing dominance of large food retailers, a clear shift in the balance of power between retailers and manufacturers has occurred (Fernie 1997: 391; Harris & Ogbonna 2001: 165; Ogbonna & Wilkinson 1998). The purchasing power of large retailers enables them to exert considerable control over manufacturers, leading to complaints of retailers abusing this power (Harris & Ogbonna 2001; Wrigley 1993). In the UK, there were also complaints from the large food manufacturers that retailers’ emphasis on own-label brands had stifled innovation and research and development within the industry (Harvey 1999: 4). Large food retailers in the UK have also been subject to public condemnation over the size of their net and gross profit margins, the largest in Europe (Burt & Sparks 1997: 133).
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The shift in power towards retailers was a direct result of the adoption of various forms of information technology. Electronic Point of Sale (EPOS) and Electronic Data Interchange (EDI) enabled retailers to track merchandise and sales at all stages of the supply chain from supplier to customer (Lowe & Wrigley 1996: 10). Moreover, the process of ordering, invoicing and payment has become paperless, thus delivering sizeable reductions in the need for clerical and administrative labour (Lowe & Wrigley 1996: 10). The Australian retail literature shows a similar power shift in the supply chain, to the benefit of large retailers (NARGA 1999b, 1999c). Prior to the 1990s, major food manufacturers held negotiating rights over the allocation of shelf space for their products (Pritchard 2000: 214). Supermarkets now allocate shelf space on the basis of sales data and use this data as a bargaining tool with suppliers (Pritchard 2000: 214). Retailer information has therefore become a recognised power base (Daparin & Hogarth-Scott 2003: 262). Currently, both Coles and Woolworths are pursuing strategies aimed at upgrading their logistics operations and expect significant efficiency gains and cost savings as a result (Ferguson 2003: 30; Fraser 2003; Mills 2003; Wright & Lund 2003: 146). In part, these efficiencies come from advances in technology that enable paperless transactions and improvements in the quality of information available. For example, in late 1998, only 30 per cent of Woolworths’ product orders were made electronically (Woolworths 1999a: 11). By mid 1999, this figure rose to 70 per cent. As of July 2003, the company was trialling automated stock replenishment and it was anticipated that by the end of 2004 all stores would have automated stock replenishment (Jimenez 2003a: 17). Woolworths are benchmarking their Key Performance Indicators (KPIs) against companies such as Wal Mart and Tesco and are using the technology and approach that Wal Mart use in the United States to remove ‘an immense amount of cost that is germane to the supply chain’ (Corbett quoted in Heiskanen 2003: 11). Other measures include Factory Gate Pricing (FGP), where the retailer controls the freighting of merchandise from the manufacturer to their distribution centre (Sullivan 2004: 10). Coles Myer are also pursuing efficiencies within their supply chain, moving towards paperless transactions and rationalising warehouses (Brown 2003: 8). This trend
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towards supply chain management (SCM) establishes links with suppliers that enable the transfer of ‘real time’ sales information so that the retailer is ‘pulling’ stock from suppliers, rather than the supplier ‘pushing’ stock onto the retailer (Wright & Lund 2003: 138). These retailer strategies all lead to changes in the nature of labour use within supermarkets; yet Wright and Lund (2003: 151) argue that the retail supermarket labour process has not been affected as much as other parts of the supply chain. However, they also assert that rationalisation of the supply chain has resulted in work intensification and cost cutting at store level. While there are clear advantages for retailers in rationalising their supply chain, as well as advantages for customers in relation to ‘out of stocks’, critics of this rationalisation process argue that only large organisations with considerable market power are in a position to employ SCM practices and hence will exert even more control over dependent supplier organisations (Wright & Lund 2003: 140). As the retail chains better manage their supply chains, the impact of these strategies is felt in the labour usage within distribution centres, within stores and within supplier organisations (Wright & Lund 1998; 2002: 1). To summarise, there are similarities in the business strategies of international and Australian food retail chains. First, there has been an increase in firm size and in industry concentration levels within grocery retailing, along with an increased share of consumer food purchases captured by supermarkets. Second, retailers have used a range of strategies to achieve growth, cost reductions and increase market share, such as different store formats (large and small), development of own label brands, diversification into other businesses, and supply chain efficiencies. All of these strategies have an impact on the nature of employment within the industry, as well as further up the supply chain.
2.2
THE RETAIL LITERATURE ON STRUCTURING EMPLOYMENT
By far the most prolific researchers in the field of retail employment are the academics based at the Institute for Retail Studies at the University of Stirling, Scotland. The Stirling contribution to the literature on retail employment has been described as the most significant in terms of breadth and its ‘holistic, industry specific approach’ (Marchington 1995: 2). The Stirling research focuses on the structure of the retail
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industry and how changes to the structure of the industry affected both the location of, and types of, retail employment (Sparks 1991: 304). The Stirling researchers are, however, not without detractors. Marchington and Harrison (1991: 290) criticised the Stirling researchers for being highly descriptive, for focusing only on the industry level and for a reliance on survey data. Freathy and Sparks (1994: 1) deflected these criticisms by arguing that an in-depth knowledge of the retail sector was necessary in order to accurately understand the factors affecting employment practices within the industry. Yet, perhaps mindful of these criticisms, more recent research demonstrates a broadening of research methods, a focus on firm-level employment practices, and a link between retail industry employment findings and broader theoretical debates, primarily labour segmentation theory (Broadbridge 1995; Freathy 1993; Freathy & Sparks 1994, 1995, 1996a, 1997). There was widespread agreement amongst retail industry scholars that controlling the cost of labour, the second largest cost behind the purchase of stock, was crucial to a retailer’s success, hence using labour efficiently was a primary focus for retailers (Baret 2000; Freathy & Sparks 1996a: 181, 1994; Walsh 1990; Wrigley & Lowe 2002: 96). This resulted in a ‘rigid cost approach’ towards employment, with centrally determined budgets and a focus on minimising fixed and variable costs such as labour (Sparks 1992: 12; Walsh 1990: 519). The practice of setting wage costs as a proportion of sales forced retail managers to focus on the cost of labour as opposed to the maintenance of service levels. Yet this was a common practice in food and other forms of retailing (Baret 2000: 39). Retail researchers at Stirling (Broadbridge 2002a: 537; Sparks 1992: 13) and service sector researchers elsewhere (Korczynski 2002) identified the need for a balance between costs and service in service industries such as retailing. Walsh (1990: 520) described this tension as the need to maximise productivity by not having too much labour and maximise sales by having enough labour. Lynch (2001: 323) recognised this tension when she described the dual retailer goals of cost minimisation and quality enhancement strategies as ‘schizophrenic’. Sparks (1992: 13) argued that whether service improvements come from ‘systems or people, there was a cost involved’. One approach to improving service was by improving the quality of training and staff performance and by increasing staff numbers. Another way of dealing with the service-cost issue was to arrange staffing so that adequate numbers of staff with the desired skills were available when demand necessitates; however, ‘there is a price to pay in employment composition’ (Sparks 1992: 13). In order to deal with problems
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associated with the employment composition, Freathy and Sparks (1996a: 182) argued that employee relations or human resource management was then used to mediate the relationship. Four key themes related to the restructuring of retail employment emerged from the retail geographers at Stirling (Freathy & Sparks 1997: 16-18). First, as retail businesses have grown they have centralised many of their functions and operations in order to enhance control over operations and finance. Second, this centralisation process, aided by improvements in technology, has resulted in the relocation of control from stores to head office. Third, as the size of retail stores has increased, the task of managing these stores has become more complex and the flexibility required of store managers has increased, in part, due to the de-layering of management. Fourth, and most critically for this thesis, successful retailers attempted to match customer demand and staffing levels. This necessitated a flexible approach towards the employment of shop floor staff and management. Each of these four themes has implications for the structure of retail employment and consequently for HR practices within the industry. The following section of this chapter reviews the literature related to these four themes. 2.2.1
Centralisation of Operations to Enhance Financial Control
Freathy and Sparks (1997: 23) argued that the efficiency of British food retailing was linked to the ‘centralised management structure that uses technology to control and monitor individual retail outlets’. The introduction of technology enabled organisations to continuously track sales figures and stock movements as well as individual and store level performance. Freathy and Sparks (1994: 5) asserted that this centralisation of control had ‘turned the store into a cost centre’. Decisions that previously were made at store level, such as product placement, buying, promotional activity and pricing, are now made at head office. T. Walsh (1991: 105) argued further that not only are stores individual cost centres but departments within stores are also treated as individual cost centres, enabling retailers to attribute labour costs to distinct departmental units. While the decisions were made at head office, responsibility and accountability for the implementation of these decisions rested with store management (Freathy & Sparks 1994: 5). Hence, a prime factor in retail restructuring was a ‘separation of conception from execution’ as the store management role became more focused on the smooth running of operations (Freathy & Sparks 1994: 5). This argument was supported by
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other researchers in the field, who also pointed to the implications for employees resulting from this centralisation of control (Freathy 1997; Smith 1988). Employment relations was another process that became more centralised. In a study of a supermarket chain in the UK, Marchington and Parker (1990: 159) found that all employment relations policies were set at head office, wage budgets were set as a percentage of sales and recruiting was prohibited until wage ratios fell within the guidelines. Pay rates were determined centrally in accordance with a collective agreement, as were the numbers of union representatives at each store, although a personnel manager located in each store conducted recruitment. Research into HR practices within UK retailers demonstrated that store level non-specialist personnel were responsible for the implementation of the policies. This shift towards the implementation of HR by line management has been noted elsewhere (Freathy 1997: 73; Maxwell 1995: 123; Renwick 2003; Whittacker & Marchington 2003). The limited existing Australian research also indicated that wage bargaining and personnel policies were decided centrally (Mortimer 2001b: 90). While head office negotiated the enterprise agreement that set the boundaries for the flexible use of labour within stores, responsibility for using the new policies was devolved to store management (Mortimer 2001b: 90). Mortimer (2001b: 90) argued that in one Australian supermarket chain, responsibility for the implementation of employment relations practices was devolved to store management level in order to ensure they became more proactive in achieving staff coverage that matched patterns of demand. Consequently, Runciman (1992: 236) argued that the centralisation of management changes the location of decision making in relation to employment structures. In the UK and the US, other jobs within the supermarket were centralised for reasons of enhanced control and cost reduction. In the US, from the late 1960s, retailers chose to centrally process meat rather than employ butchers at store level (Walsh J. 1991: 457). Processing plants butchered meat into primal cuts, sealed it in vacuum bags, boxed it and delivered it to stores. Central processing of boxed beef resulted in ‘lower labour costs; lower training costs; better quality control and sanitation; lower transportation, handling and equipment costs; more merchandising flexibility; and less spoilage and dehydration loss’ (Walsh J. 1991: 457). There was no literature on the adoption of these practices by Australian supermarket chains, nor on the likely impact upon butchers.
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As well as the centralisation of operations, retail organisations globally outsourced certain parts of their ‘non core’ business functions (Dawson 2000: 134). The functions that were externalised or subcontracted within UK retailers were advertising, logistics, security, maintenance, inventory ownership and often staff recruitment (Dawson 2000: 134). Dawson (2000: 135) argued that the ‘optimal balance between internalisation and externalisation is far from clear’. Little is known about the degree to which Australian retailers outsource business functions, but outsourcing would clearly have an impact on the structure of employment within the industry. 2.2.2 Relocation of Control from Stores to Head Office Freathy and Sparks (1996a: 180, 1997) argued that the widespread adoption of computerised stock control systems and EPOS that enabled the centralisation of functions to head office resulted in a shift in the locus of control away from store level management. As a result, the activities of store management and their discretion to make changes in response to the characteristics of their local market had been diminished (Freathy & Sparks 1997: 17). The retail manager’s position had therefore become ‘more store-based and process orientated’ (Freathy & Sparks 1996b: 10). While this may be interpreted as the de-skilling of senior store management, Freathy and Sparks (1996a: 192) questioned this assertion, and highlighted the increasing complexity of the management task. The introduction of point of sale technology also had an impact on the nature of management control over shop floor staff. Smith (1988) claimed that EPOS provided management with a vehicle for monitoring staff performance. Management can measure the average time it takes for each checkout operator to handle the average individual item, how long they take to deal with each customer, the amount of time taken between scanning the last item and taking payment for the transaction, the amount of down time between customers, takings per hour, number of miss-scans [sic] and so on (Smith 1988: 150). Additionally, supervisory costs in stores were reduced as the technology enabled supervisors to more closely monitor worker performance (Pringle 1993: 311). In Australia, Runciman (1992: 237) noted that information technology and growth in store size enabled retailers to divide their labour into back office or front office, or to particular departments. As a result, staff were idle when there were no customers and it
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was more difficult to re-deploy them to another department or location within the store (Runciman 1992: 236). She consequently argued that this division of labour, enabled by technology, had led to an increase in part-time employment, as well as work intensification (Runciman 1992: 237). This division of labour was also alluded to by Merrilees and Miller (2001: 238), when they argued that self-service superstores created a broader backstage role for employees of cleaning and tidying and ensuring merchandise was presented well, in order for it to sell itself. This review of existing literature shows that, while it was asserted that technology enabled a relocation of control to head office, the specifics of this relocation of control have not been thoroughly researched. Any relocation of control to head office will affect the degree to which store level management are able to make decisions affecting their business and would therefore be expected to have an impact on patterns of employment. 2.2.3
Increasing Complexity of Management Task
Freathy and Sparks (1994: 5) stated that ‘some of the most significant developments in the retail labour market have occurred at the managerial level’. These developments related directly to the increase in the amount of information available within the organisation by virtue of new computerised technology. Smith (1988: 149), on the other hand, argued that the store management job was largely deskilled and pointed to the lack of store management input into decisions regarding lines carried, store layout, promotions, pricing and staff budgets. Despite the fact that control over many aspects of the business was now dictated centrally, Freathy and Sparks (1994: 5) argued that the job of store management required significant technological competence, an assertion supported by Penn (1995: 238). In part, this was because stores became much larger and contained a greater variety of merchandise (Freathy & Sparks 1996b: 10). Additionally, it was the task of store management to ensure that staffing levels were adequate to meet customer’s service expectations within the budgetary restrictions imposed by head office (Freathy & Sparks 1996b: 11). Therefore, while the decision-making aspects of the job had diminished, the increased size of stores meant that the manager’s role remained a complex one and necessitated better trained and better educated managers (Freathy 1993: 73; Freathy & Sparks 1997: 18). In line with these requirements, training and qualifications for retail managers had become more common. Within the retail industry
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in the UK, Freathy and Sparks (1996a: 187) saw the growth of graduate management training schemes as a means of increasing switching costs and protecting the firm’s investment in its employees. This training was, however, given only to the senior store management, not to department heads or supervisors. Despite this training and improved levels of education, it was not uncommon for managers to fill in on the registers should the store be understaffed or experience a sudden surge of demand (Marchington & Parker 1990: 156). As a result of these changes, Freathy and Sparks (1996a: 192) argued that store management had become more about ‘good quality implementation’ than ‘strategic decision-making’ and cited increased management training, improved career paths and remuneration as evidence in support of the increasing complexity of the management role. As a result of the increasing complexity of the management role, levels of stress encountered by retail managers had escalated (Broadbridge 1999, 2002b; Broadbridge, Swanson & Taylor 2000). The predominant causes of this stress were work overload, time pressures and deadlines, long working hours, inconvenient working hours, taking work home, having to cope with change at work, the highly competitive nature of the industry and tight resource allocations leading to staff shortages (Broadbridge 2002b: 178). Freathy and Sparks (1997: 18) also argued that, despite head office dictating many store level functions, the management role required significant flexibility in relation to job content and hours worked. Additionally, while management roles were traditionally divided into hierarchies within stores, in many instances management structures within stores had been delayered, intensifying the work effort required of management (Freathy & Sparks 1997: 18). In Australia, the structure of management within retail organisations had also changed as retail organisations were restructured and management delayered (Bramble, Parry & O’Brien 1996: 80). These structural changes included changing spans of control, contracting out of functions, modifications to managerial career structures, redesigning managerial jobs, empowering lower level employees and re-layering. Bramble, Parry and O’Brien (1996: 86) highlighted the difficulty associated with managing multiple sites from head office and argued that this was usually achieved by imposing standardised procedures. Head office could then achieve economies of scale in purchasing, training and allocating staff across stores, thus ensuring financial control (Bramble, Parry & O’Brien 1996: 86). During the early 1990s, many Australian retailers
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cut the number of middle managers and delayered management as part of new business strategies. This resulted in considerable work intensification for those managers remaining (Bramble, Parry & O’Brien 1996: 91). The nature and degree of this work intensification are yet to be researched. 2.2.4
Matching Customer Demand and Labour Usage
Increases in the quality and quantity of information available through electronic point of sale systems provided retailers with the ability to understand consumer demand and enabled them to schedule the type and quantity of labour required in order to meet this demand (Freathy & Sparks 1994: 6; 1997: 21). Demand for retail employees related to patterns of customer demand and these were highly variable depending on such things as trading hours, location, weather, time of day and time of year (Baret 2000: 45; Klassen & Rohleder 2001; Sparks 1992: 16; Walsh 1990). Special events also had an impact on retail trading. Many retailers carried out the vast majority of their annual business in the months immediately preceding Christmas and in the January postChristmas ‘sale’ period. This increase in trade necessitated the employment of additional staff (Sparks 1992: 17). Indeed, Sparks (1992: 16) argued that ‘business cycles in retailing are perhaps different to business cycles in other areas of the economy’. It was recognised that retail was a seasonal industry with variable trading patterns and hence there was a need within the industry for a degree of flexibility in employment. The demand for employees was linked to daily, weekly and yearly patterns of trade. Additionally, weekly trading hours far exceeded the number of hours in a normal working week. Perrons (2000: 1723) went so far as to argue that the length of retail opening hours made it impossible to staff a store using traditional employment patterns. Operating in this environment, retailers found it important to minimise the cost of full-time labour that might not always be fully utilised (Walsh T. 1991: 105). Given the highly competitive nature of the retail industry, most retailers set wage cost targets in order to contain staffing costs. For most retail outlets this target was expressed as a percentage of sales (Walsh 1990: 519). When a retail organisation was not meeting these targets it had two elementary choices, to increase sales or cut costs (Sparks 1992: 12). It was easier and quicker to minimise costs by adjusting staffing levels than it was to increase sales. Sparks (1992: 12) argued that this practice of setting targets meant that retailers focussed on cost minimisation as opposed to service maximisation. When staff levels were cut, service fell and customers chose to shop elsewhere. Further staff were
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then cut and the cycle became self perpetuating. Sparks (1992: 12) argued that this cost minimisation approach emphasised ‘part-time employment and the employment of the cheapest rather than the best staff’. Work patterns in food superstores were quite complicated and this was exacerbated by the length of time that retail stores were open (Sparks 1992: 16-17; Arrowsmith & Sisson 1999: 61). Additionally, retail employees worked outside of trading hours preparing food, cleaning and restocking shelves. The following pattern of retail employment was generally required: considerable numbers of people able to be brought in and out of employment as demand fluctuates. On a daily basis this is met by employing part-time and casual staff that are required to be present at peak trading times (Sparks 1992: 17). This practice limited the amount of non-productive time for which employees were engaged (Walsh T. 1991: 107). The general retail industry response to these complexities was the recruitment of a sizeable workforce of part-time staff who were employed to work during peak trading times. Despite the variability of sales, trading patterns were predictable, which enabled employers to plan and adjust staff numbers (Dettre 1990: 19). As a result of the large number of variables involved with retail staff planning, a number of sophisticated manpower capacity planning models have been developed to enable retailers to allocate their labour as cost effectively as possible (McLaughlin 1999; Wild & Schneeweiss 1993). More sophisticated systems not only calculated the required amount of labour, they determined rosters for workers as well (Melachrinoudis & Olafsson 1995: 35). This reconciliation of customer demand and labour usage in the retail industry meant that the workforce had adjusted to the needs of employers (Sparks 1992: 17-18). The structure of employment within the retail industry was, therefore, a consequence of retailer decisions to match customer demand with labour usage. While Penn (1995: 238) asserted that functional flexibility was the most common form of flexibility employed in the retail industry, the majority of researchers were more likely to argue that numerical flexibility was the most common form of flexibility within the industry (Jamieson & Webber 1991: 61; Perrons 2000: 1724; Walsh T. 1991: 105). A similar situation existed in Australia where extended trading hours, fluctuations in trade and point of sale technology encouraged retailers to calculate and predict staffing
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requirements. As Whitehouse, Lafferty and Boreham (1997: 37) highlighted, an extension of trading hours, with the associated labour costs, does not necessarily equate with an associated increase in sales. Therefore, in a relatively small market such as Australia, the need for flexibility in employment was exacerbated. Jamieson and Webber (1991: 63), on the other hand, asserted that retailers ‘construct numerically adaptable workforces to meet what is essentially known fluctuations in demand’. These numerically adaptable workforces comprised part-time and casual workers. Runciman (1989b: 95) interpreted the practice of increasing casualisation as a management strategy of decreasing on-costs and disagreed with the assumption that an industry with trade fluctuations must necessarily employ casual and part-time labour. She argued that fluctuations in demand were only expensive for employers where an extreme division of labour and segmentation of the labour market existed (Runciman 1989b: 88). In firms where the workforce was not as divided, it was possible to use slow trading periods for other functions such as training or bookkeeping. Moreover, Runciman (1992: 192) suggested that it was only when firms were large enough to have centralised buying and training and the capital to build premises to facilitate the division of labour that specialised retail work could be suited to casual employment practices. Similarly, she suggested that the nature of the work to be done also has an impact on the ability to use casual employees (Runciman 1992: 192). To summarise, a number of changes have taken place in the structuring of retail employment, specifically within food retailing, associated with the variability of trading patterns and the need to match customer demand with labour usage. The centralisation and relocation of functions to head office, as a result of technological advancements and cost minimisation measures, enhanced budgetary control and changed the nature of work within retail stores. As a result, the role of management at store level became more operationally focussed, with less discretion over traditional aspects such as buying and merchandising. The variable nature of retail sales was an important factor in the structure of employment, as retail employers needed to structure their labour usage to deal with these fluctuations, as well as extended trading hours. While the results were a division of labour within stores and segmentation of the workforce, described in greater detail in the following chapter, there was not general agreement in the literature that this response by retail employers was either desirable or necessary. Division across the workforce is also something that could be said of the employment relations practices within the industry, which are reviewed in the following section of the chapter.
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2.3
EMPLOYMENT RELATIONS STRATEGIES IN THE RETAIL INDUSTRY
While the Stirling researchers are responsible for much of what is known regarding the structure and nature of retail employment, they have generally not concerned themselves with the employment relations issues associated with patterns of employment in retail. ‘Questions of power, authority and conflict are not seriously considered, nor are those relating to the complexity and problematic nature of management strategy’ (Marchington 1995: 8). Marchington (1995: 2) also argued that the Stirling researchers paid only nominal attention to the human resource strategies used by retailers to manage their segmented labour force. This meant that different patterns of employment relations within firms were likely to be overlooked. Similarly, the general HR literature tended to assume that patterns of employment relations and HR policies were applied equitably across organisations. As Lepak and Snell (2002: 518) stated ‘Although we know that different employment modes exist, empirical examination of HR systems at this employment group level of analysis remains limited’. Within the generic HR literature, there was some research that argued that HR practices were modified in relation to employment status on the basis of human capital theory (Lepak & Snell 1998, 2002; Osterman 1987; Rousseau 1995; Tsui et al. 1997; Way 1992). However, differential HR practices within the retail industry have received little research attention. In the services marketing literature, Lashley and Taylor (1998) argued that it was the amount of employee discretion required in the service transaction that dictated the type of HR interventions. To date, though, the issue of how HR practices are applied to segments of the retail workforce has received nominal research attention. More commonly, researchers have examined the links between the employment status of retail industry workers and other variables, such as job satisfaction (Conway & Briner 2002; Deery & Mahony 1994; Mueller & Price 1987; Walsh & Deery 1999), communication satisfaction (Gray & Laidlaw 2002), or organisational commitment (Sinclair, Martin & Michel 1999). The scant research that is available examines various employment relations practices within the retail industry, such as recruitment, remuneration, organisational culture and training. This literature is examined in the remaining section of this chapter.
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2.3.1
Recruitment
Working in a retail environment was generally perceived to be a low pay, low status occupation (Broadbridge 2003; Freathy & Sparks 1994: 6: Hector, Henning & Hubble 1993: 327). In particular, retail store management positions were perceived as less appealing than other marketing related positions (Broadbridge 2003: 294; Rhoads et al. 2002: 71). As a result, most retailers experienced high levels of staff turnover (Ramaseshan 1997: 193). Managing the recruitment process therefore became a key issue for many retailers. Retailers who wanted to project a quality service image recruited people who demonstrated a customer orientation, either based on the intuition of personnel staff or on psychological and occupational testing (Ogbonna & Wilkinson 1988: 13, 1990: 10). During the 1980s in the UK, retailers experienced difficulties recruiting ‘the right type of people’ in some tight labour markets (Ogbonna & Wilkinson 1988: 13). Evidence from the UK showed that where labour markets were tight, employers targeted atypical groups of workers, such as post-career workers and secondary earners, who met the organisation’s goals of flexibility and quality (Arrowsmith & McGoldrick 1996: 46). Studies of organisations that had introduced a deliberate strategy of recruiting ‘grey workers’ found high levels of satisfaction with their recruitment decision (Arrowsmith & McGoldrick 1996: 52). Older workers were found to be mature, conscientious and reliable, although still regarded by line management as ‘employees of last resort’ due to the physical demands of many retail jobs. Within the literature there were suggestions that different categories of workers were recruited into different positions within retail firms. Young people tended to be recruited into management positions whereas older employees were recruited to shop floor positions (Turnbull & Wass 1997: 104). There was also evidence of sex segregation with men dominating management roles and women dominating shop floor positions (Turnbull & Wass 1997: 104). While these assertions represent the accepted logic, a comparative study of supermarkets in one region by Penn and Wirth (1993) showed distinct differences in employment preferences. For example, Littlewoods preferred young women whereas Marks and Spencer preferred to recruit older married women. However, Marchington (1995: 18) argued that these retailers should not be
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classified as supermarkets, so perhaps it is a case of different retail formats adopting different recruitment strategies. One of the major recruitment strategies of Australian retailers was the employment of large numbers of part-time and casual employees. The consequences associated with the resulting structure of retail employment, for both employers and employees, are examined in Chapter Three. Weller, Cussen and Webber (1999: 15) argued that, in Australia, this structure was a result of the organisation’s demand for labour, managers’ perceptions of the regulatory environment and the suitability of various segments of the labour market. Changes in the industrial relations environment since the 1990s, especially the introduction of unfair dismissal provisions, resulted in a ‘shift to tighter, more employer-friendly recruitment practices’ and resulted in a pattern of employment resembling Atkinson’s (1985) flexible firm (Weller, Cussen & Webber 1999: 27-8). Research indicated that recruitment decisions tended to be ‘ad hoc, firm specific and institutionalised - a product of the firm’s history, custom, and routine practices’, yet the growth of part-time and casual employment was a dominant characteristic of employment within the retail industry and elsewhere in the service sector (Manwaring & Wood 1984 in Weller, Cussen & Webber 1999: 30). Other Australian research suggested that the best recruitment decision was one where the employee recruited achieved a ‘fit’ between their actual and desired working time arrangements (Walsh & Deery 1999: 10). Exactly how this was achieved in practice has not been the subject of research to date. 2.3.2 Remuneration All retail industry research showed that workers in the industry were not well remunerated (Craig & Wilkinson 1985; Hammond 1992: 41; Kirby 1992: 22; Pollert 1995: 635; Robinson & Wallace 1976: 169). In the US, UK and Canada, average hourly retail wages had fallen as a proportion of average domestic wages, largely due to the large numbers of part-time workers who decrease the average wage rate in the sector (Budd & McCall 2001; Maxwell 1995: 121; Rinehart & Zizzo 1995: 37). While retail managers were better remunerated than shop floor staff, they earned less than their counterparts in the corporate or head office of the retailer (Rhoads et al. 2002: 73). There was evidence that, in the tight UK labour market of the 1980s and 1990s, pay and conditions for supermarket workers had improved, but the retail industry would still not be considered well remunerated (Ogbonna & Wilkinson 1988: 13; Sparks 1992: 18). In
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Canada, the situation was somewhat different. Supermarkets were the only heavily unionised part of the retail industry and wages in supermarkets were significantly higher than those of department stores and other retail formats (Zeytinoglu & Crook 1997: 13). Also, due to union bargaining strategies, wages per hour were greater for full-time employees than for part-time employees. Additionally, the hourly rate of remuneration for both classes of employees increased with length of tenure (Zeytinoglu & Crook 1997: 37-39). The same cannot be said of remuneration for supermarket workers in Australia and New Zealand, where enterprise bargaining has enabled retail employers to reduce penalty and overtime rates of pay for retail workers, resulting in a reduction in take home pay for many (Harbridge & Street 1995: 30; McLaughlin 2000: 7; McLaughlin & Rasmussen 1998; Mortimer 2001b: 90). Accordingly, Mortimer (2001b: 91) cited the National Employee Relations Manager of Woolworths who claimed that the company saved 8 per cent on its wages bill, or approximately $450 million, under enterprise bargaining. Additionally, most retail employers provided few employment benefits other than those required by law (Patrickson & Hartmann 1996: 90). Consequently, many retail workers did not receive superannuation until it became compulsory in Australia in 1989. Remuneration levels differed across the retail industry, with large retailers paying better than small retailers. Boreham et al. (1996: 10-11) explained this by asserting that large retailers tended to have a higher public profile and hence more incentive to maintain higher levels of wages and better conditions. Remuneration also differed across states and sectors of the retail industry, with salaries, particularly for managers, being higher in southern states (Frontline Retail 2001). Remuneration in Australia is dealt with in more detail in Chapter Four, which provides the Australian industrial relations context. 2.3.3 Organisational Culture As retail is a service industry, developing a service culture was often an important part of the HR strategy. Culture was defined as a common set of values and shared beliefs within an organisation (Legge 1995: 185). Writers such as Shackleton (1998: 223) argued that the restructuring of the labour force enabled firms to establish new corporate cultures of customer service. However, UK research into attempts by grocery retailers to develop a service culture showed that cultural change could only be achieved at surface level (Ogbonna & Whipp 1999: 88; Ogbonna & Wilkinson 1988: 10, 1990: 9; Rosenthal, Hill & Peccei 1997: 490). Supermarket staff were found to be happy enough
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to act, by smiling and being polite to most customers while hiding their true feelings, but this did not extend as far as building a strong service culture within the organisations (Ogbonna & Wilkinson 1990: 13). Rather, workers exhibited ‘resigned behavioural compliance’ (Ogbonna & Wilkinson 1990: 14). This remained a positive outcome for the organisation. While the conventional wisdom of much HR and services marketing literature was that happy, satisfied employees created profitable companies, Silvestro’s (2002: 30) research suggested that the most profitable stores were those where the staff were ‘least satisfied and loyal’. Consequently, Silvestro (2002: 31) pondered whether the success of supermarket chains was ‘despite rather than because of the management of its human resources’. 2.3.4
Training
In the early 1980s, Robinson (1984) was critical of both the quantity and quality of training provided by UK retailers for their employees. Since then, shifts in industry concentration and the growth of large multiple retailers have resulted in the need for trained managerial employees. Subsequently, there has been a growth in the number of retail management training programs and retail qualifications at tertiary level, often supported by major retailers (Akehurst & Alexander 1995: xvi; Ogbonna & Wilkinson 1988: 12). More recently, most retailers have policies where workers with management potential are identified and steps taken to develop these skills with company training programs (Ogbonna & Wilkinson 1988: 13). In relation to training standards, it appeared that training was applied differentially according to the nature of the work undertaken. Penn (1995: 240) found a bifurcated workforce, with poorly qualified routine employees provided with little training and with skilled workers higher up within organisations receiving significant levels of training. Penn (1995: 237) also found that most retail organisations provided some training for new employees, but for most routine workers such as checkout staff this was less than a month. Marchington and Parker (1990: 158) found that most retail training consisted of customer care campaigns associated with a move from a low price strategy to a service strategy. Ogbonna and Wilkinson (1990: 10) concurred, and highlighted the tendency for customer service training to focus on smiling and being pleasant rather than on skills to deal with stressful situations and demanding customers.
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Across the board in the Australian retail industry, training was minimal, other than basic task related training. Statistics indicated that the retail industry had one of the lowest training expenditures per employee of any Australian industry (ABS 6353.0). As with remuneration packages, there were differences across the industry, with the larger employers tending to undertake more training (Boreham et al. 1996: 11). The largest retailers had centralised training programs for management and staff (Runciman 1992: 190). A survey of training practices in the Brisbane grocery and hospitality industry in the mid 1990s showed that, of the 125 workplaces surveyed, 84 per cent of workplaces used informal on-the-job training, 40 per cent provided formal training at the workplace and around one third, formal training outside the workplace (Boreham et al. 1996: 15). The content of this training was not examined in the survey. In line with Penn’s (1995) findings, Boreham et al.’s (1996) survey showed that managers had the greatest access to training. In terms of the impact of employment status on access to training, full-time permanent employees had the most access but, somewhat counter-intuitively, casual employees received more training than permanent part-time employees (Boreham et al. 1996: 16). On the basis of these findings, they suggested that shifting from casual to permanent part-time employment status was unlikely to change the type of jobs performed or increase an employee’s access to training, despite enhanced job security (Boreham et al. 1996: 16; Whitehouse, Lafferty & Boreham 1997). Boreham et al. (1996: 11) stressed that expenditure on training was consistently lower in organisations with a high proportion of casual employees. This also appeared to be the case in other industries, such as hospitality (Lowry 2001: 50; Lowry, Simon & Kimberley 2002: 67). Recent Australian research suggests that casual workers suffer disadvantage because they lack access to the employer-supported training which would enable them to obtain permanent better-paid positions (Campbell 2001: 71).
2.4
THE IMPORTANCE OF STORE OPERATOR
Another debate within the retail industry literature concerned the degree to which an individual retail firm or store operator dictated the structure of employment within the industry. Initially, Sparks (1983: 69-70) thought that at business level it was the size of the store that exerted the greatest impact on the structure of employment; however, later Sparks (1983: 77) added factors such as sales turnover and store operator as influences on the structure of employment within an organisation. In a later study undertaken with
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Dawson and Findlay, Sparks found the store operator to be a significant factor in determining both levels and types of employment in superstores (Dawson, Findlay & Sparks 1986: 349). Recognisable differences were found in the structure of employment within the stores studied, although broad trends were apparent. Dawson, Findlay and Sparks (1986: 350) argued that several variables impact on the structure of employment in superstores: At a general level these include decisions on labour policy made by corporate planners and individual store managers. These decisions are themselves influenced by the local labour market conditions and the type, quantity and mix of labour available. More specifically, superstore employment is related to the sales turnover, the store opening hours, and the type of goods retailed by the store. Further study by Sparks (1991) on non-food DIY superstores, the Australian equivalent of a hardware store, also demonstrated that the store operator exerts significant influence on the structure of employment at organisational level. The structure of employment differed from food stores in that full-time males dominated the employment structure, reflecting socially constructed beliefs about men and hardware (Sparks 1991: 310). Penn and Wirth’s (1993) study of supermarkets also confirmed the importance of the store operator in the approach taken to recruitment and working time configurations, especially for married versus single women, but found overall support for the dominance of female workers and the growth in part-time employment. It was not just the store operator who influenced employment patterns. In a study of supermarket employment across stores within the same firm, Marchington and Parker (1990: 163) found that the mix of employees differed between stores, along with the ratio of full-time to part-time workers and levels of overtime. These findings suggested that individual managers had some discretion in how they structured employment patterns within their stores. Similarly, Lynch (2001: 341) in her examination of superstore employment, which included supermarkets, argued that not only did store level managers exert influence over the structure of employment within firms; employee resourcing was their ‘strategy of independence’. Therefore, the retail literature supported the contention that the nature of retail employment was not determined purely by environmental factors and that the employment relations choices of an individual retail organisation and its individual managers can result in a different structure of employment.
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2.5
CONCLUSION
This chapter outlined changes in retailer business strategies and reviewed the literature on retail employment and employment relations within the retail industry. The dominant retailer business strategies were aimed at increasing market share and had resulted in increased levels of concentration within the industry. The impact of these business strategies on employment was that many functions within the industry had been centralised and this had changed the nature of work for retail managers as well as shop floor employees. Increased concentration and increased competition within the retail industry meant that managing the cost of labour had become imperative for business success. One response to this was the segmentation of employment into part-time and full-time jobs. The limited literature on employment relations practices within the retail industry established that remuneration within the industry was low, that training standards were poor, and that some retailers attempted to develop a service culture. Finally, it was established that individual firms and store managers have the capacity to affect the structure of employment. Given that many of these issues have never been examined in the context of the Australian retail industry, this research project provides an opportunity to assess the degree of centralisation of operations, the degree of relocation of control and the degree to which the complexity of the management task has changed. These are key strategies in the nature of retail industry labour usage and as such should assist in answering the first part of the research question, what is the nature of labour usage. Likewise, the second part of the research question, what are the employment relations consequences of these labour usage strategies, is informed by the literature on employment relations practices within the industry that was reviewed in the latter part of this chapter. The following chapter, Chapter Three, continues this examination of the literature on the consequences of retailers’ labour use strategies.
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CHAPTER THREE Literature on the Consequences of Business and Employment Relations Strategies for Employees and the Retail Firm
The previous chapter established the increased levels of industry concentration, diversification and control over the supply chain prevalent within the retail grocery industry. One effect of these strategies was the restructuring of retail employment by centralising operations and control, increasing the complexity of the management task and matching labour usage to patterns of customer demand. The examination of the literature on employment relations and HR strategies within the retail industry suggested that for employers, the major consequence was recruitment difficulties, for employees, the major consequences were part-time and casual work, low pay levels and variable access to training. This chapter further examines the consequences, for the employer and the employees, associated with these labour use strategies. First, the two most commonly used theories of employment structuring within the retail industry, labour market segmentation theory and Atkinson’s ‘flexible firm’ model, are critically analysed. Second, the chapter examines changes to the structure of retail employment. The primary change identified is the segmentation of the retail workforce, with the growth of part-time employment, growth of casual/temporary employment, feminisation of the workforce and de-skilling of the workforce, as well as the growth in youth employment. Each of these changes has immediate consequences, positive and negative, for the retail firm and for the employees subjected to the structure. Third, the consequences of the widespread adoption of part-time and casual employment, for both employers and employees, are addressed. Finally, the gaps identified in the literature in Chapters Two and Three are reiterated.
3.1
GENERAL THEORIES OF STRUCTURING EMPLOYMENT WITHIN FIRMS
In an examination of the structure of labour markets, Doeringer and Piore (1971: 165) argued that, based on a model developed in Piore (1969), labour markets were segmented and stratified into primary and secondary forms of employment. The factors that generated this stratification were skill specificity, on-the-job training and custom (Doeringer & Piore 1971: 13). The dual labour market theory states that jobs in the
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primary sector possessed some of the following characteristics: ‘high wages, good working conditions, employment stability, chances of advancement, equity, and due process in the administration of work rules’ (Doeringer & Piore 1971: 165). In contrast, jobs in the secondary market were more likely to possess ‘low wages and fringe benefits, poor working conditions, high labour turnover, little chance of advancement and often arbitrary and capricious supervision’ (Doeringer & Piore 1971: 165). They argue that there is little mobility between the sectors and that the segmentation of employment is reflected in the workers, with workers in secondary employment having higher levels of turnover and absenteeism and being more likely to engage in activities harmful to the firm than those workers in primary employment (Doeringer & Piore 1971: 166). Later, Piore (1975: 125) refined the dual labour market model to include a further segmentation of the primary sector into upper and lower levels. The upper tier of the primary sector included professional and managerial jobs, which are separated from the lower tier by a degree of autonomy over working procedures (Piore 1975: 126) and by the location of job skill development: formal education versus on-job training or abstract versus concrete learning (Berger & Piore 1980: 19). Later still, Berger and Piore (1980: 19) located craft jobs in between the upper and lower levels because craft jobs contained elements of both upper and lower primary sector jobs. They refined their argument to state that the dualist model did not necessarily mean that society was divided into ‘two autonomous and discontinuous segments but that a society is divided segmentally and not continuously’ [emphasis in original] (Berger & Piore 1980: 2). They also stressed that the number of segments could not be substantially increased without becoming continuous, and therefore not dual at all. Berger and Piore (1980: 15) offered two possible reasons for the existence of a dual labour market: first, that dualism had its roots in flux and uncertainty prevalent within the economic system and second, that dualism was a by-product of the process of the division of labour. Following this line of argument, Atkinson (1985: 3) stated that firms segmented their internal labour markets into core and peripheral components in order to achieve the functional and numerical flexibility necessary for adapting to changes in their external environment. Atkinson (1985: 3) argued that the ‘emerging model was one of horizontal segmentation into a core workforce, which would conduct the organisations’ key, firm-specific activities, surrounded by a cluster of peripheral
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groups’. The jobs of the core group were protected from fluctuations in business by the periphery that provided the employer with the numerical flexibility to adjust the size of the workforce (Atkinson 1985: 3). The core group provided functional flexibility. The division between core and periphery was based on a distinction between ‘jobs, which are specific to a particular firm, from those involving only general skills,’ (Atkinson 1985: 15). Demand for core workers was ‘fixed in the short and medium term, whereas in the secondary jobs it is variable’ (Atkinson 1985: 5, 1987: 88). Hence, the periphery contained employees who performed the ‘routine and mechanical activities’ as well as those external to the firm who provided either highly specialised or very mundane services (Atkinson 1987: 93). Atkinson (1985: 3, 1987: 94) did not perceive the shift towards this model as a ‘conscious strategy’; rather it was seen to represent an opportunistic response by organisations to weaknesses in the labour market. Despite this, Atkinson (1985: 4) argued that the major influence on choice of employment strategy was the business strategy adopted by an organisation. Atkinson (1985: 4) asserted that: If firms are to take a more proactive stance on the achievement of flexibility in this way, then they will need to be much clearer about their specific aims, and about the precise configuration of groups which is appropriate to them. There is also a need to develop new approaches to recruitment, selection, training and severance, in order to ensure each segment is appropriately manned.
According to Atkinson (1985: 6-7), five major factors influenced the staffing strategies adopted by an organisation: the technology employed in the organisation’s labour process, the specificity of skills required and cost of training required to achieve those skills, the capacity to attract and retain workers where labour shortages are likely, institutional pressures from unions and collective agreements, and the national training provisions which dictate ports of entry into organisations. These factors did not operate independently of the product and labour market (Atkinson 1985: 7). In response to these factors, the structure of the internal labour market contained the core and the periphery (refer to Figure 3.1) (Atkinson 1985: 15). Within the core were full-time permanent career employees with employment security, in exchange for functional flexibility. These people possessed skills and experience that provided advantage to the firm and that could not be brought in easily. The first peripheral group contained full-time workers with less job security and career opportunities than core
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workers (Atkinson 1985: 17). These workers received little training, their jobs were highly routinised and their skills were not firm specific, hence turnover was relatively high as workers drifted in and out of these routine positions. The second peripheral group comprised part-time workers who provided a mixture of functional and numerical flexibility with routine jobs and limited firm-specific skills (Atkinson 1985: 17). The third peripheral group, external to the organisation, provided the labour for tasks that were either highly specialised, such as computer programming, or very mundane, such as cleaning. External labour was provided by subcontracting and temporary help agencies.
Figure 3.1
Atkinson’s Flexible Firm Model
Source: Atkinson (1987: 94) This new model for the organisation of workers within firms had employment relations implications for firms and potential consequences for employees employed under the model (Atkinson 1985: 25). Atkinson (1985: 25-28) suggested that the implications for firms adopting the model were the need to develop new training structures to reskill
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core employees, new reward structures capable of rewarding performance, and the provision of job security to retain core employees. For employees working in peripheral positions, the new structure was likely to involve a lack of job security, the need to move between employers to achieve promotion, the need to bear the cost of maintaining individual skill levels, and the cost of absence from work (Atkinson 1985: 25-28). As a result, the allocation of tasks to groups of workers was ‘likely to be on the basis of the characteristics of the posts rather than the postholders’ (Atkinson 1985: 31). Atkinson’s flexible firm model has been criticised both within the retail industry literature and elsewhere. T. Walsh (1991: 104) accused Atkinson of using ‘cursory qualitative data’ to mistake incremental employment change for wholesale change. This misrepresents Atkinson, who, despite sweeping statements about the growth of flexible employment practices, makes no such claims about widespread employer adherence to the model (Atkinson 1987: 89). T. Walsh (1991: 104) was also critical of Atkinson’s focus on demand side factors and disregard for supply side factors. While regarding the primary/secondary framework as relevant for describing the structure of retail employment, Freathy and Sparks (1996a: 193) argued that its weakness was that it ignored ‘the wider structural issues operative within the labour market’. These criticisms appear well founded. Although Atkinson (1987: 90) mentioned ‘the legal, administrative and labour market possibilities for securing additional workers’ as factors which would affect the acceptance of the flexible firm model, supply side issues are largely overlooked in Atkinson’s work. Marchington (1995: 15) took issue with what he saw as an artificial demarcation between core and peripheral employment in Atkinson’s model. He argued that a degree of internal mobility exists within retailing, at least up to supervisory level and therefore assertions of distinct ports of entry into the core and the periphery are inaccurate. Similarly, Kalleberg (2001: 488) asserted that the periphery might be used as a screening device for recruitment to the core. Marchington (1995: 15) also pointed to the disparity between working conditions in leading retail chains and smaller independent retailers and argued that the distinction between core and periphery might be of more value in an examination of retail employment conditions between firms, rather than within firms. Hunter et al. (1993: 402) supported this when they stated that few employers differentiate between types of employees when setting wages and conditions.
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Atkinson’s treatment of the core and periphery as homogenous groups has also been widely criticised (Hunter et al. 1993: 402; Kalleberg 2001: 488; Walsh, T. 1991: 104; Wong 2001: 33). Using evidence presented by these authors, the criticisms appear valid. Atkinson groups workers into core, peripheral or external groups in his discussions, despite identifying distinct groups within the group in the visual representation. Research such as that by T. Walsh (1991) shows that part-time, temporary, and casual workers in retail and hospitality are not homogenous. Marchington (1995: 15) questioned whether front line workers could be treated as peripheral, given that they represent the point of contact between the organisation and its customers. Following this same line of argument, Deery and Mahony (1994) and Walsh and Deery (1999) questioned the location of part-time workers within the periphery in a department store environment. Walsh and Deery (1999: 51) highlighted the numerical dominance of part-time workers in retail and the product knowledge involved in personal selling in support of their argument that part-timers are not peripheral. It may be, however, that the nature of the labour process and the product knowledge requirement are quite different in department stores from that prevailing in supermarkets. Others have said that the flexible firm theory only states the obvious, since firms have always differentiated between types of labour and there is little evidence that employers have adopted the flexible firm as a deliberate strategy (Marchington & Parker 1990: 163; Pollert 1988, 1990; Purcell 1996: 16). Indeed, much of the debate surrounding Atkinson’s model centres on whether the core-periphery strategy was adopted deliberately or not. Some survey research argued that the strategy was not deliberate (Mayne et al. 1996: 9; Robinson & MacDonald 1995: 2), while others argued that, at least for a small percentage of workplaces, it was deliberate (Hakim 1990: 180-181; Hunter et al. 1993: 399). In general, case study research is more likely to argue that the structure of employment was deliberate (Mayne et al. 1996: 9). In defence of Atkinson’s model, Hakim (1990: 162-163) states that the model was not supposed to represent an accurate representation of the structure of labour - it was a ‘simplified synthesis’ - and as such presented a widely accepted and valuable tool for examining aspects of flexibility. For the purposes of this thesis, the flexible firm model represents one of the few models with the potential to assist in an examination of organisational labour usage strategies.
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3.2
THE STRUCTURE OF RETAIL EMPLOYMENT
Within Great Britain, the size of the retail workforce grew from 9.6 per cent of the total workforce in 1981 to 10.7 per cent in 1993 (Townsend, Sadler & Hudson 1996: 212-3). At the same time the proportion of part-time workers grew from 35 per cent of the retail workforce in 1981 to 48 per cent in 1993. Within Britain, regional changes in the structure of retail employment partly reflected changes in the spatial patterns of population and shifts in wealth (Townsend, Sadler & Hudson 1996: 218). Perrons (2000: 1721) argued that these changes were to be expected in an industry that requires a consumer base within close proximity, but structural changes in employment also reflected employer strategy. As Freathy (1993: 8) stated, these employment patterns were arguably ‘the outcome of both supply and demand side determinants operating within the context of specific sectoral, time and place constraints’. In a comparison of patterns of food retail employment between France, Germany, Japan and the UK, Gadrey, Lehndorff and Ribault (2000: 144-5) highlighted differences in the part-time employment rate across the four countries. In Germany, part-time employment in food retail was 58.6 per cent in 1996 (Gadrey, Lehndorff & Ribault 2000: 145). In Japan, part-time employment grew from 24 per cent of total retailing in 1982 to 35 per cent in 1992 (Gadrey, Lehndorff & Ribault 2000: 145); within Japanese food retailing, the proportion of part-time employment rose from 36 per cent in 1982 to 51 per cent in 1992. French statistics, which were divided by store format, showed that part-time employment grew: from 23.5 per cent in 1981 to 32.7 per cent in 1995 across the entire retail industry, within hypermarkets from 22.5 per cent to 34.6 per cent over the same period, and within supermarkets from 10.6 per cent to 31.3 per cent (Gadrey, Lehndorff & Ribault 2000: 144). Hypermarkets defy precise definition, but are very large format food retail outlets, with a merchandise mix of non-food products (Sparks 2000: 5-6). Gadrey, Lehndorff & Ribault (2000: 151) attribute lower levels of female part-time employment in France to societal norms of females working full-time. In addition, Gregory (1991: 504), who compared working time arrangements between France and the UK, attributed the lower levels of part-time employment in France to better childcare provision, a 16-hour minimum in the sector’s collective agreement, lower levels of competition within the industry and semi-autonomous work teams that negotiate working hours. Therefore, despite degrees of difference between these
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countries, there was a convergence in the trend towards part-time employment in food retailing. In the US, Christopherson (1996: 170) argued that the growth of large corporations had led to homogeneity in labour utilisation practices between sub sectors of the retail industry (Christopherson 1996: 170). Across the retail industry as a whole from 1972 to 1989, the number of workers grew from 11 million to 17 million (Christopherson 1996: 173, citing US Dept of Labor statistics). Yet changes in the structure of retail employment in the US differed from trends elsewhere. Part-time employment peaked in 1981 and has since gradually declined, whereas full-time employment declined until 1983 and then began to slowly increase. Christopherson (1996: 173) argued that these changes were the result of declining numbers of married women and teenagers available in the labour market. As a result, employers in the US had begun pursuing strategies of functional flexibility as opposed to numerical flexibility. However, Gadrey and JanyCatrice (2000: 27) were more inclined to argue that these longer hours were a result of the very low wage levels in the US.
3.3
THE STRUCTURE OF RETAIL EMPLOYMENT IN AUSTRALIA
In Australia, the size of the retail workforce grew from 897 000 in August 1985 to 1.48 million in November 2003, an increase of 61 per cent over nearly two decades (ABS 6291.0.55.001). Retailing employed 15 per cent of Australia’s workforce in November 2003 (ABS 6291.0.55.001). Within the retail industry, food retailing employment grew from 313 400 in August 1985 to 576 600 in November 2003, an increase of 84 per cent (ABS 6291.0.55.001). Food retailing in 2003 represents 39 per cent of the retail workforce and 6 per cent of Australia’s total workforce (ABS 6291.0.55.001). For ABS purposes, food retailing includes supermarket and grocery stores, fresh meat and poultry retailing, fruit and vegetable retailing, liquor retailing, bread and cake retailing, takeaway food retailing and specialised food retailing (ABS 8613.0). The growth in food retail employment occurred almost entirely in part-time employment, while fulltime employment figures remained largely static over the period (refer to Figure 3.2). There was no change in the gender balance of the full-time workforce as male and female full-time employment statistics fluctuated in tandem. Males though, continued to dominate full-time employment within food retailing.
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Figure 3.2
Level of Full-time Employment, Food Retail, Australia
Number of Employees (,000)
250 200 Males
150
Females
100
Total
50
Nov-02
Nov-00
Nov-98
Nov-96
Nov-94
Nov-92
Nov-90
Nov-88
Nov-86
Nov-84
0
Year
Source: ABS Labour Force, Australia, Detailed, Time Series cat. 6291.0.55.011 Over the past two decades retail employment growth has been in part-time employment, which grew from 122 400 persons (39 per cent) in August 1985 to 348 500 persons (62 per cent) in August 2003 (refer to Figure 3.3). This represents a growth in part-time employment of 185 per cent over nearly two decades and places Australia amongst the nations with the highest proportion of part-time employment within food retailing. Also of note is the finding that the growth in the number of part-time workers within food retailing has been across both sexes, not just females (refer to Figure 3.3).
Figure 3.3
Level of Part-time Employment, Food Retail, Australia
Number of Employees (,000)
400 350 300 250
Males
200
Females
150
Total
100 50 Nov-02
Nov-00
Nov-98
Nov-96
Nov-94
Nov-92
Nov-90
Nov-88
Nov-86
Nov-84
0
Year
Source: ABS Labour Force, Australia, Detailed, Time Series cat. 6291.0.55.011
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Male part-time employment within food retailing grew from 28 000 persons, or 23 per cent of the workforce, in August 1985 to 124 000 persons, or 36 per cent of the workforce, in August 2003 (ABS 6291.0.55.011). More notably, the proportion of male part-time employees in food retail employment increased (refer to Figure 3.4). Female part-time employment within food retailing on the other hand, rose in overall numerical terms but fell as a proportion of the total part-time workforce. In August 1985, female part-time employment in food retail was 94 000 persons or 77 per cent and by August 2003 was 224 000 persons or 64 per cent (refer to Figure 3.4). Many of these part-time workers were employed on a casual basis, without leave entitlements. There has also been significant growth in the numbers of food retail employees working on a casual basis. Unpublished ABS statistics show that casual employment in supermarkets and grocery stores grew from 19 771 employees, or 22.5 per cent of the supermarket workforce, in August 1990 to 96 636 employees, or 42.5 per cent of the supermarket workforce, in August 2001 (ABS 6310.0 cited in Wright & Lund 2003: 144).
Figure 3.4
Composition of Part-time Employment, Food Retail, Australia
0.9 Percentage of Employees
0.8 0.7 0.6 0.5 0.4
Male PT Female PT
0.3 0.2 0.1
N
ov -8 4 N ov -8 6 N ov -8 8 N ov -9 0 N ov -9 2 N ov -9 4 N ov -9 6 N ov -9 8 N ov -0 0 N ov -0 2
0
Year
Source: ABS Labour Force, Australia, Detailed, Time Series cat. 6291.0.55.011 Changes to the employment status composition within the industry appear to have had little impact on the age composition of the workforce (refer to Figure 3.5). As can be seen from Figure 3.4, the retail industry contains a fairly high proportion of young workers. For the past two decades, around 20 per cent of the workforce has been between 15 and 19 years of age and 40 per cent of the industry has been under 24. The
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ABS only began reporting data on the age composition of the workforce at retail industry level in November 1984. Prior to this date, retail employment figures were included with the wholesale industry. The retail industry contained a sizeable proportion of young people under 19 (25 per cent) in 1985, therefore it was not possible to assess when the juvenilisation of the industry had occurred. Other trends were the growth in the number of retail employees aged between 45 and 54, and a reduction in the number of retail workers aged between 35 and 44 (refer to Figure 3.5).
Composition of Employment, Retail, By Age, Australia
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
55+ 45-54 35-44 25-34 20-24
2000
1995
1990
15-19
1985
Percentage of Employees
Figure 3.5
Year, February Figures
Source: Calculated from ABS Labour Force, Australia cat. 6203.0 various years Similarly, there has been only nominal change to the composition of employment in terms of hours worked in the retail industry over the past two decades (refer to Figure 3.6). The number of employees working between one and fifteen hours per week grew steadily from 17 to 24 per cent of the workforce between 1985 and 2000 and dropped back slightly to 22 per cent in 2003. The proportion working between 16 to 19 hours per week grew steadily from 10 per cent in 1985 to 17 per cent in 2003. Another notable change was the proportion of employees working 40 hours per week, which fell from 22 per cent of the workforce in 1985 to 10 per cent in 2003. This was perhaps to be expected given the introduction of a 38-hour working week in the retail industry during the 1980s across most Australian states. Yet the decrease in those working 40 hours does not appear to have translated directly into an increase in those working between 35 and 39 hours. In 1985, 9 per cent of the workforce worked between 35 and 39 hours per week; by 2003, only 12 per cent.
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Percentage of Persons by Hours Worked
Figure 3.6
Composition of Employment, Retail, by Hours Worked, Australia
100% 90%
49+
80%
45-48
70%
41-44
60%
40
50%
35-39
40%
30-34
30%
16-29
20%
1-15
10%
0
0% 1985
1990
1995
2000
2003
Year, February Figures
Source: ABS Labour Force, Australia cat. 6203.0 various years The overall picture is of a declining proportion of employees working 40 hours or more each week, while a growing group are working less than 30 hours per week. The structure of the retail workforce outlined in this section shows a clear shift towards part-time employment in the food retail sector across all the countries examined, with the exception of the US. While Atkinson (1985) placed part-time workers within the periphery in his model of the flexible firm, the numerical dominance of part-time workers in the food retail industry suggests that, for this industry, part-time workers may form part of the ‘core’ workforce (Penn 1995, Purcell 1996: 19). This segmentation of the workforce is further examined in the following section.
3.4
SEGMENTATION OF THE RETAIL WORKFORCE
As demonstrated by the retail employment statistics in the previous section, retail employment is heavily segmented. This section reviews the retail industry literature on the segmentation of employment in order to determine the basis by which the workforce is segmented. There is widespread agreement within the retail industry literature that the practice of matching labour usage to customer demand patterns, which prevails within the retail industry, results in the employment of large numbers of employees on
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casual/temporary, part-time and other forms of less than full-time labour (Balchin 1994: 47; Batt 2000: 543; Broadbridge 2002a; Dawson, Findlay & Sparks 1986: 350; Deery & Mahony 1994: 337; Freathy 1993: 67; Freathy & Sparks 1994: 507, 1996a: 187; Sparks 1992: 13). Freathy (1993) and Freathy & Sparks (1996a: 184; 1997), using segmentation theory, argued that the retail industry divided roughly into primary and secondary forms of employment, based on the amount of control exercised over the job. The secondary segment contained shop floor workers, the vast majority of whom worked part-time hours for low rates of pay. The secondary status afforded shop assistants related to the minimal qualifications required to gain entry to the position, the low levels of training provided by employers and the lack of demarcation between tasks performed by shop assistants (Freathy 1993: 75). In keeping with Berger and Piore (1980: 19), Freathy (1993: 74) argued that within retailing the primary segment had three tiers: the upper primary tier contained senior store management who were not subject to extensive work rules, the middle primary segment contained department managers who reported directly to store management and whose work was centrally controlled and governed by rules (Freathy 1993: 75), and the lowest primary segment comprised the supervisory employees whose work closely resembled Piore’s (1975) lower primary tier (Freathy 1993: 75). The supervisory job was routine, a policing role to ensure that other employees adhered to work schedules. All positions in the primary segment, with the exception of some supervisors, were permanent full-time jobs with reasonable job security. While the notion of secondary employment with low costs could be readily applied to the retail sector, the degree to which retail management positions denoted primary employment was more contentious given the centralisation of functions to head office (Freathy 1993: 73; Freathy & Sparks 1996a: 185). In the UK, there was evidence of a decline in the overall number of full-time jobs and a marked increase in the number of part-time jobs: a process facilitated by the use of computerised stock control and sales terminals (Freathy & Sparks 1997: 21). Exactly when this shift in the structure of employment occurred was a subject of some dispute (Curson 1986; Penn 1995; Pollert 1988; Walsh T. 1991). As such, T. Walsh (1991: 113) argued that the use of part-time, casual and temporary workers was central to the productive use of labour within retailing. However, the use of peripheral labour, defined as agency workers, contractors,
59
casuals and those on short-term contracts, was not a strategy widely adopted in the UK (Freathy & Sparks 1996a: 185; Penn 1995: 236). The UK retail workforce was, however, segmented by gender and age (Freathy 1993: 71-72). These issues, discussed in greater detail later in this chapter, are reviewed briefly here. Young people tended to be recruited into management positions whereas older employees were recruited to shop floor positions (Sparks 1983; Turnbull & Wass 1997: 104). Women were recruited into part-time unskilled jobs, whereas men were recruited into management and other full-time skilled positions (Freathy 1993: 71; Freathy & Sparks 1997: 49; Sparks 1983). This gender segmentation is further examined later in this chapter. UK retail literature also points to a division of labour within stores. Walsh (1990: 524) argued that part-time and casual employees were allocated to different jobs within the organisation’s internal labour market, and as such were not interchangeable. Part-time and casual work was usually confined to certain occupational bands, such as counterhands and cashiers (Walsh T. 1991: 111). Fulltimers (usually men) were employed in the higher grades. However, contrary to suggestions in labour market segmentation theory that employers recruit independently into the primary and secondary labour markets, Freathy (1993: 76) did not find that the barrier between secondary and primary employment was impenetrable, as there was evidence of the movement of some individuals from the secondary to the primary labour market. Studies in the US showed that this does not appear to be the case there. Bailey and Bernhardt (1997: 10) argued that the traditional internal labour market was being dismantled as firms substituted part-time and casual labour for full-time workers (Bailey & Bernhardt 1997: 10). They also noted that the practice of recruiting college students straight into trainee management positions reduced the likelihood of internal promotion opportunities for part-time workers (Bailey & Bernhardt 1997: 11). While there was no systematic study of the operation of internal labour markets in Australia, Boreham et al. (1996: 11), found that career paths existed within the retail industry, although career progression was largely the preserve of male employees. Existing Australian research supported the arguments that the retail labour force was divided by gender and age, much as in the UK and US. Reasons offered for this included the actions of the shop assistants’ union (Donaldson 1996; McCann 1994;
60
Mortimer 2001a; Probert 1995) and management strategy (Mortimer 2001a, 2001b). The activities of the shop assistants’ union are described in Chapter Four. Australian research also suggested that the degree of the division varied according to the size of the retailer, with larger retailers displaying a greater division of labour (Jamieson & Webber 1991: 66). As in the UK and US, the most rigid division of labour in Australia occurred between management and other employees (Jamieson & Webber 1991: 66). Runciman (1989b: 86) suggested that for the majority of employees a transition from a service to a management role was not possible. Brosnan (1991: 20) supported this argument with his assertion that retail managers were recruited from a separate labour market, young males. Jamieson and Webber (1991: 62) argued that in Australia casual and part-time workers were used for different purposes and times within the week. Their research into employment patterns within a range of Melbourne retailers showed that casual employees worked on weeknights and weekends, whereas part-time staff worked during the week to gain maximum staffing levels at peak periods and minimal staffing when trading is quiet (Jamieson & Webber 1991: 62). Similarly, Jamieson and Webber (1991: 66) argued that only full-time employees performed administrative tasks. This division of labour lends support to arguments that technological change has led to the deskilling of the female, part-time, casual and generally younger workforce (Boreham et al. 1996: 10). As identified in this brief précis of the literature on the structure of employment across the US, UK and Australia, there appears to be a convergence across countries with retailers, particularly food retailers, dividing their workforce into full-time, parttime and, in Australia, casual employment contracts based on gender and age. These different groups of employees also appear to perform distinct functions within the organisation. The following section examines the literature on the costs and benefits of part-time employment for employers and employees.
3.5
PART-TIME EMPLOYMENT
There was no universally accepted definition of part-time employment. Generally, parttime employment was considered to be work for less than the usual, collectively agreed or statutory working hours (Akehurst & Alexander 1995). In Australia, the ABS defined
61
part-time workers as employees who work fewer than 35 hours a week in all jobs (ABS 6342.0). As established previously, part-time workers represented 62 per cent of the food retail workforce in Australia. The definition is further complicated since Australian retail industry awards and certified agreements define part-time as ‘permanent parttime’, known as PPT. This is permanent employment for less than a fixed number of hours per week, usually around 36 hours. Part-time employees, who are not permanent, are called ‘casuals’ and have no legal right to on-going employment. Casual employment is discussed later in this chapter. Junor (1998: 203) divided part-time work into ‘retention’ and ‘contingency’. ‘Retention’ part-time employment was structured to retain valuable employees who chose to work part-time hours, whereas contingency part-time employment was characterised by job insecurity, low skill and low status. Arguably then, not all part-time work had the same characteristics. Part-time work could provide benefits for both employers and employees, but for some part-time workers and their employers this came at a cost. What was apparent from retail research was that categories of employment (full-time, part-time and casual) did not contain homogeneous groups of workers, even at the level of the individual firm (Penn & Wirth 1993: 262; Walsh T. 1991: 524). Therefore, while one individual worker may benefit from part-time employment, another worker may not. This section explores these differences. 3.5.1
Benefits of Part-time Employment for Employers
Robinson (1995: 72) argued that the growth of part-time employment in the UK was encouraged by the existence of a selective employment tax and operational changes. While part-time and full-time employees were usually engaged on the same pay rate, a minimum number of hours work per week was necessary to qualify for sick pay, weekend penalties and superannuation (Robinson 1995: 73). Since part-time employees worked only limited hours, they represented a cheaper labour source because most did not receive these additional benefits (Freathy 1993: 71; Freathy & Sparks 1996a: 187; Robinson 1995: 72). Based on research in Canada, Zeytinoglu (1992: 490-491) argued that part-time workers provided flexibility of hours, attracted lower wages and benefits, provided a buffer against trade fluctuations, and many preferred to work part-time. Similar arguments existed in the US literature where it was argued that part-time employees were subject to fewer employment benefits, such as medical, insurance and retirements benefits, and were therefore cheaper (Pfeffer & Baron 1988: 285).
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Part-time employment permits retailers to better match fluctuations in trade and therefore potentially provide better customer service while reducing direct wage costs (Freathy & Sparks 1996a: 187; Robinson 1995: 72). The need to match fluctuations in retail trade to labour usage patterns means that some authors argued that part-time workers were ‘necessary for operational reasons, not as a cost-reduction policy’ (Purcell 1996: 19). Walsh (1991: 107) stated that the most important factor was savings in direct labour costs by restricting work to hours where the capacity was required. Therefore, it was apparent that part-time employees were cost effective. Part-time employees might also be more productive since they worked at peak times and were less likely to experience fatigue (Browell & Ivers 1998: 287; Horning, Gerhard & Michailow 1995: 66; Lewis 1990: 42) or to absent themselves from work (Lee & Hoon 1993: 78). Another factor cited by employers was that a worker’s availability for certain hours was a key factor in the decision to employ them on a part-time basis (Balchin 1994: 49). Similar arguments existed within the Australian retail employment literature. Runciman (1989b: 88) perceived the benefits of using part-time labour as work intensification, a reduction of costs in slow periods and the potential for a greater division of labour. Despite the additional indirect costs (sick leave, annual leave) associated with their employment, part-time labour was considered cost effective because it enabled retailers to employ fewer full-time employees and maximised the productivity of labour. As such, Jamieson and Webber (1991: 63) argued that part-time employment was ‘central to employment strategies in retailing’. So, part-time employment provided employers with the ability to match labour usage to fluctuations in demand, thus eliminating payment for non-productive time and thereby reducing overall labour costs. Also, because most part-timers worked short hours, they did not attract other employment benefits, and therefore provided employers with an additional saving. 3.5.2 Costs of Part-time Employment for Employers As part-time employment was the dominant form of flexibility within the UK retail industry, it had received significant research attention. Townsend, Sadler & Hudson (1996: 211) argued that part-time employment might not be a tenable long-term strategy since it relied on factors such as high levels of unemployment and a workforce prepared to accept disparities in wages and conditions. Hurstfield (1987: 10) pointed out that the low level of pay meant that employers had difficulty attracting employees. Based on
63
these cost arguments, Robinson (1995: 87) argued that segmentation of the workforce for short-term financial gain was at the expense of long-term productivity growth. The productivity of part-time employees was subject to some debate, with no conclusive evidence demonstrating that part-time workers were either more or less productive (see review in Runciman 1989a: 10). Indeed, recent studies showed that food retailers were moving away from short hours contracts because staff turnover levels amongst short hours employees were so high and the quality of customer service was not always adequate (Akehurst & Alexander 1995: xv; Perrons 2000: 1725). The high level of turnover amongst part-time employees was a major cost issue for retail employers. This is addressed later in the chapter. Other consequences associated with the use of large numbers of part-time workers were scheduling problems and problems managing the interpersonal dynamics between different categories of workers (Lee & Hoon 1993: 77). The fact that more part-time employees were required to cover the same period of working time also resulted in additional administrative costs, more employee record keeping, higher payroll costs, recruitment costs and training expenditure (Allan 2000: 189; Balchin 1994: 50; Lewis 1990: 44). Additionally, some authors argued that part-time employees had higher levels of absenteeism, due to family commitments, such as taking time off to care for sick children (Balchin 1994: 50; Jamieson & Webber 1991: 64). Lee and Hoon (1993: 77), however, argued to the contrary that part-time workers were less likely to take time off since their shorter working hours allowed for greater personal flexibility. There was therefore conflicting empirical evidence in the literature on whether part-time workers exhibited more or less absenteeism. This is not surprising given the heterogeneity of part-time workers. In Australia, as in the UK, part-time employment was used as a cost saving mechanism (Hall, Harley & Whitehouse 1998: 58). However, in the Australian retail industry, parttime retail employment was traditionally permanent in nature. Employers regarded permanent part-time employment as relatively inflexible, since employees were engaged for a fixed number of working hours each week (Jamieson & Webber 1991: 64). Another problem for employers was the lack of continuity in dealing with customer orders and complaints because employees did not always communicate action they had taken to other employees (Jamieson & Webber 1991: 64). Customer service was also believed to suffer because part-time employees were not apprised of new stock arrivals
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and did not have the same levels of product knowledge as full-time employees (Jamieson & Webber 1991: 64). Jamieson and Webber (1991) conducted their research across a range of retail formats, though, and these findings are less likely to apply to part-time workers in supermarkets where the requirement to possess product knowledge is not as important. 3.5.3
Benefits of Part-time Employment for Employees
Part-time work could reconcile the needs of the worker for less than full-time hours and the needs of the organisation for workers in peak trading periods. Many students find that part-time work provides an income, as well as valuable work experience (Curtis & Lucas 2001; Lucas & Ralston 1997). While studies showed that part-time workers chose to work part-time for a range of reasons, such as childcare arrangements, many worked part-time because they could not find a full-time job (Balchin 1994: 51). Similarly, most of the literature asserted that it was the employer who set the job specifications and the time schedules for part-time workers (Walsh T. 1991: 107; Jamieson & Webber 1991: 63). There were exceptions though. In another UK study of supermarket employment, Perrons (2000: 1724) found that over 70 per cent of respondents chose the number of hours they worked and the distribution of these hours. This suggested that the wide variety of rosters available in supermarkets might enable some employees to combine work and personal commitments. In studies of part-time retail workers it has been argued that employees who were able to achieve a fit between their working arrangements and other commitments were ‘highly stable, satisfied and organisationally committed employees’ (Walsh & Deery 1999: 58). Those employees who were able to negotiate their working time arrangements and achieve a fit between actual and desired working hours were likely to feel a greater sense of control and hence job satisfaction. Patrickson and Hartmann (1996: 93), in a study of older women workers in Australian department stores, found four-fifths of their sample were ‘satisfied’ or ‘very satisfied’ with their job, despite relatively low pay. Therefore, for many retail workers, work might be meeting an intrinsic need (Patrickson & Hartmann 1996: 96; Balchin 1994: 56). It also suggests that many retail employees may have low expectations about their pay and the nature of their jobs.
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3.5.4 Costs of Part-time Employment for Employees The debates surrounding the cost of part-time employment for employees centred on whether part-time work presented a threat to full-time work, was precarious and was a source of exploitation of female workers (Akehurst & Alexander 1995). Evidence from the US and Canada demonstrated that part-time workers were treated less equitably than their full-time counterparts, in terms of pay and conditions (Tilly 1992). Evidence from the UK also showed that part-time workers received worse pay, conditions and benefits than full-time workers (Balchin 1994: 44; Tam 1997: 3). Balchin (1994: 46) also found that part-time employees had only limited understanding of their entitlements, so attempts to improve employment protection and entitlements relied on employers doing ‘the right thing’. Part-time employees were, however, conscious that they were subjected to different treatment than full-time employees (Balchin 1994: 52). Differences in intrinsic factors preoccupied human resource management researchers, especially differences in job attitudes and job satisfaction between part-time and fulltime workers (Deery & Mahony 1994; Mueller & Price 1987; Walsh & Deery 1999). Various findings existed. Some researchers found part-time workers less satisfied than their full-time counterparts because of their lower pay, reduced benefits and generally less rewarding work (Wakefield et al. 1987). Other research demonstrated that part-time retail workers were just as satisfied as their full-time counterparts (Conway & Briner 2002: 290; Deery & Mahony 1994: 341). Again, given the heterogeneity of part-time workers, differences in attitudes between groups may be explained by the workers’ individual characteristics and circumstances (Feldman & Doerpinghaus 1992; Sinclair, Martin & Michel 1999; Walsh 1999). Furthermore, there was no clearly established relationship between satisfied employees and firm-level performance, despite the rhetoric of satisfied employees possessing greater loyalty and higher levels of performance (Silvestro 2002). Labour segmentation theorists put a different slant on employee satisfaction. Burchell and Rubery (1994: 115) argued that groups in the labour force who were satisfied with poorly paid jobs may be permanently located in the secondary labour force, whereas those who were dissatisfied were more likely to be displaced from the primary labour force. If this was the case, then research suggests there was little opportunity for advancement as part-time workers were generally restricted to low skilled positions on
66
registers and hence did not develop the competencies necessary for a management role (Runciman 1989b: 88). To summarise, using part-time workers provided both benefits and costs to organisations. The primary benefit was the capacity to allocate labour where customer demand necessitated, thereby reducing the amount of non-productive time that labour was engaged for. This practice provided the organisation with significant cost savings in terms of direct labour costs and associated financial benefits. At the same time, employing part-time employees increased administrative costs, as greater numbers of workers were required to achieve the same hours coverage. Additionally, high levels of turnover were identified as a cost associated with the use of part-time employment. In an Australian context, permanent part-time employment was perceived as relatively inflexible since the number of contracted weekly working hours was fixed. Part-time employment also had benefits and costs for employees, although the employee perspective was not as well researched. From the employee’s point of view, the benefits of part-time employment came from the ability to match working hours to work availability, in order to reconcile other aspects of their lives. Whether this reconciliation of needs was achievable depended largely on which party controlled the allocation of labour. The literature suggested that it was the employer’s time schedules that dictated working time arrangements, not the employee’s desires. If this was the case, then part time employment comes at the cost of reduced control over working time arrangements for employees. For the employee, the additional costs of part-time employment were low pay, limited additional benefits, and little opportunity for promotion. Having established this, however, it was clear from the literature that parttime workers are not a homogeneous group and that the costs and benefits to each worker will differ.
3.6
CASUAL EMPLOYMENT
In the strictest sense, casual employment was employment when needed, as opposed to continuing or permanent employment. As such, a casual worker was legally terminated after every shift and could not accumulate continuous periods of service (Creighton & Stewart 2000: 213). In practice, however, different awards and certified agreements adopted varying definitions.
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Casual labour was more commonly called temporary labour in the UK, and was not a widely adopted labour use strategy within the retail industry (Walsh T. 1991: 108). Where casual labour use existed, it was primarily to meet seasonal variations in demand, for sale periods and the like. T. Walsh (1991: 110) argued that, in the UK, temporary workers were treated as a separate labour force and paid lower rates as a cost saving measure. The incidence of temporary labour in the UK was so low that it had been the focus of little research attention. In the US, casual labour of the type used in Australia was most commonly called on-call work, direct-hire temporaries or short-term hires (Nollen 1999: 26). The incidence of this type of flexible working was estimated to account for around 4 per cent of total employment in 1997 (Nollen 1999: 27). As in the UK, given the low incidence of this form of working, it was not well researched (Way 1992: 332). In Australia, however, the incidence of casual work was higher than in most other Western countries (Ozaki 1999: 9). The growth in the incidence of casual employment in Australia had been the subject of many studies and definitional debates about the ‘true’ character of casual employment (Burgess 1997; Campbell 1996, 2001; Lewis 1990; Mangan 1998; Mangan & Williams 1999; Murtough & Waite 2000; Norris & Wooden 1996; Ozaki 1999; Romeyn 1992). The retail industry was renowned as one of the industries with the highest levels of casual employment and several studies existed that examined casual employment within the industry. Just as part-time employment was not homogeneous, neither was casual employment (Weller, Cussen & Webber 1999: 16). The nature of casual jobs, their duration, working time arrangements and level of recognition under industrial agreements differed as did the characteristics of the individuals accepting casual employment (Campbell 2001: 67; Runciman 1992: 190; Weller, Cussen & Webber 1999: 17). Weller, Cussen and Webber (1999: 17) divided casual employment into ‘probationary’, ‘quasi permanent’, ‘restructuring’, ‘technical / organisational’, ‘labour pool’ and ‘agency’ work. These forms of casual employment could operate simultaneously and organisations could use one form or a number of different forms of casual employment concurrently. Boreham et al. (1996) and Whitehouse, Lafferty and Boreham (1997) surveyed employers to examine patterns of numerical flexibility in the grocery retail and
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hospitality industries in Brisbane in 1994. Their findings showed that numerical flexibility was more prevalent in large employers and that casual labour was more widely used than permanent part-time. Boreham et al. (1996: 14) found limited evidence of employers shifting employees from casual to permanent part-time status. Where this had occurred the workplaces were medium or large and the change had been driven by enterprise bargaining agreements, as well as by the perception that permanent part-time employees were cheaper in the long run and more loyal. Most noticeably, this research suggested that changes in employment status were unlikely to improve the conditions under which employees labour (Boreham et al. 1996; Whitehouse, Lafferty & Boreham 1997). The following section examines the benefits and costs of casual employment for employers and employees. 3.6.1 Benefits of Casual Employment for Employers As with part-time employment, there were obvious cost savings achieved, for the employer, by matching customer demand with labour usage (Lowry, Simon & Kimberley 2002: 54). Campbell (2001: 81) listed the employer benefits of recruiting casual labour as: ‘cheaper labour costs; greater ease of dismissal; ability to match labour-time to fluctuations in workload; administrative convenience; and enhanced control’. This was reinforced by Runciman (1987: 10), who argued that retailers consistently had more casuals on their books than work available, therefore casual workers were always under threat of replacement as only the most productive workers were given the hours. Weller, Cussen and Webber (1999: 27) highlighted the potential for casual employment to be used as a ‘probationary’ form of employment before an organisation committed to permanent employment. As such, casual labour was a means of avoiding Australia’s unfair dismissal legislation and compulsory superannuation system (Weller, Cussen & Webber 1999: 28). The system of rewarding casual employees with a loading meant that, in Australia, casual employees attracted the same direct costs as permanent employees. There were, however, significant savings in indirect costs, such as turnover, recruitment, absenteeism, redundancy and carrying ineffective or disruptive workers (Weller, Cussen & Webber 1999: 28). Weller, Cussen and Webber (1999: 29) asserted that another benefit of using casual employment was that it extended management control and enabled work intensification, since casual employees were essentially probationary and hence more compliant. Management was therefore able to determine which casual workers were most
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compliant with management direction before they were selected for permanent work. The benefits of using casual labour were clearly significant for employers, but more surprisingly, recent literature suggested that, despite the transient nature of casual work, it could provide benefits for employees as well. 3.6.2
Costs of Casual Employment for Employers
The decision to adopt casual employment comes with high levels of employee turnover, as casuals leave to get longer hours or permanent work elsewhere. As a result, a strategic shift occurred in some segments of the retail industry in Australia with some retailers choosing to move from casual to part-time employment, in an attempt to reduce turnover levels (Boreham et al. 1996; Whitehouse, Lafferty & Boreham 1997). Additionally, managers perceived that employees would be more committed to the organisation’s goals if they had permanent jobs. In a survey of Brisbane grocery and hospitality firms, Whitehouse, Lafferty and Boreham (1997: 41) found that both casual and full-time employees were perceived as restricting flexibility. Full-time workers were perceived as being locked in to an expectation of 9 to 5 hours. Casuals, because they were primarily students, were unavailable at certain times of the year. Permanent part-time employees were perceived as the most flexible, as they had limited ability to refuse shifts and did not attract the added cost of penalty rates. This directly contradicts the findings of Jamieson and Webber (1991). Managers also expressed the view that staff turnover would be reduced and loyalty to the organisation improved through the transition of casual part-time workers to permanent part-time status (Whitehouse, Lafferty & Boreham 1997: 42). The precise dimensions of these costs for employers are an under-researched area within the Australian retail industry. 3.6.3 Benefits of Casual Employment for Employees Australian research indicated that many casual employees preferred their casual employment status, as it allowed them to fit work commitments around other commitments, such as study (Whitehouse, Lafferty & Boreham 1997: 42; Lowry, Simon & Kimberley 2002: 54; Romeyn 1992: 40). Hence, a transition to permanent employment reduced flexibility for the employee, although it provided greater predictability of hours and therefore greater income. On the other hand, Whitehouse, Lafferty and Boreham (1997: 43) pointed out that the potential existed for casual employees to be coerced into accepting hours in order to
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maintain their position in the organisation. For part-time employees, the benefits of casual work depended to a significant extent on an individual’s personal circumstances. Whitehouse, Lafferty and Boreham’s (1997: 43) study showed that some casual workers preferred their casual status for its higher hourly pay rates, while others expressed a desire for the security and employment conditions (holiday pay, sick leave) provided by permanent part-time employment. There was also some recent evidence from the hospitality industry that casual work had the potential to provide control over working time and, in some instances, the potential for a move to full-time employment (Lowry, Simon & Kimberley 2002: 54). Likewise, Weller, Cussen and Webber (1999: 25) suggested that it was possible to graduate from casual employment to permanent employment by demonstrating ‘the right attitude’ (Weller, Cussen & Webber 1999: 25). The idea that casual employment could provide benefits for employees appeared in the literature only relatively recently, and therefore requires further research. The retail industry provides a perfect vehicle for such research, given the prevalence of casual employment within the industry. 3.6.4
Costs of Casual Employment for Employees
The costs of casual employment for employees were more apparent. It was widely accepted that casual or temporary workers were vulnerable (Burgess 1997: 112; Burgess & Campbell 1998; Kirby 1992; Mangan & Williams 1999). The American human resource literature stated that casual workers typically have limited employment security, fringe benefits or possibilities for advancement (Davis-Blake & Uzzi 1993: 195; Mangum, Mayall & Nelson 1985). General industrial relations and human resource management literature in Australia told a similar story. Casual employees did not receive much in the way of training, job security or organisational benefits, nor did they have the capacity to plan working time (Campbell 1996; Burgess 1997; Lowry, Simon & Kimberley 2002: 63; Romeyn 1992). Additionally, casual employees were often exposed to greater health and safety risks because they received less on-job training (Quinlan & Mayhew 2001: 12-14). Australian studies into casual employment did not specifically examine supermarket employment. Those retail related studies that exist examined casual employment in department stores (Deery & Mahony 1994; Walsh & Deery 1999) or a broad spectrum of retail employers using surveys (Whitehouse, Lafferty & Boreham 1997; Boreham et al. 1996). Hence, little is known about casual employment within supermarkets. The
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preceding section outlined the literature on the costs and benefits of part-time and casual employment for employers and employees. The section argued that neither part-time nor casual employees represented a homogeneous group and therefore the consequences for each were likely to differ according to personal circumstances. For employers, the literature demonstrated that the benefits clearly outweighed the costs.
3.7
FEMINISATION OF THE RETAIL WORKFORCE
There was an obvious supply-side connection between the shift towards part-time employment and the growth in the number of women in the retail workforce. At the same time, it is not possible to discuss the increasing numbers of female workers in the retail industry without at least alluding to the social changes that have led to the increasing participation of women in the workforce. Burchell and Rubery (1994: 80) argued that segmentation of the labour force on the basis of gender was ‘both the outcome of labour market processes on the demand side and a direct influence on firms’ employment and pay policies’. Gender segmentation was not a recent phenomenon in the retail industry, though. Studies of internal labour markets within the US retail industry found evidence of segmentation from as far back as 1913 (Carter & Carter 1985: 597). Similarly, in the UK stereotypic views of women’s domestic responsibilities led to gender being used as a convenient recruitment tool (Hunter et al. 1993; MacEwen Scott 1994: 249). In the UK, there was systematic evidence of a gender division in the food retail labour market, with a preponderance of men holding retail management positions (Freathy & Sparks 1996a: 187; Turnbull & Wass 1997: 104). Within management, the gender bias existed for deputy and assistant store managers, as well as for store managers (Freathy & Sparks 1996b: 11). Women dominated shop floor level jobs, while men dominated the management positions (Freathy & Sparks 1997: 51; Broadbridge 1999). In the UK’s food superstores, women held 73 per cent of sales positions, while men employed on the shop floor worked in specialist areas such as meat, vegetables, bakery and storeroom (Freathy & Sparks 1994:7). Additionally, for women seeking a career in retail management, ‘the opportunities are generally fewer and qualitatively different from those available to men’ (NEDO 1985 in Maxwell 1995: 121). Ducatel and Blomley (1990: 222) asserted that retailers had deliberately dismantled the ‘relatively skilled, male-dominated labour force’ and replaced it with a ‘low-skilled, lowly paid, feminized
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workforce’, as well as increasing the use of juvenile labour and part-time working hours. Not all authors agreed, however. Bluestone and Stevenson (1981: 44) perceived the duality of the employment structure as ‘a by-product, rather than an explicit goal, of the restructuring of the industry’. In several studies into retail earnings differentials in the UK, Broadbridge (1995: 14, 1997: 221) found that female sales assistants and checkout operators earned four-fifths of their male counterparts’ gross weekly wages. This earnings differential also existed in Australia, with females earning 86 per cent of the male full-time ordinary weekly earnings (Hammond 1992: 41). Hammond (1992: 34) attributed this wage differential to the location of male and female workers across the retail industry. Broadbridge (1995, 1997) concurred, arguing that men tended to be located in positions with payment by results, performed higher amounts of overtime and had continuous service records allowing them to capitalise on length of service payments. In fact, both in the UK and Australia there was general agreement within the retail literature about the dominance of males in the professional and managerial areas of the retail industry and the dominance of females in sales and clerical positions (Boreham et al. 1996; Broadbridge 1995, 1997; Brockbank & Airey 1994; Brosnan 1991; Dawson, Findlay & Sparks 1986: 357; Freathy 1993; Sparks 1991). This was not to say that females do not hold management positions, rather, that those who do tend to be in lower level management positions, and rarely at Board of Directors level (Broadbridge 1997: 231). Research into why women do not hold management positions within the retail industry attributed this under-representation to organisational culture and policies that supported the dominant male ethos of long working hours (Broadbridge 1999: 153). There was, however, some evidence that this situation may be changing. Thomas (2001) examined the composition of the boards of British retailers and found a recent increase in the numbers of women holding board positions. Women, though, generally held only nonexecutive director positions and were more likely to be degree qualified than their male counterparts (Thomas 2001: 5-7). It is important to note that the gender domination of females was not an industry-wide phenomenon. Research into employment in DIY (Do It Yourself) superstores found a preponderance of male full-time workers in this segment of the industry (Sparks 1991: 310). The reasons suggested for this were societal perceptions that male employees
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knew more about the hardware products sold in DIY outlets and were better able to demonstrate the products (Sparks 1991: 310). Despite the large numbers of male fulltime employees, this segment of the industry also employed a sizeable proportion of female part-time employees. Part-time employment was, however, not the dominant form of employment in DIY. This Sparks (1991: 311) attributed to a lower volume of customer flow, extended trading hours, greater decentralisation of the stock control and administration function, and direct to store delivery from manufacturers. It therefore appeared that different retail formats exhibit different patterns of labour usage.
3.8
DESKILLING
Retail has been perceived as a low skill occupation with few barriers to entry (Freathy & Sparks 1994: 6; Hector, Henning & Hubble 1993: 327). The tasks required of service assistants in food retailing were unpacking merchandise, cleaning and stacking shelves, collecting trolleys and preparing fresh foods and flowers for sale, doing incidental clerical duties, registering sales and handling customer queries, all of which were tedious and regarded as requiring few skills. Yet Sparks (1992: 17) argued that any interaction with customers required significant interpersonal skills, especially if the interaction was to prove profitable for the organisation. The introduction of point of sale technology has also had an impact on the nature of work performed by shop floor staff. Prior to the introduction of Electronic Point of Sale (EPOS) one of the most labour intensive parts of supermarket work was the pricing of merchandise (Walsh J. 1991: 459). Until the mid 1970s in the US, one team of workers priced the merchandise and placed it on shelves and another team of people read the price and keyed this price into a cash register. Bar coding with Universal Product Codes (UPC) and scanners automated this labour intensive process. While the elimination of price marking reduced the quantity of labour in stores, Smith (1988: 150) claimed that EPOS did not significantly reduce the amount of time needed to process a sale. Smith (1988: 154) also argued that, as a result of the introduction of EPOS, checkout operators lost their ability to deal with unexpected customer requests and to perform mental arithmetic (Smith 1988: 154). Significant debate existed on the effects of technological change on the skill levels of retail employees. Advocates of the deskilling thesis (Braverman 1974; Crompton, Gallie
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& Purcell 1996) asserted that the advent of computerised technology resulted in a deskilling of the workforce. Rhoads et al. (2002: 74) highlighted the fact that even retail managers believed they have limited autonomy and variety within their jobs. On the other side, advocates of the skilling thesis argued that computerised technology requires a more highly skilled and trained workforce, especially for management (Freathy & Sparks 1994: 5). Penn (1995: 229) argued that the introduction of new forms of technology had not reduced skill levels required overall, except in the area of checkout operators. Rather, the majority of establishments that Penn (1995: 237) surveyed were more likely to say that increased skill was required, as a result of technological change. Managers in particular, as a group, were more likely to have experienced an increase in their skill requirements as a result of technological change, as were clerical workers and, to a lesser extent, skilled retail employees (Penn 1995: 237). While there was no general agreement as to the skill implications of technological changes within the industry, there did appear to be a bifurcation in the skill levels required of retail employees.
3.9
YOUTH EMPLOYMENT
Another feature of food retailing employment was the dominance of young people, both at shop floor level and in management positions. Freathy and Sparks (1994: 7) estimated that more than 25 per cent of the retail labour force in the UK was less than 24 years of age. Freathy and Sparks (1997: 52) found that young people were employed on permanent part-time contracts, either for specific early morning and weekend shifts or for seasonal work. Young people under eighteen years were also desirable for their differential wage rates. Freathy and Sparks (1994: 7) argued that the employment of large numbers of young people was a reflection of supply side pressures. This argument was supported by evidence of a shift away from young people towards older, even retired, workers in areas where it was difficult to attract young people. While the Australian Bureau of Statistics provides evidence of large numbers of young retail workers, all evidence to date is either statistical or anecdotal, and little is known about what young people think of their retail employment.
3.10
TURNOVER
One of the most enduring features of retail industry employment is high levels of staff turnover, and consequently recruitment and retention problems (Feinberg & Jeppeson
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2000: 123). The costs of turnover were fourfold: the lost productivity of trained workers who leave, the direct costs of finding and training a replacement, the cost of waiting until a new employee was fully productive, and any effect on the morale of other employees (Feinberg & Jeppeson 2000: 123). There were two bodies of literature that examined retail staff turnover. One body of retail turnover literature examined the link between an individual’s intention to leave and other variables such as previous retail experience (Gable, Hollon & Dangello 1984), age and job satisfaction (Lucas 1985; Darden, Hampton & Boatwright 1987; Good, Sisler & Gentry 1988) and organisational performance (Koslowsky & Locke 1989). As identified earlier in this chapter, individual survey responses depend on an individual’s personal circumstances; therefore this literature was as inconclusive as the job satisfaction literature. The second body of literature examined levels of turnover within the industry. Again, the literature was inconclusive, as levels of turnover vary between retailers. A study by Marchington and Parker (1990: 153) of a leading supermarket chain in the UK found turnover levels of 50 per cent across the chain and up to 55 per cent in one of stores examined. Another study by Marchington (1993) of a UK supermarket chain found that average turnover across the organisation was around 40 per cent, and that some stores in the South of England had figures as high as 200 per cent. High rates of turnover applied across all employment classifications within the firm with the lowest rates for middle-aged female part-timers (Marchington 1993: 137). Walsh (1990: 521), in a study of five retail outlets in the UK, found no evidence that part-time employees had higher levels of turnover than full-time employees, although ‘Saturday-only’ staff had higher turnover levels. Freathy’s (1993) study of superstores found that levels of turnover varied between companies and that, while one organisation felt a 23 per cent turnover was unacceptable, another felt that 40 per cent staff turnover was quite acceptable. It was apparent from the literature, then, that there were no industry standards regarding staff turnover levels. The issue of retail staff turnover in Australia was of enough concern to prompt a collaborative government sponsored investigation. This joint research by the Australian Retailers Association (ARA), the Work and Family Unit of the Department of Employment and Workplace Relations (WFU) and the Equal Opportunity for Women in the Workplace Agency (EOWA) reported that Australian retailers have general turnover levels of 19 per cent, with 12 per cent for head office staff, 15 per cent for store
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managers, 16 per cent for permanent store staff and 34 per cent for casual staff (ARA/WFU/EOWA 2002: 8). ABS statistics indicate that 22.8 per cent of the retail workforce had less than one year’s tenure in their current job in February 2002 (ABS 2002 6209.0). One of the recommendations from the research was that retailers should attempt to cost their organisational turnover (ARA/WFU/EOWA 2002: 2). This was particularly important since one of the report’s major findings was that retailers have difficulty attracting and retaining good staff. There were attempts within the academic literature at quantifying the cost of retail staff turnover. One US survey placed the cost at more than $10 000 per employee in 45 per cent of cases (Feinberg & Jeppeson 2000: 123). Also in the US, the Coca Cola Research Council calculated the direct and indirect costs of turnover in supermarkets at $US 13 936 direct costs for a store manager and $US 20 799 indirect costs (cited in ARA/WFU/EOWA 2002: 11). Costs for a cashier were $US 736 direct and $US 1 550 indirect. Australian evidence suggested that turnover costs $3 800 for a full-time staff member, $2 000 for a permanent part-timer and $1 200 for a casual employee (cited in ARA/WFU/EOWA 2002: 12). Staff turnover was clearly an issue for retail employers and highlighted the need for further investigation. Coupled with the issue of turnover was the need to recruit replacement employees and attempt to retain existing employees. The reconciliation of supply and demand in the retail industry meant that the workforce had adjusted to the needs of employers (Sparks 1992: 17-18). This was despite the fact that retailers had tailored their recruitment and, in some countries, raised pay rates for shop floor employees in order to attract people to the industry. The difficulties experienced with recruitment had led retailers to increase their focus on retention strategies and training as a means of improving service quality (Cameron 1991). Sparks (1992: 18) argued that in the past retailers had focused on ‘matching staff to turnover in purely quantitative (i.e. numerical) terms’. As a result, he argues that retailers favoured part-time employees and the ‘cheapest rather than the best’ employees (Sparks 1992: 12). He argued that retailers desirous of delivering quality service needed to consider reconciling demand and supply in a qualitative sense as well. This argument was reiterated recently by Broadbridge (2002a: 536), who argued that the adoption of a purely quantitative approach to scheduling staff leads to staff shortages, service problems and human resource management problems. Details of the difficulties
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experienced by retailers in recruiting and retaining employees have received limited research attention in Australia.
3.11
RESEARCH AGENDA
What, then, is the research agenda after examining the literature in Chapter Two and Chapter Three? The first section of Chapter Two identified changes in business strategy that contributed to the restructuring of retail employment. Here it was apparent that the growth of large grocery retail chains and increasing concentration of ownership had led to a shift towards salaried employment within the industry, both in Australia and overseas. The superstore retail format altered the structure of food retail employment in the UK and US. Australian grocery retailers, whose preferred location was an anchor store within a shopping centre, did not copy this retail format, but appeared to mimic changes in the structure of employment. By the late 1990s, grocery retailers in the UK and in Australia began experimenting with a range of retail ‘brands’, large and small stores, the development of ‘own label’ products and diversification into other sectors, such as finance and petrol retailing. These changes in business organisation provide the context for this research. While there was evidence of these changes in business organisation in Australia, their impact on employment within the retail grocery industry has received limited research attention. This thesis was designed to remedy that situation. The second section of Chapter Two examined the Stirling School’s arguments that the retail workforce had been restructured by centralising functions, shifting control to head office, increasing the complexity of the management task, and matching customer demand and labour usage. Little is known about the nature of labour usage in Australian grocery retail firms and whether functions have been centralised. Similarly, the relocation of control to head office has not been examined in any depth in Australia. This thesis therefore contributes by expanding the knowledge regarding retail employment. The complexity of the management task has received some Australian research attention, but within a specialty retailer, not a food retailer (see Bramble, Parry & O’Brien 1996). Therefore, this thesis will examine whether similar changes have occurred within food retailing. The practice of matching customer demand with labour usage, and the resultant growth in part-time and casual employment, define the area which has received the greatest research attention in Australia (see Runciman 1989a,
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1989b, 1992; Jamieson & Webber 1991; Deery & Mahony 1994; Boreham et al. 1996; Whitehouse, Lafferty & Boreham 1997; Walsh & Deery 1999). Yet only two of these studies include supermarkets within their employer survey sample and none of the studies examines the structure of a firm’s internal labour market. This study therefore expands knowledge regarding internal labour markets in supermarkets and the way in which labour is used in supermarkets. The third section of Chapter Two reviewed the existing literature on employment relations strategies within the retail industry. This review demonstrated that employment relations strategies were an under researched area within the retail industry literature. As retail is a major employing industry, this thesis will make an important contribution to information regarding employment policies and practices within the industry. The fourth section of Chapter Two examined whether individual store operators could in fact choose employment patterns that differed significantly from those of their competition. The literature argued that store operators and individual store managers could choose to deviate from prevailing employment structures within the industry, but that broad employment patterns were apparent. This thesis will examine whether differences appear in the structure of employment between branches of the one retail firm. As such, it will be possible to test arguments that store managers have the capacity to influence employment structures within their own stores (see Sparks 1983; Dawson, Findlay & Sparks 1986; Marchington & Parker 1990; Penn & Wirth 1993; Lynch 2001). These ideas have not been examined in an Australian retail context. Chapter Three examined the literature on the consequences of the labour use strategies employed in the retail industry. The first section of Chapter Three briefly examined two of the most prominent theories on the structure of a firm’s internal labour market: labour market segmentation and the ‘flexible firm’ model. While this section identified criticisms of the flexible firm model in the UK and Australian literature, it was suggested that the structure of retail employment resembled the ‘flexible firm’. The model has been applied to a study of the retail labour market in the UK, and found to require some alterations, but it has not been applied to the Australian retail labour market. This thesis will establish whether the flexible firm model applies to the
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Australian grocery retail industry and whether the shape of grocery retail employment in Australia is similar to that in the UK. Chapter Three examined the literature on the structure of the retail workforce in the UK and the US, where it was argued that the labour force was heavily segmented into primary and secondary jobs. There is a paucity of in-depth research into internal labour markets in the Australian retail industry and the evidence that is available is inconsistent. Some Australian researchers argued that retailers recruited from both primary and secondary segments and that progression between segments was not possible for most workers (See Runciman 1989b; Brosnan 1991). Others, however, argued that transition between the primary and secondary segments was possible (Weller, Cussen & Webber 1999). This thesis provides an in-depth examination of the internal labour market within a supermarket retailer and adds to the body of literature on career progression in retail. It also provides a revision of the flexible firm model - the casual internal labour market model - which may prove more appropriate for a labour market, such as the Australian retail industry, where casual labour usage is a longstanding feature of employment. Chapter Three also identified the benefits and costs associated with part-time labour from an employer’s and an employee’s perspective. While much is known about the benefits of using these flexible employment forms in retail and other industries in Australia, little is known about the situation within supermarkets specifically. Given the large numbers of people employed within Australian supermarkets, this is a significant oversight. Similarly, it is only recently that the costs to employers of adopting flexible employment forms have attracted research attention. This thesis provides the opportunity to examine the organisational costs associated with flexible labour usage within the retail industry. Australian retailers rely heavily on casual employment contracts. This was not a strategy adopted by retailers in the UK or US, although there were signs that UK retailers were moving towards more flexible forms of employment, such as zero hours contracts. This research will therefore fill an information void on the benefits and costs associated with casual employment in the supermarket sector of the retail industry. The third section of this chapter examined the literature on feminisation, deskilling and growth in youth employment within the retail industry. Within this literature, it was
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argued that there was a gender division within the retail industry in the UK and Australia, with men holding management positions and women, shop floor positions. This research, by examining the internal labour market, adds to the body of knowledge on segmentation by gender. Conflicting literature on the nature of skill within retailing was also identified, with some authors arguing that the industry had been deskilled and others, that skill levels had increased (Freathy & Sparks 1994; Penn 1995). Wright and Lund (1996, 1998, 2002, 2003) were the only researchers who examined the nature of skill in the retail industry in Australia, but their primary focus was the distribution centres operated by retail chains. This thesis will therefore fill a gap in the literature on retail skills. Similarly, despite recognition that retailers employed large numbers of young people, little was known about these workers and their employment. The final section of the chapter examined additional literature on some of the consequences associated with flexible employment forms, turnover, recruitment and retention. Turnover was recognised as a major issue for retail employers in the UK and Australia. Following from this, recruitment and retention became important issues. With the exception of a government-sponsored report (ARA/WFU/EOWA 2002), there was no Australian research into these issues. This thesis will provide an in-depth examination of turnover and the associated problems within one of Australia’s largest retail chains.
3.12
CONCLUSION
This chapter examined the structure of retail employment in Australia and elsewhere, and the literature on the segmentation of the retail workforce. It demonstrated that the retail workforce was segmented by employment status and hours, with large numbers of part-time workers and, in Australia, casual workers. The benefits and costs of these employment forms were addressed from an employee and an employer perspective. The literature also demonstrated that the retail workforce was segmented by gender and age; however, this segmentation has not been well researched. Some organisational consequences of a segmented workforce, such as turnover, recruitment and retention, were discussed. Finally, the gaps in the literature that this thesis addresses were identified. The next chapter, Chapter Four, provides the economic and institutional context for a study of the Australian retail industry.
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CHAPTER FOUR The Australian Context
Whereas the previous two chapters have examined the literature on retail business strategy and employment relations strategy, as well as the changing structure of retail employment and its consequences, this chapter provides the contextual background material for the case study. Employers’ choices about patterns of labour usage are not made independently from the environment in which they operate. Factors external to the firm, such as the economic structure of the industry, technological change, legislation, unions, employer associations and the labour market, operate to constrain and to provide opportunities for employers. This chapter examines those external factors that affect decisions made by retail employers in Australia and, more specifically, Queensland. Thus, the chapter provides the contextual material that underpins the labour use decisions of retail employers. The first factor encompasses the economic and technological changes that have occurred within the retail industry over the last two decades. The co-ordinated push by employers for increased flexibility and control over the working time arrangements of employees is examined, along with the regulatory regime governing both the retail industry specifically, and employment more generally. Changes in the structure of the labour market, which have provided opportunities for retail employers to recruit different types of labour, are examined. Overall, the chapter argues that these external factors have exerted significant influence over the nature of labour usage patterns within the retail industry.
4.1
ECONOMIC AND TECHNOLOGICAL CHANGE
The structural changes to the retail industry such as the profusion of takeovers, which resulted in both increased levels of concentration within the industry and the growth of large retail chains, were outlined in Chapter Two. This section briefly discusses the economic structure of the Australian food retailing industry. As the major retail chains grew over the last two decades, total retail sector income also grew. In 1984, retail turnover was $46 billion per annum, 29 per cent of which was
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derived from supermarkets and grocery stores (ABS 8501.0). By 2003, annual retail turnover was $150 billion, of which $53 billion (35 per cent) came from supermarkets and grocery stores (ABS 8501.0). Supermarkets and grocery stores also delivered the best dollar return per square metre of floor space across the retail industry at $7 666 per square metre (ABS 2000 8622.0). In June 1999, there were 98 289 retail businesses (management units) in Australia (ABS 2000 8622.0). This represented a 17 per cent increase on the number of retail businesses operating in 1991-92 (ABS 1994 8624.0). These figures do not, however, reflect growth across all sectors within the retail industry. Within the supermarket and grocery stores sector the number of small businesses employing fewer than 20 employees declined from 5 190 in 1991-92 to 3 477 in 1998-99 (ABS 1994, 2000 8622.0). Similarly, the number of medium size businesses declined from 362 in 1991-92 to 290 in 1998-99. The number of large businesses employing over 200 employees also declined from 50 in 1991-92 to 30 in 1998-99. Concentration within the industry is reflected in the percentage share of total income by large businesses. In 1991-92, businesses with over 200 employees accounted for 77 per cent of supermarket and grocery store sales (ABS 1994 8622.0). In 1998-99, large chains accounted for 86 per cent of all supermarket and grocery sales (ABS 2000 8622.0). The concentration of ownership and the slow growth in consumer spending over the 1980s created an increasingly competitive market as the major chains realised economies of scale and were able to pass savings on to the buying public. In 1992, Coles operated 383 large supermarkets nationally under the Coles banner and over 120 discount Bi-Lo outlets (Humphery 1998: 154-155). At the same time, there were 415 Woolworths supermarkets nationally in addition to nearly 100 other discount stores operated by Woolworths under other banners. By late 2002, Coles operated 667 supermarkets under 5 retail brands (AC Nielsen 2002: 11-14). Woolworths operated 680 stores under 5 retail brands at the end of 2002. There was, however, evidence to suggest that the dominance of the two major chains might be abating in the wake of the demise of Franklins, which was discussed in Chapter Two (AC Nielsen 2001, 2002). A decision by the Australian Competition and Consumer Commission (ACCC), which limited the number of Franklins stores available for purchase by Coles and Woolworths, has allowed other firms to enter the market and
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has led to a small resurgence in independent retailing (Flanagan 2002: 11). By the end of 2002, independent operators accounted for 22 per cent of grocery market share. The South African owned Pick’n’Pay had re-entered the Australian market after purchasing ex-Franklins stores and the German owned deep discounter Aldi had expanded to 36 largely purpose-built stores in New South Wales, with plans to expand into other states (Flanagan 2002: 14). All these factors made grocery retailing exceedingly competitive. Despite the level of sales, grocery retailing had low operating profit margins compared to other segments of the retail industry (ABS 2000 8501.0). Amongst the states, Queensland’s retail industry had the second lowest operating profit margin with 1.8 per cent of sales available as operating profit (ABS 1994 8625.0). The average operating profit before tax for Australian supermarkets and grocery stores in 1991-92 was 2 per cent (ABS 1994 8625.0). By 1998-99 this figure had risen to 2.9 per cent (ABS 2000 8622.0). Even with their market dominance, the major grocery retailers, Coles and Woolworths, delivered an operating profit margin before tax of 3.4 per cent and 3.6 per cent respectively in 2002 (Coles Myer 2002; Woolworths 2002). However, in the retail industry, competition also came in the form of advances in technology. The advent of scanning technology and its widespread acceptance across the entire supermarket sector revolutionised the industry. Scanning was introduced in 1982, achieved widespread acceptance by 1985, and was fully adopted across the industry by 1987 (Johnston et al. 2000: 77). Scanning, and the Electronic Funds Transfer at Point of Sale (EFTPOS) that followed shortly after, enabled retailers to reduce the amount of labour devoted to monitoring prices, marking stock and entering prices into cash registers at point of sale (Walsh J. 1991: 459). While customers initially resisted the removal of prices from individual items, claiming that it made price comparisons difficult and pricing errors at the cash register likely, retailers were quick to recognise the advantages (Walsh J. 1991: 459). Scanning enabled retailers to track sales of various products and tailor their product offering to better meet the needs of their target market. These changes also made centralised buying a reality since the capacity to monitor sales across stores and to reorder accordingly became available. As discussed in Chapter Two, following from this, retailers invested in large-scale distribution facilities which allowed for just-in-time
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purchasing and delivery, thereby reducing the overheads associated with storage and interest on stock payments (Harvey 1999: 6-9; De Bruyn 1999: 9). The objective of this strategy was for stock to be ordered from the warehouse (or distribution centre) and placed directly on the shelves in store, thus reducing double handling (Lansbury 1983: 22). Within the stores, the introduction of electronic point of sale technology created three potential areas of job losses: no need for price marking stock, greater speed of processing sales at the checkout and a reduced need for stocktaking (ASTEC 1986; Maher 1986: 96). The fears of the checkout employees proved real as the technology led to job losses across the industry and to productivity improvements for retailers (Lansbury 1980: 278, 1983: 53; Walsh J. 1991: 461; Maher 1986: 96). Across the industry, computerised stock control, coupled with mass advertising, reduced the importance of knowledgeable sales employees. With the consequent reduction in skill required to sell stock, it became possible to replace experienced sales people with untrained casual and part-time employees (Bluestone & Stevenson 1981: 30). Further advances in checkout technology now exist which enable customers to selfserve, pack and pay. These self-checkouts have the potential to reduce customer queuing time and to further reduce retailer employment costs (Flanagan 2002: 14). Although this technology has existed for a number of years and is used in the US and Europe, along with electronic shelf labelling, Australia has been slow to adopt this technology. That situation is likely to change in the near future, as Woolworths trialled self-checkout technology in two of its Big W discount variety stores during 2003 (Retail World 17 March 2003: 5). The other major technological innovations that have changed the nature of retail employment are changes to the systems of production of meat and bread products. The invention of an airtight, non-toxic plastic strong enough to withstand punctures made it possible for meat to be centrally processed and then transported long distances with reduced risk of spoilage (Walsh J. 1991: 457-8). All major Australian retailers either have their own meat processing plants or have arrangements with meat producers so that most meat is provided boxed. Another major development was the introduction of bread pre-mixes and par bake technology. Both of these technological changes enabled skilled trades people to be replaced with lower cost, less skilled employees.
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Technological changes such as these have enabled supermarket retailers to improve labour productivity by maintaining sales levels and reducing the amount of labour required (Johnston et al. 2000: 74). Yet the retail grocery industry remains highly labour intensive, as shelves need to be constantly filled and sales processed (Pringle 1998: 148).
4.2
THE PUSH FOR INCREASED FLEXIBILITY IN LABOUR UTILISATION
From the mid 1970s, there were pressures from a range of sources for increased levels of flexibility in labour utilisation. Some of the factors identified in the literature as the catalysts for workplace change in Australia were structural shifts in the economy, the election of conservative governments and the removal of trade protection barriers (Norris & Wooden 1996: 6; Wooden 2000: 22). Additionally, Australia began to experience high levels of unemployment. Unemployment rates rose steadily from around 5 per cent in the late 1970s to around 8 per cent for most of the 1990s, before tapering off to between 6 and 7 per cent from 1999 until 2002 (Norris 1996: 226; ABS 6291.0.55.001). The presence of high levels of unemployment meant that, for the past two decades, employees and trade unions have been prepared to consider a range of previously undesirable employment options simply to gain access to paid work and paid workers (Norris & Wooden 1996: 8). Widespread unemployment provided the perfect vehicle for employers to push for increased labour market flexibility. One of the means of achieving flexibility in the retail industry was the use of casual employment. There have been provisions for the use of casual employment in the Queensland Retail Awards since prior to 1916 (QGIG 1916: 88). Initially, casual employees had to be engaged for either a full eight-hour day, if employed Monday to Friday, or 4 hours if employed on Saturdays, and could not be employed for more than three days per week (QGIG 1964: 5). Conversely, the provision for the permanent parttime category of employment did not appear in Retail Awards until December 1955. Until 1965, permanent part-time employment was limited to adults and in the ratio of one adult part-time employee for every sixteen adult full-time employees (QGIG 1965: 527). These workers were employed for a minimum of twenty hours per week between the hours of 11 am and 3 pm on Monday to Friday and between opening and closing times on Saturdays. In 1965, the proportion was reduced to one permanent part-time employee for every three full-time employees (QGIG 1965: 528). Over time, employers
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achieved greater control over their use of labour as the proportions clauses were eliminated and the restrictions on the use of casual and part-time labour relaxed. However, permanent part-time employment remained a relatively inflexible form of employment as weekly working hours were fixed, whereas casual employees could be used at will. During the 1980s, Australia’s centralised wage fixation system came under pressure from governments and employers keen to improve labour flexibility (NLCC 1987: 25). The process of shifting towards enterprise bargaining occurred slowly over the next decade, with numerous changes to both state and federal legislation. In 1988, provisions for negotiated consent awards and certified agreements were inserted in the Commonwealth Industrial Relations Act 1988 (Alexander & Lewer 1994: 173). In 1993, provision was made for non-union agreements, as long as they passed a ‘no disadvantage test’, and a separate bargaining division was established within the Australian Industrial Relations Commission (AIRC) (Burgess & Macdonald 2003: 2; Creighton & Stewart 2000: 46). When the Howard Liberal Government came to power federally in 1996, legislation governing industrial relations was again rewritten as the Workplace Relations Act 1996 (Cth). This new Act provided for union and non-union certified agreements for individuals and collective groups of employees; established a new body for filing and approving agreements, the Office of the Employment Advocate (OEA); regulated strikes and lock-outs; and restricted the role of the centralised Australian Industrial Relations Commission (Creighton & Stewart 2000: 46). Additionally, the Act restricted the range of matters which could be included in federal awards to twenty ‘allowable matters’ (Creighton & Stewart 2000: 46). Australian retailers were quick to realise the potential benefits of enterprise bargaining and to adopt the new system. In the 1980s and early 1990s, employment conditions for clerical and sales employees within retail organisations were set under a complex series of State industrial awards. This system was cumbersome and confusing, especially for retailers operating across a number of states (Carter 1986a: 32-3). In New South Wales, the conditions of retail employment were covered by one award. In Victoria, award conditions varied depending on the type of shop and, in Queensland, different awards applied in different geographical regions of the state. The result was a system whereby employees performing the same work for the same company in different states were earning different rates of pay and working different standard hours. Hence for
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employers, the opportunity to create a certified agreement that would simplify and standardise employment conditions across the entire organisation was appealing, but required negotiation with a number of unions. The major grocery retailers approached enterprise bargaining in very different ways, largely as a result of each organisation’s relationship with the relevant trade unions and preparedness to grant pay increases. Woolworths took advantage of changes to the Queensland state legislation and signed an agreement with the Shop Distributive and Allied Employees’ Association (SDA), the Queensland branch of the shop assistants’ union, in late 1995 for 3 years duration (Woolworths Supermarkets Queensland Agreement, 1995). In this agreement the organisation achieved a much greater span of ordinary working hours at ordinary rates of pay, greater flexibility in rostering arrangements, and a reduction in the number of hours that attracted penalty pay rates, in exchange for a 10 per cent pay increase phased in over 5 instalments of 2 per cent every 6 months.
This agreement gave Woolworths much more flexibility to deploy its
employees across a broader span of hours as the needs of the business dictated. Less than 2 years later, Woolworths Queensland signed another state-based agreement containing the same clauses, pay rates and provisions as the 1995 agreement but ‘roping in’ the Australian Liquor Hospitality and Miscellaneous Workers’ Union members and expanding the coverage to bakery employees (Woolworths Supermarkets Shop Assistants and Bakery Southern and Central Divisions Agreement, 1996). Where Woolworths did not have a good working relationship with the major trade unions, the Coles organisation did and was able to capitalise on this relationship (Union Official, Interview 4 September 2000). Coles, which was by 1996 a division of Coles Myer, adopted a very different approach. In 1993, the SDA had provided concessions to the organisation in relation to rostered days off for full-time staff since the organisation was experiencing financial hardship (Union Official, Interview 4 September 2000). Just prior to the introduction of the Workplace Relations Act 1996, Coles’ financial position had improved and they wanted to negotiate an Australia-wide agreement under the Federal system. Northern Queensland was excluded from this agreement as another union has coverage of this region. Coles were able, by virtue of their positive working relationship with the SDA and a promise to promote union membership, to achieve a national agreement. The agreement included provisions for a broader span of ordinary working hours, reductions
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to penalty rates, and greater flexibility in rostering. The SDA regarded the Coles agreement as a real win for employees as it offered a 4 per cent per annum increase for five years, phased in at 2 per cent every 6 months for the life of the agreement (Coles Supermarkets Australia Retail Agreement, 1996). Since the agreement was made so early, and for such a long duration, there were provisions for re-opening negotiations if a competing organisation achieved a significant reduction in penalty rates. It was the advent of enterprise bargaining that gave these major chains the opportunity to achieve significant flexibility in their use of labour (Mortimer 2001b: 90).
4.3
REGULATORY CONSTRAINTS ON AUSTRALIAN RETAILERS
Regulatory constraints on retail organisations in Australia fall into four broad groupings: restrictions on trading hours, restrictions on business ownership and practices, industrial relations legislation and the trade union and employer association behaviour that occurs as a result of the legal recognition granted to these organisations under industrial legislation. This section examines each of these constraints. 4.3.1
Trading Hours
Regulation of trading hours is a State government responsibility and across Australia different State governments adopt different approaches (Trading Hours Investigation Committee 1987). In New South Wales and Victoria, retail trading hours are totally deregulated and retail stores of any type can open 24 hours a day, 7 days a week except on Good Friday, Christmas Day and before 1 p.m. on Anzac Day (Inside Retailing 11 Nov 1996: 3). In Queensland, the State Government has legislated to regulate trading hours since the Factories and Shops Act in 1900 (Howatson 1998: 56; Kingston 1994: 113). Currently, retail trading hours are set by the Queensland Industrial Relations Commission (QIRC) in accordance with the Trading (Allowable Hours) Act 1990. This Act regulates trading hours according to a system of classifying retail outlets. The SDA have pushed for this classification structure in order to prevent the flow-on effects of long opening hours for some stores, like bakeries, from affecting opening hours for the entire retail industry (Runciman 1989a: 5). Three classifications of retail shops exist in Queensland: independent, exempt and non-exempt shops.
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4.3.1.1 Independent Retail Shop An independent retail shop is one that is owned by an individual, partnership or private company; it employs no more than 20 people in a shop at any one time and no more than 60 people in total if several stores exist in Queensland (Trading (Allowable Hours) Act 1990 s.6). Section 17 of the Trading (Allowable Hours) Act 1990 stipulates that if an independent retail shop sells primarily food it has unrestricted trading hours. If the independent retail shop sells primarily non-food products, it is required to close on Good Friday, Christmas Day and until 1 p.m. on Anzac Day. 4.3.1.2 Exempt Shops Exempt shops under section 5 of the Trading (Allowable Hours) Act 1990 are specifically defined: Antique shop; art gallery; aquarium or aquarium accessories shop; arts and crafts shop; bait and tackle shop; bookseller’s shop, newsagent’s shop, railway bookstall; bread shop, cake shop, pastry shop; camping equipment shop; chemist shop; confectionary [sic] shop; cooked provisions shop where the cooked provisions are cooked or heated on the premises immediately before sale; delicatessen; fish shop; flower shop; fruit shop, vegetable shop, fruit and vegetable shop; table shop; funeral director’s premises; hairdressers, beauticians or barber shop; ice cream parlour; licensed premises within the meaning of the Liquor Act 1992 or the Wine Industry Act 1994; marine shop; milk bar; nursery (plant) shop for selling garden plants and shrubs, seeds, garden and landscaping supplies or equipment and associated products; pet shop; photographic shop; premises in relation to which a pawnbrokers license under the Pawnbrokers Act 1984 is in force; restaurant, cafe, refreshment shop; service station; shop of a class declared by regulation to be a class of exempt shop; shop for selling motor vehicle spare parts or motor cycle spare parts or both; soap shop; souvenir shop; sporting goods shop; temperance beverages shop; tobacconist’s shop; toy shop; veterinary supplies shop; video cassette shop (blank or pre-recorded).
Shops included in this classification have no restrictions on trading hours or the number of employees.
4.3.1.3 Non-exempt Shops Under the definitions provided in the Trading (Allowable Hours) Act 1990, a nonexempt shop is any shop other than an exempt shop, independent retail shop, office or stall. The trading hours for non-exempt retailers are set by a Full Bench of the QIRC (Trading (Allowable Hours) Act 1990 s. 21(1)). However, the full bench cannot decide trading hours that are less than 8.00 a.m. to 9.00 p.m. for Monday to Friday and 8.00 a.m. to 5.00 p.m. for Saturday unless the day in question is a public holiday (Trading
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(Allowable Hours) Act 1990 s. 21(1A)). When setting retail trading hours the commission is required to consider: the locality, or part thereof, in which the non-exempt shop or class of nonexempt shop is situated; (a) (b) (c) (d)
the needs of the tourist industry or other industry in such a locality or part; the needs of an expanding tourist industry; the needs of an expanding population; the public interest, consumers’ interest, and business interest (whether small, medium or large); (e) the alleviation of traffic congestion; (f) such other matters as the Industrial Commission considers relevant (Trading (Allowable Hours) Act 1990 s. 26). The result of this retailer classification system was that small independent and exempt operators were free to trade at will, while the large chains faced restrictions on their trading hours. Yet, with the exception of some small local convenience stores, it was only the large supermarket and grocery chains that stayed open until 9.00 p.m. each weeknight. In July 2002, the Trading (Allowable Hours) Amendment Regulation (No. 1) was enacted and the QIRC was required to consider the impact of any trading hours decision on employment and to garner the views of any local government responsible for the geographic area under consideration. In 2002, the Queensland State Government amended the Trading (Allowable Hours) Act 1990 and overrode the decisions of the QIRC. The resulting legislation, Trading (Allowable Hours) Amendment Act 2002 (Qld), introduced Sunday trading from 9.00 a.m. until 6.00 p.m. in South East Queensland from 1 August 2002. As a result of these changes to trading hours, supermarket and grocery chains in the South East Queensland area now trade from 8.00 a.m. to 9.00 p.m. on Mondays to Fridays, 8.00 a.m. to 5.00 p.m. on Saturdays and 9.00 a.m. to 6.00 p.m. on Sundays: total of 83 trading hours per week (Trading Hours- NonExempt Shops Trading by Retail- State). As a tourist area, the Gold Coast, 60 kilometres south of Brisbane where Store B is located, has had Sunday trading between the hours of 10.30 a.m. and 4.00 p.m. since October 1992 (141 QGIQ 446). The decision by the State Government in 2002 to set trading hours for the entire South Eastern corner of the state brought all these regions into line with common trading hours.
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4.3.2
Restrictions on Business Ownership and Practices
In addition to legislation on the hours retailers may trade, legislative interventions affecting retailers cover matters including shop licensing, shop leases, trade practices, workplace health and safety, food safety, sale of liquor and cigarettes to minors and the sale of banned substances (Carter 1986a: 10). A discussion process for a review of Queensland’s Retail Shop Leases Act commenced in July 2003, but mooted changes to the act are unlikely to have a major impact on large retailers (Smith 2003: 10). In addition, Queensland has legislation which allows only licensed clubs and hotels to sell alcohol (Hauquitz 1999: 53). The Australian Competition and Consumer Commission (ACCC) administers the Trade Practices Act 1974 and the Prices Surveillance Act 1983 (ACCC 2002). These acts relate to the governance of ‘anti-competitive and unfair market practices, mergers or acquisitions of companies, product safety/liability, and third party access to facilities of national significance’ (ACCC 2003). In recent years, the ACCC has exerted significant impact on the retail grocery industry with its decision not to allow any one retailer to purchase the Franklins chain and thereby increase concentration levels within the industry (ACCC 2001a, 2001b). Variations in any of these pieces of legislation could be expected to have an impact on the business activities of grocery retailers. 4.3.3
Industrial Relations Legislation
As discussed in section 4.2, the system of regulating wages and working conditions has shifted away from a centralised award system to enterprise level bargaining in Australia since the early 1990s. However, the pre-existing award system acts as a ‘safety net’ providing minimum conditions. Industrial legislation at State and Federal level includes a ‘no disadvantage test’ so that agreements do not undercut pre-existing standards in awards. While the introduction of enterprise bargaining and its product, certified agreements, provided opportunities for retail employers to move away from the constraints of the classification structure and provisions of awards, an examination of certified agreements as part of this research shows there has been little change from the basic structure of the award. This is also the case with Australian Workplace Agreements (AWAs), the individual level employment contracts (Burgess, Sullivan & Strachan 2004: 64). However, most retail industry agreements, both collective and individual, reflect a broadening of the span of ordinary working hours, greater managerial freedom to vary working hours and a reduction in penalty rates attached to certain anti-social working times in exchange for higher rates of pay.
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The classification of employment status in agreements replicates that found in the retail award (Retail Industry Interim Award - State; Woolworths Queensland Supermarket Certified Agreement 2001; Coles Supermarkets Australia Retail Agreement 2002). Weekly or permanent employees are those engaged on an on-going basis for either fulltime (average 38 hours per week) or part-time working hours. Permanent employees are legally entitled to sick leave and holiday leave. The span of hours required to qualify for ‘permanent’ part-time employment has expanded in order to increase the number of permanent workers in the industry. This change is one that the SDA have pushed for and retailers have also been seeking (Union Official, Interview 4 September 2000). Casual employees are engaged on an ‘on call’ basis, with no guaranteed hours and no entitlement to sick leave or holiday leave. In lieu of these entitlements, casual workers are paid a premium. This premium under the award is 23 per cent; under most certified agreements, 20 per cent. Casual employees can work at any time of the day or night and are usually entitled to the same penalty rates as permanent staff for work in the early morning or on Sundays. In Queensland, long serving casual employees receive protection from unfair dismissal under section 72 (8) of the Industrial Relations Act 1999 Qld. Exempt employees are those whose weekly wage is equal to or greater than 125 per cent of the rate of pay for shop assistants or other appropriate classification (Retail Industry Interim Award - State). Exempt employees are specifically excluded from any provisions in the award or in certified agreements, other than those legally required by state and federal employment legislation, such as superannuation and public holidays. All awards and agreements provide a hierarchical classification structure and pay rates are set accordingly (Retail Industry Interim Award - State; Woolworths Queensland Supermarket Certified Agreement 2001; Coles Supermarkets Australia Retail Agreement 2002). Level 1 shop / service assistants are new recruits with limited responsibilities. Level 2 shop / service assistants form the bulk of the retail workforce and are responsible for sales and product knowledge; ordering, receiving and storing stock; preparation of food under supervision; routine clerical duties; using keyboard operated equipment and cash handling; as well as a range of incidental duties. The remaining levels (4 to 6) incorporate first level supervisory staff, tradespeople with and
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without formal qualifications and office managers. Although the award provides this classification structure and major retail agreements adopt the structure for employees below supervisory level, most large retailers set managerial pay rates outside the confines of an agreement and also provide an incentive payment scheme. The major change for retail employees between the award and the agreements of the major retailers is that the award stipulates that employees in non-exempt stores should be paid time and a quarter for work performed between 6.00 p.m. and 9.30 p.m. on weeknights, time and a quarter for Saturdays and double time for Sundays (Retail Industry Interim Award – State s. 4.1(5-7)). Slightly lower rates apply for those employees working in independent and exempt shops. The award also limits ordinary working hours to five starts per week and limits ordinary commencing and ceasing times to between 7.00 a.m. and 6.00 p.m. on Monday, Tuesday, Wednesday and Friday; until 9.30 p.m. on Thursday; and between 7.00 a.m. and 12.30 p.m. on Saturdays (Retail Industry Interim Award - State s. 4.1(1)(b)(i)). All retail certified agreements set a much broader span of ordinary working hours than the award and regard Monday to Friday from 5.00 a.m. until midnight, and Saturday from 5.00 a.m. until 10.00 p.m., as ordinary time at ordinary pay rates (Woolworths Queensland Supermarket Certified Agreement 2001; Coles Supermarkets Retail Agreement 2002). Sundays still attract penalty payments from 50 per cent to 100 per cent according to the time of day that the hours are worked. Under certified agreements, pay rates have been increased as part of the trade off for greater managerial control over working time and a greater span of ordinary hours. The award rate for an adult full-time employee at September 1, 2003 was $507.40 per week (Retail Industry Interim AwardState). This equated to earnings of $13.35 per hour. As a comparison, in September 2003, the Federal minimum wage rate for full-time workers was $431.40 (Print 002003). Under the Coles Agreement in September 2003, the wage rate of an adult fulltime employee was $556.20 per week ($14.64 per hour) and under the Woolworths agreement it was $547.60 per week ($14.41 per hour) (Woolworths Queensland Supermarket Certified Agreement 2001; Coles Supermarkets Retail Agreement 2002). Therefore, there is a relatively small gap between full-time pay rates under the prevailing Queensland retail award and the certified agreements of the major retail chains; Coles pay 9.6 per cent above the award and Woolworths pay 7.9 per cent above the award.
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Additionally, both retail awards and agreements provide youth rates for employees under the age of 21. Youth pay rates are set as a proportion of the adult rate until the worker attains the age of 21 and is considered an adult (Lewis & McLean 1999: 386). These rates vary from 45 per cent of the adult rate for those under 16 years of age to between 85 to 90 per cent for those aged 20 (Retail Industry Interim Award - State). While discriminatory (Belchamber 1999; Stott Despoja 1999), this practice is specifically excluded from the provisions of anti-discrimination legislation by virtue of the Workplace Relations Amendment (Youth Employment) Act 1999 (Cth). The cost benefits of using youth labour make young people a financially attractive option for employers. The dimensions of youth retail employment in Australia were briefly examined in Chapter Three. An additional regulatory constraint on employment is the Superannuation Guarantee Administration Act 1992 (Cth). This Act provides that an employer shall contribute 9 per cent of an employee’s gross earnings into an approved superannuation fund. There are exceptions to the Act, which enable some retail employers to avoid this impost. Workers who are over 70, under 18 and working part-time, or who earn under $450 per month do not attract superannuation payments. 4.3.4
Trade Unions and Employer Associations in the Retail Industry
There are a number of parties to industrial relations active in the Queensland retail industry. On the employee side, two main trade unions, the Shop, Distributive and Allied Employees Association (SDA) and the Australian Workers’ Union of Employees (AWU), represent the majority of shop floor workers. The SDA has coverage rights over workers in the south eastern corner of Queensland, where this study was conducted. The AWU has coverage over retail workers in the northern part of the state of Queensland. Ancillary workers such as clerical employees and butchers are covered by other trade unions. On the employer side, two main employer associations exist within the industry. In Queensland, the Retail Association of Queensland (RAQ), which changed its name to the National Retail Association (NRA) in May 2003, represents the interests of larger employers, whilst the Queensland Retail Traders and Shopkeepers Association (QRTSA) represents the industrial interests of smaller retailers. Conflicts exist between these two employer associations, especially over the deregulation of retail trading hours. The NRA argues that larger retailers are disadvantaged by their inability
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to trade as extensively as smaller independent and exempt retailers and so pushes for extensions to trading hours (QGIG: 2003: 542). The QRTSA take the opposing view that allowing large retailers to trade for longer hours would decimate the financial viability of small business (QGIG 2003: 542). The duality of the retail industry, with a small number of large employers and a large number of small employers, is also reflected in union membership. Across the industry, union density was 16.5 per cent in August 2002 (ABS 6310.0). In general, large employers have encouraged union membership, while small employers have not (Carter 1986a: 5). The SDA is one of the largest trade unions in Australia, with in excess of 211,000 members (Joint Select Committee on the Retailing Sector 1999: 33). The SDA is a federation of state branches, as opposed to a national union, with coverage of employees in retail stores and in some distribution centres. The SDA is known for its moderate ‘business union’ approach and it is ‘the intention of the union to continue to play its moderate and responsible role for the future’ (De Bruyn 1999: 14). According to its critics, the SDA’s reputation includes ‘trading off its acceptance of extended trading hours and reduced penalty rates for compulsory unionisation and oneoff pay increases’ (McCann 1994: 64; Mortimer 2001a). At present, though, compulsory union membership is unlawful under federal and all state jurisdictions (Creighton & Stewart 2000: 372). Game and Pringle (1983: 78) argued that the SDA has done little to stem the increasing incidence of casual employment in the retail industry and has actually been ‘behind the findings of the arbitration courts’ [emphasis in original]. Probert’s (1995: 25-26) assessment was less harsh. She argued that when the SDA agreed with major retail employers to relax existing limitations on the employment of casual workers, it was in the context of reducing working hours and introducing a five-day week for full-time employees. While ultimately it was this decision that led to the proliferation of part-time and casual employment within the industry, Probert (1995: 26) argues that, in retrospect, the union had little premonition of the revolution in shopping hours and hence working hours that would occur. In addition, the SDA did not see part-time and casual workers as ‘real workers’ necessitous of union protection. Nor did the union feel that inferior conditions applicable to casual workers were of much import since these workers comprised housewives and school children earning a little extra pocket money (Probert 1995: 26). Similarly, it is suggested by Carter (1986a: 28) that the casualisation of the retail
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workforce was ‘facilitated by badly framed industrial awards’. Carter (1986a: 2-3) also stresses the inevitability of shifts in employment structure given the inexorable push by large retail businesses for extended trading hours. Along with the push for increased trading hours, retailers also pushed for reductions in penalty rates associated with those hours historically deemed ‘anti social’ (Deery & Mahony 1994: 336). The SDA is currently trying to persuade retailers of the benefits of offering secure and meaningful employment within the industry, as opposed to a large pool of casual employees. De Bruyn (1999: 5) argues that: retailers recognised…that the pendulum had swung too far towards casual employment, creating for them a degree of flexibility which they did not need and never used, an enormous and unnecessary cost structure due to the high rate of employee turnover, and insufficient trained and experienced employees.
The SDA has managed to include clauses containing a commitment to a reduction in casual employment within the certified agreements negotiated with large retail employers (Whitehouse, Lafferty & Boreham 1997: 44). The union regards these clauses, and retailer adherence to them, to be a successful mechanism in achieving more secure employment within the industry (Union Official, Interview 4 September 2000). In addition to the activities of employer and employee groups, the shape of the labour market has provided retailers with opportunities to recruit different groups of workers.
4.4
LABOUR MARKET CHANGE
In Australia over the past two decades, there have been fundamental changes to labour force participation, as well as to the institutional arrangements supporting the labour market discussed earlier in this chapter (Norris 1996: 8; Norris & Wooden 1996: 1-5; Campbell, Heiler & Wiseman 2000: 9-11). Four significant changes to the pattern of labour supply have occurred. The first change was the increase in the proportion of females in the workforce (Norris & Wooden 1996: 1). Between 1972 and 1995, the number of female workers in the workforce grew by 88 per cent, whereas the number of males in employment grew by 25 per cent (ABS 6203.0 in Norris 1996: 10). The second change was the retention of many young people in education and the subsequent fall in the numbers of young people in full-time employment (Norris & Wooden 1996: 3-4; Norris 1996: 99). A corresponding growth in part-time employment of students had occurred (Dawkins & Norris 1995: 18). The third major change was the increased levels
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of educational attainment of the workforce as a whole, with 51 per cent of the workforce holding post-school qualifications by 1993 (Norris & Wooden 1996: 4-5). The fourth change was the increase in the number of full-time workers working longer hours, primarily unpaid overtime (Norris & Wooden 1996: 5; Campbell, Heiler & Wiseman 2000: 42). In 1995, 28 per cent of men and 9 per cent of women reported working in excess of 49 hours per week (Norris & Wooden 1996: 6). These supply side changes to the structure of employment and to unemployment have created a wider pool of potential employees available to enter the retail industry.
4.5
CONCLUSION
This chapter has outlined the environmental factors that have provided opportunities and constraints on retail employers’ employment relations decisions. These included shifts in the economic structure of the industry, technological changes, regulation of trading hours, anti-competitive behaviour and industrial relations, as well as changes to the structure of the labour market. The following chapter, Chapter Five, begins the examination of the demand side of the labour usage equation, with an examination of the business and employment relations strategies of the case study firm.
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CHAPTER FIVE Business and Employment Relations Strategy in FoodCorp
This chapter examines the business and employment relations strategies of the case study organisation, FoodCorp. As one of the market leaders in the grocery industry, the business strategies of this organisation are often imitated. Similarly, with one of the largest workforces of any grocery retailer, the human resource practices of this organisation exert significant impact on practices across the industry. Since there is a paucity of literature on human resource management practices within this industry, this chapter contributes to the literature on how market-leading retail firms implement their employment relations. In Chapters Six and Seven, the impact of these strategies on the structure of employment within the organisation is examined. Chapter Eight examines the consequences associated with these strategic choices for employees and the organisation. This chapter commences with a description of the structure and strategies of the FoodCorp organisation, followed by an examination of the organisation’s employment relations policies.
5.1
BUSINESS STRATEGY OF FOODCORP ORGANISATION
FoodCorp is a high volume, low margin retailer that operates a growth strategy (FoodCorp 2000: 19). The organisation expects this growth to come from growth in the core business; a competitive strategy of price, range, quality and convenience; new stores with good growth potential; analysis of population and geographic data; experimenting with different retail formats; the acquisition of ‘bolt on’ businesses which leverage on current businesses; the use of banking customer information to extend services; and internet and electronic shopping (FoodCorp 2000: 20-21). The company operates a range of retail brands across a number of retail categories. In August 1999, the organisation announced that it was embarking on a project intended to examine all aspects of the business with a view to increasing sales and reducing costs in order to improve earnings per share. Specifically, the organisation’s goal was to maintain and improve market share by focusing on meeting customer needs, making management more responsive, improving supplier relationships and adopting best
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practice principles in cost measurement, tracking and control (FoodCorp 2000: 7). This project revolves around four tenets: 1. Everyday low prices to drive sales; 2. Establishment and maintenance of cost leadership to allow greater price reductions; 3. Better management of inventory and supply chain to reduce investment in working capital; and 4. Better capital management to drive growth in earnings per share (Gottliebsen 2003: 22).
Stage one of the project, the cost rationalisation phase, involved the centralisation of functions and the introduction of improved stock management technology (Gottliebsen 2003: 23). Additionally, the organisation divested itself of several non-food businesses and acquired several others. Stage two of the project focuses on achieving cost savings through improvements to the logistics and information technology parts of the supply chain. By mid 2002, the project had cut the cost of doing business (CODB)2 as a percentage of sales from 23.95 per cent of sales to 21.84 per cent, a total saving of $1 042 million (FoodCorp 2002a: 18). Eighty five per cent of these cost savings were returned to customers in the form of lower prices, while 15 per cent went to shareholders (FoodCorp 2002a: 18). An ex-Director of FoodCorp’s major opposition describes this strategy as a virtuous cycle: The difference between Company A and FoodCorp is FoodCorp has a virtuous cycle and Company A has a vicious cycle. It is a vicious cycle because it has to get costs down to meet the short-term profit targets. At the same time as that happens, sales and market shares are going backwards, relative to FoodCorp. FoodCorp has a virtuous cycle because any cost benefits are passed on to customers and shareholders, and that further increases sales (Quoted in Ferguson 2003: 31).
During the period covered by this research, competition within the industry became more active (Manager 18, Interview 17 June 2003). In part, this was a result of the business opportunities provided by the sale of the Franklins organisation but another major factor was the response by competitors to FoodCorp’s business strategies and resultant financial success.
2
Cost of Doing Business (CODB) includes selling, general and administration expenses as well as rent, depreciation and amortisation, but does not include the cost of purchasing goods.
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5.2
ORGANISATIONAL STRUCTURE
In the first stage of the project, the organisational structure was changed from state based divisions to a single, functionally based business in order to reduce duplication of services (FoodCorp 2001a: 13). The buying and operations streams of the supermarket operation were changed to a national shared service in June 2000: In line with our objectives of improving the ranging, layout, competitive pricing and promotional offer to our customers, this was the first major approach to a centralised management environment in Supermarkets. It laid the foundations for a streamlined management structure in Finance, Human Resources, Operations and Supply Chain (FoodCorp 2001a: 13). Prior to this, the organisation’s separate supermarket brands each had their own management and buying teams, which not only created duplication of functions, it reduced the organisation’s buying power (Gottliebsen 2003: 22). During the centralisation process, 200 to 300 jobs in buying became redundant, although the organisation redeployed all employees within other areas of the organisation (Beeby 2000: 65).
Figure 5.1
FoodCorp Corporate Organisational Chart, 2002 Board of Directors
CEO / Group Managing Director
Corporate Support Group CEO = Chief Executive Officer; GM = General Manager; CGM = Chief General Manager GM Business Development
GM General Merchandise
CGM Electronics
Company Secretary/ GM Corporate Services
GM Supply Chain
CGM Variety
Chief Financial Officer
GM Human Resources
GM Information Technology
CGM Supermarket Buying and Marketing
GM FoodCorp Academy
GM FoodCorp Supermarkets
CGM Supermarket Operations
CGM Freestanding Liquor, Petrol, Banking, ECommerce
Source: FoodCorp (2002b) Organisational Chart, effective August 2002
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The company was organised on a divisional basis with the general merchandise and supermarket divisions operating independently of each other (refer to Figure 5.1). The recognition of the importance of human resources to the organisation was demonstrated by the allocation of two HR positions, GM Human Resources and GM FoodCorp Academy at corporate level. In 2001, supermarket store operations and human resources changed to a regional structure in which those stores geographically closest were managed in a group, as opposed to the State structure that had existed previously (Manager 13, Interview 12 December 2001). This restructure resulted in Australia being divided into ten regions, as opposed to seven states. These new regions were adapted to differences in store numbers and sales volumes. Queensland became two regions with stores in Northern New South Wales managed from the Queensland head office due to their geographic proximity. The aim was to make ‘business decisions and accountabilities…as close as possible to the frontline, with Store Management the focal point of the structure’ (FoodCorp News, August 2001: 21). Within the supermarket operations division, each region had a regional manager who reported to the chief general manager of supermarket operations. Each region had its own trading support managers for long life, short life, administration, and relay and refit (refer to Figure 5.2). Specialists in each trading department supported the trading support managers. From an HR perspective, each region also had its own HR manager who was below the regional manager in the hierarchy of the organisation (refer to Figures 5.2 and 5.3). Each region was divided into a number of areas, with its own HR area manager, store services specialist and HR specialist, as well as an area recruitment officer and, in some remote areas, a store recruitment officer (refer to Figure 5.3). Each area contained 10 to 12 stores (Manager 19, Interview 29 July 2002). Although the regional HR manager is shown in Figure 5.3 to be on the same level in the hierarchy as the area HR managers, this was not the case. The regional HR manager was responsible for all area HR managers and the overall HR performance of the region. The organisational charts suggest a blurring of responsibilities between operations and HR; for instance, all the training functions appear purely on the operations organisational chart (refer to Figure 5.2). There was a deliberate attempt within the
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organisation to align operations and HR (Manager 19, Interview 29 July 2002). A senior HR manager stated: We don’t have operations and HR, we just have region 9. I take part in a business meeting every Tuesday morning about sales and what stores aren’t performing, so that if I see an issue…He’ll ask you why do you think sales in such and such store are down, and you say, well we turned over3 a department manager last week, maybe that’s got something to do with it (Manager 19, Interview 29 July 2002).
Figure 5.2
FoodCorp Regional Operations Organisational Chart, 2002 Regional Manager
Personal Assistant Regional Manager / HR Manager
Regional HR Manager
Training Manager
Recruitment Admin Assistant
Remuneration/ Benefits Officer
Trading Support Mgr Long Life
Trading Support Mgr Short Life
Retail Support Mgr
Petrol Specialist
Produce Trading Specialist (4)
Banking Coordinator 50% R9 /R10
Meat Trading Specialist (4)
Food Safety Coordinator
Deli / Seafood Trading Specialist SQ (2)
Project Coordinator
Deli / Seafood Trading Specialist NQ/CQ (2)
Industrial Engineer Manager
Bakery Trading Specialist (3)
Retail Support Office Administration
Training Officer (7)
Refit and Relay Manager
Retail Support Admin Assist
Trade Support Admin. Assist
Source: FoodCorp 2002b
The organisation was also consciously trying to improve the quality of its HR service delivery and the number of people employed within the HR section of the organisation 3
A department manager left the organisation
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has grown significantly since the restructure (Manager 14, Interview 14 May 2002). Both store and HR personnel felt that the new structure provided more support for store staff when dealing with human resource issues than under the previous structure (Manager 13, Interview 14 May 2002; Manager 19, Interview 29 July 2002). HR was, though, very much a service support function (Manager 19, Interview 29 July 2002). The alignment between operations and HR led to a situation whereby operations set the sales budgets and consequently the wage budgets, which imposed significant constraints over the structure of employment within the organisation.
Figure 5.3
FoodCorp Human Resources Organisational Chart, 2002 Regional Manager
Personal Assistant Regional Manager / HR Manager
Regional HR Manager
Area HR Managers (5)
Store Services Specialist Area HR Specialist
Area Recruitment Officer
Source: Manager 19, Personal Communication 5.2.1
Store Organisational Structure
Stores within the organisation varied significantly in size, sales turnover, trading patterns and the range of products offered. The organisational structure within a store depended on the number of departments, and this in turn reflected the physical size and turnover of the store (Manager 13, Interview 12 December 2001). A small store was approximately 2 000 square metres, while a large store was approximately 4,000 square metres. Stores offered a differentiated range of service departments depending on the
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size of the store and the market in which they operated. Physically small stores did not prepare meat, bread or delicatessen products on site. In these stores, a limited number of meat and bakery lines were delivered pre-packaged and no preparation was done in store. The potential range of departments included grocery / dry goods, bakery, meat, liquor, perishables, fish, delicatessen, general merchandise / variety, fresh produce / fruit and vegetables, customer service / front end and petrol. All departments within stores operated as distinct cost centres. The grocery department incorporated all packaged dry goods from toiletries to breakfast cereal. The bakery department sold bread and cakes, as well as a number of specialist lines which were delivered from local suppliers (Manager 13, Interview 18 December 2001). Most stores had a bakery in house where cakes and bread were baked fresh daily. Smaller stores operated ‘warm spot’ bakeries where donuts were made and cakes were iced. Very small stores, such as inner city small format stores, stocked a limited range and all products were delivered daily from an outside supplier. Larger stores contained a meat department that butchered lamb, beef and pork in store (Manager 10, Interview 11 July 2001). Lamb and pork arrived in store as half a beast and needed to be butchered, although some trim lamb arrived boxed. Boned beef and veal arrived boxed, as did sausages, minced beef, lamb and pork. Where a store did not have sufficient space for a butcher, one store in each geographic area was designated to butcher meat and deliver it to them (Manager 13, Interview 18 December 2001). Small stores stocked only a limited range of popular cuts. In the Brisbane area, the Kuraby store butchered and delivered meat to smaller stores. Only ten stores in Queensland ordered their meat this way. The perishables department included all pre-packaged frozen goods, as well as refrigerated dairy and meat products and eggs (Manager 8, Interview 11 July 2001). The seafood department was adjacent to the delicatessen in all stores. The delicatessen was a full service department that sold fresh and cooked chicken, and unpackaged dairy and meat products, that were sold by weight. The department used a queuing system for service, whereby customers took a numbered ticket and were served on a ‘first come first served’ basis. All delicatessen departments had electronic visual displays that indicated the number of the customer currently being served. Prospective customers therefore had some indication of how long they were likely to have to wait.
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The variety department consisted of standard lines of clothing, hosiery, baby goods, toys, household cleaning, and garden and kitchen goods, as well as non-standard special purchase lines (Manager 7, Interview 11 July 2001). The fresh produce department sold fruit, vegetables, flowers, and nuts, most of which were sold unpackaged (Manager 5, Interview 10 July 2001). Customers served themselves, by placing the required items in a clear polythene bag and then proceeding to the front end of the store to pay for their purchases. Fresh produce also included ‘fresh cuts’, which were pre-prepared salad vegetables sold by the bag and fruits, such as strawberries, which were also prepackaged. Every fresh produce department contained chiller cabinets for storage of products that required refrigeration. The front end was the term used to describe the area of the store where customer purchases were processed through a cash register (Manager 4, Interview 10 July 2001). The front end was divided into two separate work areas. One section, usually attached to the cigarette ‘smokes’ counter, contained a number of checkouts which were express checkouts for customers purchasing only a few items. Express customers formed a common queue and the next available operator served them in turn. The remainder of the front end consisted of separate registers with separate queues. The petrol department was a free-standing outlet adjacent to the store, usually in the grounds of the shopping centre (Manager 3, Interview 23 July 2002). The sale of petroleum products was a relatively new innovation for the company and most petrol sites were managed from the closest supermarket. The non-trade department sold no products, but was a cost centre that included the store manager, duty manager, trading manager, service manager, computer system operator, cash office clerks and storepersons. 5.2.2
Store Management Structure
The management structure in stores differed, depending on the size of each store and the volume of business, but followed the basic structure in Figure 5.4. Only the high sales volume stores had a duty manager. This role was essentially an assistant and deputy for the store manager. In most cases, stores had two trading managers, one for the fresh food departments and one for long life products, such as groceries and variety products (Manager 2, Interview 18 June 2001).
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Figure 5.4
FoodCorp Store Management Structure
Store Manager Duty Manager
Store Trading Manager- Long Life
Store Trading Manager- Fresh Food
Department Managers Department Managers . General Merchandise Perishables Source: Manager 2, Interview 8. June 2001 Manager Manager . Bakery Manager . Grocery/ Dry Goods . Produce Manager Manager . Meat Manager . Liquor Manager . Deli Manager . Stock Room . Seafood Manager Manager
Store Services Manager
Department Managers . Customer Service (Front End Sales) Manager . Cash Office Manager . Systems Operator . Ezy Banking Assistant . Petrol Manager
Source: Derived from FoodCorp 2003, Manager 19, Interview 29 July 2002 Regardless of their role, FoodCorp employees had clearly defined responsibilities and accountabilities, which are outlined in the following section. 5.2.2.1 Store Managers’ Responsibilities The store manager’s role was ‘the oversight of all store operations in line with company standards’ (Store Manager Job Description, July 2001). The purpose of the position was to ensure the provision of quality customer service to internal and external customers, manage costs in accordance with budget, and ensure that store communication channels were effective. A store manager’s performance was assessed against a number of accountabilities and key performance indicators (refer to Table 5.1). This was a salaried position and the incumbents did not receive overtime or penalty payments.
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Table 5.1
Store Manager Accountabilities and Key Performance Indicators
Accountabilities Financial Cost of Doing Business (CODB) Store Sales
Key Performance Indicators Store CODB Percentage against Last Year Store Sales Budget Store Controllable Profit Budget
Profit Process
Workplace Safety
No. of accidents in store Dollar amount of compensation claims
People
Food Safety
Compliance to food safety audits
Customer Service
No of complaints and reduction
Stock Levels
Percentage of instore out of stocks against budget
Staff Development
Accurate and current self sufficiency On job training completed as per requirements for their role Trainees have completed training as per training plan Number of department managers who are ‘ready now’ for promotion Completion of performance appraisals Staff Turnover percentage
Staff Retention
Percentage of Absenteeism
Staff Productivity
Productivity Improvement Plan (PIP) results for store
Source: Store Manager Job Description, July 2001 Store managers received a company car as part of their remuneration package, as well as a bonus of a given percentage of their salary if they achieved the targets set for five main Key Performance Indicators (KPIs) each year (Manager 19, Interview 29 July 2002). The HR manager would not disclose what these KPIs were. Store managers received a salary package of between $65 000 and $85 000 per annum, which included the value of their car and which was dependent on the size of the business being managed, the length of service and the manager’s performance. Each member of the management team, from department managers to the store manager, was on an
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individual employment contract. These contracts were private contractual arrangements, not AWAs. The store manager’s role was heavily budget driven and severely constrained by decisions made elsewhere within the organisation - usually head office (Manager 18, Interview 17 June 2003). These budgets related to sales and wages, as well as to the entire range of controllable expenses: phone, electricity, cleaning and wrapping. It’s pretty restrictive. We get a profit report at the end of each month and that tells us everything from sales, to costs, to wages and how we’re going in line with the guidelines they’ve set down (Manager 18, Interview 17 June 2003).
5.2.2.2 Store Trading Managers’ Responsibilities Store trading managers had direct responsibility for both the performance of the fresh food or long life departments within a store, and the performance of the department managers who run each respective department (Store Trading Manager Job Description, July 2001). In the absence of the store manager, the store trading manager assumed total responsibility for the running of the store. The accountabilities and KPIs of trading managers were the same as for store managers, except within their own defined departments. Store trading managers were salaried and received a package of between $46 000 and $56 000, depending on their performance. They were also eligible for performance bonuses. 5.2.2.3 Store Services Managers’ Responsibilities A store service manager was ‘responsible to manage effective operational processes within the service departments - being the systems office, cash office, front end…and where designated petrol’ (Store Services Manager Job Description, July 2001). In the absence of the store manager and store trading manager, the store services manager assumed total responsibility for the store’s operations. Store services managers were salaried and ‘would get anywhere between $40 000 and $53 000’ (Manager 19, Interview 29 July 2002). Again, a performance related bonus was paid annually, if the employee met the KPIs specified for their position. 5.2.2.4 Department Managers’ and Assistant Department Managers’ Responsibilities Each department manager was responsible for effective service delivery and operational outcomes within their department. Department managers were salaried and received
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between $34 000 and $49 000, plus a performance bonus, based on the achievement of KPIs, if applicable (Manager 19, Interview 29 July 2002). Each department also had an assistant department manager, usually called the 2IC (Second-in-charge), who was responsible for the department’s performance in the department manager’s absence. In some of the smaller departments, the 2IC was a part-time employee. Most large departments also had a 3IC (Third-in-charge) to ensure that the department had management coverage over the entire spread of trading hours. The 2IC of a department was often an ‘exempt’ employee, whose standard working hours were 45 per week. Exempt status equated to a salaried position where overtime was not paid. The flexibility achieved by transferring key employees to exempt status is discussed in Chapter Six. These employees were usually rostered for the hours when the department manager was absent, in order to provide adequate management coverage. FoodCorp therefore had three primary classifications of payment: salaried employees who were not paid overtime or penalty rates; exempt employees who likewise received a 25 per cent higher weekly pay rate, in exchange for longer and more flexible hours and accumulate time off in lieu of overtime payment; and employees who were covered by the conditions of the collective agreement and who received penalty rates and overtime. In this organisation, the members of the senior store management team - store manager, trading manager, duty manager and services manager - performed no ‘hands on’ tasks (Manager 18, Interview 17 June 2003, Personal Observation). Their jobs were purely managerial in nature, delegating tasks to department managers, checking task performance, monitoring stock movements and achieving budgets. So, while head office dictated and monitored the tasks performed by senior store management, via the daily ‘management to do plan’, store management had some control over how and when the tasks were performed. The nature of the department manager’s position was somewhat different. Department managers were ‘hands on’ and performed most of the duties of a service assistant, as well as managerial tasks. These employees received their departmental ‘to do’ lists from head office via store management, so it could not be said that they had complete autonomy over which tasks they chose to do (Manager 18, Interview 17 June 2003). At the same time, in most instances, department managers had control over where these
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tasks were located, across the day and the week, and which employees performed which tasks. Yet it was not uncommon to see department managers counting and refilling shelves, changing tickets and other service assistant duties (Personal Observation). It was not possible to state with any degree of accuracy whether this was a result of the way jobs were designed within the organisation, or whether it was simply a result of work intensification associated with tight wage budgets. Department managers were subject to the same employment conditions as more senior store management and received the same training opportunities, so they were clearly subject to ‘core’ employment conditions. The management team provided both functional flexibility and numerical flexibility for FoodCorp. Managers performed a wide variety of tasks and their hours were often variable depending on how heavy their workload was. It was common for managers to work significantly longer hours than those scheduled on the roster.
5.3
FOODCORP HUMAN RESOURCE POLICIES AND PRACTICES
Prior to the centralisation and nationalisation of HR, each state devised its own HR policies and practices, so there was little consistency between states (Manager 13, Interview 14 May 2002). The organisation had a very ad hoc approach to the management of human resources, and since employee records were not centralised, it was difficult for the organisation to undertake any systematic HR planning. In fact, when asked why the organisation changed the structure of its HR, one HR employee responded, ‘because what we had was pretty terrible’ (Manager 16, Interview 4 June 2002). Under the new structure (refer to Figure 5.3), each region had its own human resource manager. This meant that the existing state level HR managers were in effect ‘demoted’ to regional HR managers, and additional HR employees were promoted to HR regional managers. The organisation’s human resource philosophy is encapsulated in the phrase ‘The FoodCorp Way’. The expressed culture and values of the organisation are that: We take pride in ourselves - we DO make the difference [emphasis in original]. We’re a team working towards a common goal, and learning from each other through coaching and listening. We live by mutual respect and honesty. We encourage initiative, recognise and reward success, and create an environment where everyone can succeed.
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We encourage our egalitarian culture (FoodCorp 2001a: 16). The phrase ‘The FoodCorp Way’ was used widely within stores and in the corporate literature, although not always with the same meaning (FoodCorp 2001b; Manager 18, Interview 12 June 2002; Manager 19, Interview 29 July 2002; Employee 8, Interview 6 June 2003). Store managers regarded the FoodCorp Way as ‘disciplined’ and ‘structured’ and associated it with ‘giving every staff member similar opportunities and similar work standards’ (Manager 18, Interview 17 June 2003). Some employees, however, perceived the ‘FoodCorp Way’ as ‘do as I say, not as I do’ and pointed out that: Unless you’re truly flexible and bendable and moulded and shaped into [FoodCorp] then you find a lot of people here go (Employee 8, Interview 6 June 2003). While the lived experience of the ‘FoodCorp Way’ might not always match the rhetoric, the employee satisfaction levels from the staff survey discussed in Chapter Seven suggest that, overall, most staff regarded FoodCorp as a reasonable employer. 5.3.1
Recruitment Policies and Procedures
Prior to mid 1999, prospective FoodCorp employees completed an application form at their local store, were interviewed by the store’s administration officer and were appointed without the store or department manager ever having met the applicant (Manager 13, Interview 14 May 2002). The centralisation of recruitment - a Queensland state-level initiative - was perceived as successful and spread to other states (Manager 13, Interview 14 May 2002). As of mid 1999, prospective employees completed an ‘Expression of Interest’ form in store (Manager 4, Interview 10 July 2001). Completed forms were sent to human resources personnel in Queensland head office and details entered into a database. This application remained current for four months, after which time the applicant needed to complete another form (Manager 13, Interview 12 December 2001). The organisation also intended to develop their application process to the stage where applicants could apply on line via the internet (Manager 13, Interview 14 May 2002). By early 2004, this online application process was available only for applicants in New South Wales and the Australian Capital Territory. Another goal was to have all data related to an applicant, including the results of the first and second interview, stored in a human resource information system that could be accessed by stores.
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When a store required staff, the department manager completed a request for the type of employee they required - for example, a 16-year-old produce assistant - with their area recruitment officer (Manager 13, Interview 14 May 2002). The area recruitment officer searched the database by entering at least six postcodes local to the store and compiled a list of candidates (Manager 13, Interview 12 December 2001). The recruitment officer then assessed candidate suitability, using Orion, a computer based literacy/numeracy package, and a structured interview. Initially, these interviews were performed individually, but in mid 2003 the organisation decided to perform group interviews with 15 applicants at once (Manager 19, Interview 16 February 2004). At the time of the first interview, reference checks and criminal checks were performed on applicants. If no suitable applicants were found in the database, the search was broadened to include applicants who were older than requested, or who lived further away from the store. In general terms, the organisation’s HR personnel tried to recruit people who met two criteria: reasonable personal presentation and communication skills, and a satisfactory ‘fit’ with existing staff in terms of availability to work (Manager 19, Interview 29 July 2002). If the recruitment officer regarded the applicant as suitable, the department manager from the store they would be working in, and the department manager’s immediate superior, conducted a second interview.
The number of applicants
interviewed by store level management was at the discretion of the store, ‘Most interview at least three, some interview up to six for one position’ (Manager 13, Interview 18 December 2001). Managers within the organisation were provided with interview, recruitment and selection training to assist them in this task (FoodCorp 2001c: 17). There was no policy or other requirement that employees should start as casuals, but most managers tended to appoint new workers as casuals so that they could assess their suitability and avoid the likelihood of unfair dismissal cases (Manager 13, Interview 12 December 2001). As one senior HR manager stated: Very rarely would stores put in a shop assistant full-time. In fact, they’d never do it. The only full-time positions they’d recruit for is when we’ve got a skill shortage, such as bakery managers (Manager 19, Interview 29 July 2002).
The centralisation of recruitment to specialised human resource personnel was: Designed to reduce turnover [of employees], designed to get professional recruiters as opposed to the store manager, to be able to source people. I mean if you live at Kenmore or Indooroopilly, you can get economies of scale out of recruiting for both because people live in the middle or don’t mind travelling (Manager 19, Interview 29 July 2002).
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It appeared that this centralisation process had reduced turnover of employees within stores (Manager 19, Interview 29 July 2002; Manager 19, Interview 16 February 2004). Feedback from management also suggested that the quality of people recruited by the organisation had improved (Manager 13, Interview 14 May 2002; Manager 22, Email 2 March 2004). In some instances, ‘the recruitment officer has put forward three candidates and the people in store have been so impressed that they have recruited all three, rather than the one person they were initially looking for’ (Manager 13, Interview 14 May 2002). All new recruits received an induction training session, which is discussed in the following section. 5.3.2
Induction
FoodCorp conducted in-house induction programs for all new employees. When this research commenced in mid 2001, all new employees were given a three-day induction (Manager 2, Interview 8 June 2001). By May 2002, however, induction training was reduced to one day (Manager 13, Interview 14 May 2002). The one-day induction covered the basics of working for the organisation, what it means to be an employee of FoodCorp, occupational health and safety, customer care, company policies, company compliance issues, as well as employee benefits and conditions (Manager 19, Interview 29 July 2002). New recruits appointed as checkout operators received a second day of training devoted to the use of the cash register system. In addition, some store managers ensured all new recruits were register trained to increase functional flexibility within the store (Manager 3, Interview 10 June 2003). Queensland food safety legislation states that all employees handling foodstuffs must be trained in safe and hygienic food handling (Manager 19, Interview 29 July 2002). Hence those employees who were going to be working in the delicatessen or fresh food departments received an additional three hours of food safety and hygiene training that was completed in-store using self-paced training packages. HR personnel did not see this use of self-paced training as a cost-reduction measure: they argued instead that food safety plans were dependent on the department layout and unique for each store, and therefore the self-paced package was a more appropriate learning tool (Manager 19, Interview 29 July 2002). It was a department manager’s responsibility to assess a new employee’s competence in food handling.
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After completion of the induction training, the employee was rostered to work two shifts in store with a sponsor (Manager 13, Interview 12 December 2001). A new employee’s performance was assessed at four, seven and eleven weeks in order to ascertain how well they were coping with the job. This assessment process was: not necessarily an appraisal, and if they’re no good, we will get rid of them. It is also to let us know what it is we haven’t trained the person in, so we can improve our training practices. We need to be fair to the employee (Manager 13, Interview 12 December 2001). The HR personnel saw this assessment system as a method of ensuring management became more involved in employee development; however, at the same time, store management were provided with considerable access to specialist HR support personnel (Manager 13, Interview 14 May 2002). Managers have to start taking more responsibility for the performance of employees and help them out. Managers are required to sign off on the person’s achievement of competency, so they are more accountable, whereas before it was not uncommon for a manager not to have a clue who a staff member actually was, let alone how they performed (Manager 13, Interview 14 May 2002).
Under Queensland industrial legislation, a person’s employment can be terminated within the first three months, without exposing the organisation to the risk of an unfair dismissal claim. The organisation’s staff handbook stated that the first three months were regarded as a probationary period and that, during this period, employment could be terminated for poor performance across a range of areas: customer service, attendance, punctuality, appearance, productivity, behaviour or language, disobedience, misconduct and dishonesty (FoodCorp 1999a: 37). The induction appraisal system, therefore, not only provided the employee with performance feedback, but also provided the organisation with evidence about an individual’s performance. 5.3.3
Training and Development
FoodCorp tried to inculcate its staff with the organisation’s values, ‘The FoodCorp Way’, through a focus on training. FoodCorp was a Registered Training Organisation, which means it had government accreditation to deliver and assess accredited training packages (Manager 14, Interview 12 December 2001). FoodCorp had adapted the national retail certificate framework to the needs of the organisation and delivered their own specialised certificate courses (Manager 14, Interview 12 December 2001). These included the FoodCorp Certificate II in Retail Operations for school leavers; the
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FoodCorp Retail Operations in Fresh Food Level III for supervisors and managers of fresh food departments; the FoodCorp Store Operations Level III for supervisors and department managers; the FoodCorp Retail Management Level IV for senior store management and a Level V Diploma in FoodCorp Retail Management for store managers. This training framework was structured in such a way that trainees could progress from one level to another, building upon their learning from prior training. Sizeable numbers of employees within the firm were participating in this training: Each store has 2-7 trainees at different levels - depends on the manager really. Most have 2-3 Certificate II. Maryborough have 20 school based traineeships. When it’s school based, the trainees do Certificate II in Retail Operations, not the [FoodCorp] traineeship. Overall, in Queensland there are about 110 people doing Cert II, 500 doing Cert III and 100 doing Cert IV (Manager 14, Interview 12 December 2001).
The Commonwealth Government provided financial incentives to employers who took on trainees, as a strategy for reducing unemployment (Schofield 1999: 1). In 1999, this incentive was $1250 upon initial appointment, and $1500 upon completion of certified training. The Queensland State Government provided subsidies to cover the cost of training. In 1999, the Queensland Government paid $2100 to registered training organisations for the provision of Level II training and $1562 for Level III training (Schofield 1999: 2). FoodCorp placed existing employees in traineeships, rather than recruiting from the pool of unemployed, so did not qualify for the Commonwealth Government subsidy, but received funds from the State Government for the cost of training (Manager 14, Interview 12 December 2001). Additionally, employers were able to pay trainees a ‘training wage’ of seventy five per cent of the award (Brandi 1999: 9). FoodCorp did not opt to pay trainees the training wage, primarily because the workers undertaking traineeships were existing employees and did not qualify (Manager 13, Interview 18 December 2001). Within FoodCorp, individual stores did not receive the training subsidies directly, so there was no incentive to have large numbers of trainees as a cost cutting exercise at store level. Head office used the State Government training subsidies to provide wage relief to stores to cover the cost of wages for replacement staff while people attended training. In fact, the cost of wage relief provided by head office to stores exceeded that provided by the government subsidy (Manager 14, Interview 12 December 2001).
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All training was conducted off the job in face-to-face mode (Manager 14, Interview 12 December 2001). A Level II certificate involved 11 days of off-job training, plus an additional 3 to 5 days depending on which electives the trainee chose. Level III certificates involved 10 days of off-job training, while level IV certificates required 15 off-job training days. As part of reducing the time spent away from the business, the organisation was developing online training programs that could be individually tailored to meet the needs of the organisation’s businesses and employees (FoodCorp 2000: 15). The organisation prided itself on the quality of its employee training and had won National Retail Association excellence awards for its commitment to retail training (FoodCorp 2001d: 25). Across Australia, by mid 2002, six per cent of all staff on the payroll were enrolled in a traineeship program (Manager 16, Interview 4 June 2002). Queensland had the highest level of participation in training of any state, with 80 per cent of all the organisation’s traineeships. The only limitation on the number of potential trainees per store was the number of qualified staff to supervise them. For example, a Certificate II trainee will have the competencies of a good shop assistant at the completion of their training. Therefore a Certificate II trainee can be supervised by anyone who is already a good shop assistant or above. Therefore we could have up to 50 Certificate II trainees if the store wished…In reality stores set the number of trainees they wish to have based on their own perceived developmental needs, limits would only ever be imposed if the ratio of qualified people to trainees is out (Manager 20, Email 5 June 2002).
Not all employees could access accredited training, however. All trainees must be fulltime or permanent part-time employees in order for the Queensland Government to register their traineeship and, therefore, reimburse the cost of the training (Manager 20, Email 5 June 2002). Since the organisation was responsible for bearing the entire cost of training, it did not allow casual employees to access certificated training. There appeared to be pressure placed on aspiring management to undertake certificated training: ‘they would like to see you go in and do it, and if you don’t do it, you don’t get into anything’ (Employee 8, Interview 6 June 2003). As well as the face-to-face training, workers were required to complete activities in their own time and this could act as a disincentive for employees with other responsibilities (Employee comment Store A, 6 June 2003).
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5.3.4
Career Progression
The organisation operated a strong internal labour market. As stated in the recruitment section of this chapter, all staff were initially employed as casuals, unless there was a shortage of skilled tradespeople, in which case tradespeople were recruited directly into permanent positions. The career path was from casual to permanent part-time, to fulltime, to 3IC or 2IC, and then to department manager (Manager 19, Interview 29 July 2002). Permanent part-time positions were either filled from in-store applicants or advertised within stores in the region (Manager 13, Interview 14 May 2002). From permanent part-time, an employee who wanted to progress within the organisation would move to a 3IC or 2IC position, which may or may not be full-time, and then to a department manager position (Manager 3, Interview 3 July 2003). The role of department manager was a full-time position. Most people spent 4 to 5 years as a department manager and then progressed to a more senior position (Manager 14, Interview 12 December 2001). The old succession for store manager was to have come from assistant store manager position and prior to this, grocery manager. Now store managers need to have experience in a fresh food and a long life department and then become either a trading or services manager - you don’t need to be both - before becoming a store manager (Manager 13, Interview 14 May 2002).
During the period covered by this research there were many promotional opportunities available within FoodCorp, due to the acquisition of Franklins stores. The Australian Competition and Consumer Commission (ACCC) stipulated that all ex-Franklins employees were to be retained by FoodCorp, yet some Franklins managers did not have the experience to run such large businesses under the FoodCorp systems framework and required significant retraining before they could be appointed to management positions with FoodCorp (Manager 13, Interview 14 May 2002). The retraining of ex-Franklins employees in FoodCorp’s systems cost the organisation $11.8 million in 2002 (FoodCorp 2002a: 50). Within stores, it was the job of individual managers to identify staff with career potential (Manager 18, Interview 17 June 2003). Since it was up to each store’s management team to identify potential management talent, the process was not transparent and led to accusations of favouritism. As one employee stated: Unless you get along with your boss, you don’t stand a chance. [Pointing to list of advertised positions on board] You can apply for any job up there, but you’ve got to go through the store manager to get a recommendation of a reference. So
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if you don’t get along with the powers that be, you don’t stand a chance (Employee 8, Interview 6 June 2003). Similarly, to move from a casual to a part-time position or to acquire longer hours required the approval of the store manager, and hence was subject to the discretion of the individual manager (Manager 18, Interview 17 June 2003). 5.3.5
Performance Management
The organisation formally appraised the performance of all management and all fulltime staff on a yearly basis. Management, though, were informally appraised every week based on their sales figures and other KPIs: We’ve got budgets we’ve got to achieve. We’ve got a wage costing that we’ve got to achieve. We’ve got a sales budget that we strive to achieve. We’ve got cost centres that we’ve got to achieve (Manager 18, Interview 17 June 2003). While for management there were financial rewards attached to satisfactory appraisals and achieving budgets, the only reward for service assistants was the potential for a permanent job, longer hours and career progression. The organisation did not appraise the performance of part-time and casual employees beyond the 3-month probationary period because the turnover of employees was so high that it claimed that it was not financially viable to do so (Manager 19, Interview 29 July 2002). Another part of the performance management system involved human resource forecasting. The organisation monitored the skills of its people and developed selfsufficiency plans [a system which ensured trained employees were available for succession] for all key roles both at regional and store level (Manager 19, Interview 29 July 2002). At store level it’s probably not exactly completely self-sufficiency plan, but it’s very much about key roles and how much they are trained in those roles and who the back-ups are for that role, and what is their percent? [How capable is the person of performing a role, expressed as a percentage] (Manager 19, Interview 29 July 2002). HR personnel also engaged in succession planning to ensure that individuals within the organisation developed the skills and experience necessary to meet the needs of the organisation in the future. Again, it was usually the store manager who identified the likely gap and took steps to ensure the store had enough adequately trained employees: We’re planning in advance all the time…we’ve got to look forward and say, OK, I’ve got a department manager with potential for operations training, management training. I’m going to lose him perhaps potentially in November or
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February. My succession plan indicates that I need a 3IC in this department. So we work like that (Manager 3, Interview 10 June 2003). Since the system was so heavily reliant on the discretion of the individual store manager, it was open to abuse. During interviews with store managers it became apparent that some store managers focused on developing the skills of their people more than others (Personal Observation). Additionally, some managers appeared much more adept at identifying workers with potential and enabling their career progression. These issues are discussed in greater detail in Chapter Seven. There were, however, no tangible rewards for managers who focused on developing their people as ‘stores that provided good training tended to lose their staff because other stores poached them’ (Manager 13, Interview 14 May 2002). 5.3.6 Dismissal and Turnover When employees were dismissed, ‘an HR specialist is always involved’ (Manager 13, Interview 12 December 2001). This was to ensure that the company was protected from unfair dismissal claims. The vast majority of employees who left, though, did so of their own volition. In the past, the organisation posted out exit surveys to all employees who voluntarily left the organisation. As a rule, the return rate was only about 30 per cent, but this information was still valuable to tell us how we could improve. Now we don’t do surveys any more but we do exit interviews on all key and long serving employees who leave (Manager 13, Interview 12 December 2001). Within the region researched, it was the policy of the regional HR manager to do exit surveys for high turnover stores. It was the responsibility of the HR specialist for each area to conduct exit interviews across the three highest turnover stores in their area (Manager 13, Interview 12 December 2001). When this research was conducted, the practice was relatively new and was not revealing much of any value. As Manager 19 stated (Interview 29 July 2002), people were leaving to pursue other alternatives, ‘get hours which suit them better, more hours, or the schoolkids that are leaving at the end of the year’. In interviews with HR managers within FoodCorp, these managers consistently failed to recognise that limited hours and casual employment could be causally related to turnover.
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5.3.7
Remuneration Policies and Classification of Duties
Management remuneration was outlined earlier in this chapter in the section dealing with managerial roles and accountabilities. Non-managerial staff in FoodCorp were employed under a range of employment status classifications, each defined in the FoodCorp Queensland Supermarket Certified Agreement, 2001 (FQSCA). This certified agreement between FoodCorp and the Shop, Distributive and Allied Employees Association dictated the employment classifications and working conditions of nonsalaried employees for the two-year period from 19 February 2002 until 27 May 2004. 5.3.7.1 Exempt employees One classification of employee that largely fell outside the provisions of the certified agreement was that of exempt employees. These employees were not managers, with packaged salaries or a bonus system. Exempt employees were often 2ICs or 3ICs of departments, or performed other key functions such as the stockperson. The acceptance by an employee of exempt status was entirely voluntary (FQSCA s.4.4.1.). Exempt employees were full-time permanent weekly employees ‘who are paid a rate of pay which is 125% in excess of the rate of pay of the appropriate classification’ (FQSCA s.1.5.11). Where an employee’s weekly wage was equivalent to, or exceeded, the exemption rate, the employee was excluded from all provisions in the FQSCA, except the clauses governing superannuation, public holidays, sick leave, annual leave, bereavement leave, long service leave and family leave. Exempt employees worked 45 hours per week, averaged over a fifty-two week period, without the payment of overtime penalties or meal allowances (FQSCA s.4.4.1). In addition, exempt employees were required to ‘work such hours as to ensure the completion of tasks to a standard satisfactory to management’ (FQSCA s.4.4.1). This meant that exempt employees invariably performed more than 45 hours per week of work (Manager 12, Interview 25 July 2001). Overtime hours, accumulated in the process of completing these tasks, attracted the equivalent amount of time off in lieu or, after a period of 21 days, attracted payment at the ordinary hourly rate (FQSCA s.4.4.1.). On the face of it, exempt employment status offered significant cost savings for FoodCorp. If exempt employees were paid for 25 per cent more labour, this equates to payment for 47.5 hours of labour provided. Under the terms of the FQSCA (s.4.8.1), overtime was payable for all hours in excess of an average of 38 hours per week, at time
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and a half for the first two hours and double time thereafter. Therefore, an employee undertaking 45 hours of labour would effectively be paid for 48.5 hours of labour. This assumes that exempt employees only actually performed 45 hours of work each week, whereas this did not appear to be the case. Exempt employees interviewed as part of this research recognised that exempt status was a cost cutting measure because they were paid less than they would be if they received overtime; however, they did not suggest that they were coerced into accepting exempt status (Employee 4 & Manager 12, Interview 25 July 2001). Exempt employees worked very flexible hours. As one exempt employee commented, ‘If stock doesn’t all get put away, arses get kicked. Exempt employees just keep working until the job is finished’ (Manager 12, Interview 25 July 2001). 5.3.7.2 Full-time employees Full-time employees were permanent weekly employees working a roster of ‘not more than 20 working days or 152 ordinary hours per 4 week cycle’, an average of 38 hours per week (FQSCA s.4.4.3). Working hours should not exceed 48 hours per week, nor include less than four hours per day or more than 10 ordinary hours per day. Hours worked beyond these attracted overtime payments. Likewise, certain hours attracted penalty loadings. 5.3.7.3 Part-time employees Part-time employees were permanent weekly employees, engaged at the same hourly rate as full-time employees, who worked between 12 and 36 hours per week (FQSCA s.4.4.4). Part-time working hours must average no more than 36 hours per week across 20 days in a 4-week roster cycle. Each ordinary working day was between 3 and 10 hours in duration. Part-time employees worked a set number of hours each week; however, the spread of these hours across the working week varied from week to week. Part-time employees could be offered, on a voluntary basis, additional hours to a maximum of 38 per week. In order to undertake this additional work, store management were required to complete an ‘Authority for Part-Time Employees Flex-Up Form’ outlining the reason why the person was required to work longer hours. The part-time employee was required to sign this form as proof that it was their choice to ‘flex up’ their hours, and that they did so at their normal hourly rate, not at overtime rates.
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However, each year on the anniversary of the employee’s starting date, their yearly hours were averaged over the preceding year and employees were entitled to have their core ordinary hours increased (FQSCA s.4.4.4). As a result, managers were loath to flex up part-time employees (Manager 21, Interview 27 June 2003). In FoodCorp, permanent part-time employees were regarded as part of the fixed component of staffing. Part-time employees performed core functions, such as ordering merchandise, receiving and storing merchandise, layout changes, markdowns, fresh produce preparation, removing damaged and out of date stock, and refilling shelves, as well as relieving department managers in their absence (Manager 2, Interview 11 July 2001). 5.3.7.4 Casual employees Under the terms of the FQSCA (s.4.4.6) casual employees were engaged on an hourly basis, at any time, and on any day of the week, with no fixed rostering arrangements. In reality, casual employees were required to nominate, one week in advance, which hours they were available for. Casual employees worked a maximum of 38 hours per week across 5 days, unless the individual employee agreed to work across 6 days. Under FQSCA (s.2.1.7), casuals were engaged for a minimum of 3 hours and maximum of 10 hours per start, and their working times were subject to change at any time before the employee commenced their daily engagement. 5.3.7.5 Trainees A trainee was an individual employed under the provisions of a Traineeship Agreement registered with the State Training Authority to undertake structured on-job and off-job training. Within the retail industry, trainees were employed on a full- or part-time basis to complete a period of approved training which led to a Certificate II or III in Retail Operations. As discussed earlier in this chapter, while FoodCorp had trainees in most stores, they were treated as ordinary full-time employees in relation to wages and working hours. 5.3.7.6 Apprentices An apprentice was an individual employed under the provisions of an Apprenticeship registered with the State Training Authority to undertake structured on- and off-job training in order to achieve a trade qualification. Within the retail industry, apprentices were employed on a full-time basis leading to qualifications as butchers, bakers and
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pastrycooks. Most stores employed at least one apprentice in the bakery and meat departments (based on Employee Schedule Reports). 5.3.7.7 Contractors FoodCorp also engaged outside contracting companies to perform some of the tasks within stores. Although not legally employees of FoodCorp and therefore not paid by FoodCorp, these workers often worked alongside FoodCorp employees. Tasks performed by contracted workers included general cleaning, floor polishing, window washing and trolley collection (Manager 13, Interview 14 May 2002). Contractors were also engaged to perform more highly specialised tasks such as maintaining and repairing electrical equipment and performing updates on computers. One cleaner in Store A had been a contractor in the store and had been offered a permanent job by FoodCorp, however, this was not usual practice (Employee Store A, Conversation 7 June 2003). 5.3.8 Wage Rates Wage rates for all non-management and non-exempt employees were set according to a six level scale (refer to Table 5.2). Grade 1 was the classification rate for all new employees during the three month probationary period. Grade 2 retail employees included shop assistants, bakery assistants, cake decorators, meat packers, systems operators, driveway service at petrol outlets, unqualified cooks, caretakers, gatekeepers and cash office clerks. Grade 3 employees included first level supervisors, service supervisors, night fill supervisors, head storeperson and payroll clerks. Grade 4 employees included single trade or unqualified bakers, pastrycooks and butchers. Grade 5 employees were qualified combined baker and pastrycooks and qualified butchers. Grade 6 employees included the service manager and the office manager.
Table 5.2
Wages by Classification, FoodCorp, at 23 November 2003
Classification Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Source: (FQSCA s.3.2).
Weekly Rate $528.80 $556.60 $571.00 $604.40 $636.20 $662.90
Hourly Rate $13.92 $14.65 $15.03 $15.91 $16.74 $17.44
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As highlighted in Chapter Four, and in concurrence with the retail literature, FoodCorp’s employees were not highly paid. Service assistants, the bulk of employees, received $556.60 per week as adult full-time workers. This compared to the Federal minimum weekly adult wage of $431.40 (Print 002003) and to private sector full-time adult average ordinary weekly earnings of $913.10 in November 2003 (ABS 6302.0). FoodCorp’s wage for service assistants was therefore 29 per cent higher than the minimum wage and 39 per cent less than adult average ordinary weekly earnings in the private sector. Additionally, only those in management positions were able to increase their incomes through the organisation’s bonus system. Few, if any, employees received paid overtime; if extra labour was required, it was easier to extend casual workers’ hours (Manager 4, Interview 10 July 2001). Casual employees of any classification received a 20 per cent loading in addition to the ordinary hourly rate for that classification. 5.3.8.1 Apprentices Workers employed as apprentices were paid a percentage of the tradesperson’s rate. First year apprentices received 50 per cent of the grade 5 rate; second year apprentices received 65 per cent; third years, 85 per cent and fourth years, 95 per cent (FQSCA s.3.2.2). 5.3.8.2 Youth Rates In line with the youth rates existing in the retail award, FoodCorp’s employees who had not attained 21 years of age were paid a percentage of the adult minimum rate for the position they held in accordance with their age (FQSCA s.3.2.1) (refer to Table 5.3).
Table 5.3
Youth Wages, Percentage of Minimum Adult Rate
Percentage of Minimum Adult Rate Under 16 years of age 16 and under 17 years of age 17 and under 18 years of age 18 and under 19 years of age 19 and under 20 years of age 20 and under 21 years of age Source: (FQSCA s.3.2.1).
% 45 50 55 65 77.5 87.5
The existence of youth rates encouraged retailers to recruit young people on the basis of cost savings. As a regional HR manager said:
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You’ve got a wage budget for the cost of doing business, and the school kids want to work at night and Saturdays and that’s where you get your cheaper labour component, so you do it (Manager 19, Interview 29 July 2002). The decision to recruit young people lay with the individual department manager who made the initial recruitment request to head office HR. As such, the decision was affected by the beliefs and prejudices of each manager; however, the opportunity to acquire labour at a lower cost by recruiting young people benefited a department’s wages budget. It would not be unreasonable to conclude that the stringent adherence to wage budgets that drove labour decisions within stores led store level management to prefer youth employees (Personal Observation). One of the factors which became apparent during the course of this research was the significant savings achieved by the organisation under enterprise bargaining. A cursory examination of the pay rates of seven grocery employees in Store A in 2003 under the Retail Award and the FQSCA highlights the way in which the organisation has been able to reduce employee’ wages under enterprise bargaining. While this was clearly of benefit to the organisation, it was also clearly detrimental to the employees working for the organisation. These calculations were based on the rates of pay for adult workers applicable as at 23 November 2003 (refer to Table 5.4).
Table 5.4
Wage Comparison, Adult Grocery Employees, Store A, 2003
Role
Roster
Total Hours
FT Nightfill
M 21:00- 30:30 T 21:00- 30:30 W 21:00- 30:30 Th 21:00- 30:30 Su 12:00- 22:00 M 16:00- 21:00 T 09:00- 18:00 W 09:00- 18:00 Th 09:00- 18:00 Su 20:00- 29:30
45
FT Grocery
38
Wage under Award T=$13.35 Exempt 38T x 125%
Wage under FQSCA T= $14.65 Exempt 38T x 125%
$634.13 2T + (3Tx150%) 8T 8T 8T (9Tx200%)
$695.88 5T 8T 8T 8T (1Tx150% +3Tx175% + 5Tx130%)
$647.48
$618.96
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PPT Nightfill
M 21:00- 25:00 W 21:00- 25:00 Th 21:00- 25:00
12
PPT Grocery
Fr 06:00- 15:00 Sa 06:00- 10:00
12
CASUAL Casual Grocery Day Casual Nightfill Casual Grocery
Sa 08:00- 18:00
M 21:00- 26:00
Su 14:00- 24:00
9
5
9
3T + (1Tx130%) x3 (3T x 150%) + (1T x 200%) x2 .5T + (3T x150%) +(.5T x200%) $253.65 (1T x150%) +7T 4T x125%
$188.99 8T 4T
$180.23 CT= $13.35 x 123%
$175.80 CT= $14.65 x 120%
(1.5CT x 150%) + 9CT 7.5CT $160.10 (3 CT x150%) +(2CT x 200%)
$158.22 3CT + (2Tx150%)
$139.57 (9T x200%)
$96.69 (6T x170%) (+3Tx195%)
$235.13 $240.30 T = hourly rate for permanent employee, CT = hourly rate for casual employee Source: calculated from Retail Industry Interim Award-State and FQSCA 2001, verified by Union Official, Email 3 March 2004. As seen in Table 5.4, in every case except the exempt employees, workers in FoodCorp actually ended up being paid less under the terms of the FoodCorp agreement than they would have been paid under the award. This is consistent with Mortimer’s (2001b: 91) evidence of one supermarket retailer saving 8 per cent of its wages bill by enterprise bargaining and raises questions about the ‘no disadvantage test’ in the legislation. 5.3.9
Additional Employment Benefits
All employees, of any employment status, were eligible for a staff discount card with a 5 per cent discount entitlement after three weeks of service (FoodCorp 1999a: 15). The organisation also operated two share plans for employees (FoodCorp 2002d: 20). The first plan, Employee Share Plan (ESP), allowed eligible employees to acquire FoodCorp shares with a 10-year interest free loan, with the right to sell the shares after three years and pay out the loan. Another plan, the Employee Share Issue Plan (ESIP), gave eligible employees fully-paid shares in the company. For example, over 35,000 employees were granted 75 shares each as part of the organisation’s 75th birthday celebrations in 1999 (FoodCorp 2000: 18). Eligible employees for both plans had to be over 18 years of age
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and to have been employed by the company for either 12 months continuous full-time or equivalent casual / part-time service for ESP or 18 months service for ESIP (FoodCorp 2002c: 20). For most casual employees, with an average of ten hours work per week, this meant that it would take around four years to qualify for ESP and six years to qualify for ESIP. So, while it could be said that the system was equitable in terms of access and entitlements, in reality, the situation was somewhat different. 5.3.10 Staff Dress Policies Staff in FoodCorp stores were expected to dress in a businesslike manner. The company had a range of corporate uniforms available for employees to purchase, or employees could wear their own clothing as long as it complied with company guidelines (FoodCorp 1999a: 19). In fresh food departments, where hygiene was an issue, staff were provided with aprons, hats and overcoats to be worn over their clothing (FoodCorp 1999a: 20). A strict code of appearance in relation to hairstyles, hair colours and body piercing also applied. Dress policies were enforced at store level and a number of employees had been dismissed for breaching the policy.
5.4
CALCULATING STAFFING
Almost everything within FoodCorp stores was driven by budgets. Salary budgets reflected sales budgets, which were set from the top down: We get a corporate figure about increases and then we work out with our accountants where we’re going to get that increase and set sales and wages. It’s very driven by an overall bucket and then you’ve got to work out your spread (Manager 19, Interview 29 July 2002). Store sales budgets were negotiated between the regional manager and individual store managers up to twelve months in advance (Manager 13, Interview 14 May 2002). Each store’s salary budget was calculated as a percentage of the sales budget based on different percentages for different stores. An industrial engineer, using a sophisticated model, calculated the store salary percentages at regional level. The basic model considered five aspects of the staffing decision (Manager 19, Interview 29 July 2002). First, the wages set by the certified agreement were adjusted to reflect the store’s trading and working hours. Second, the mix of staff was determined by inputting the department’s trading patterns (in items) by day, calculating the number of hours required to perform the essential tasks and
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ensuring that full-time hours did not exceed those required for minimum trade in any given week. Third, the stores were grouped geographically according to ABS classifications. Fourth, the department’s productivity ratio, existing break up of hours, and geographical classification were correlated to determine the most productive mix of staff. Precise details on how this was achieved were not provided. Fifth, any specific circumstances applicable to the store, such as geographical location, competitive nature of the market, parcel pick up, full delivery service and staff turnover were considered. This process resulted in a staffing budget for each period (3, 4, 5 or 6 weeks duration), based on cycles of trade (Manager 13, Interview 14 May 2002). Salary budgets were set at between 7 and 11 per cent of sales across the stores researched in this study (Manager 3, Interview 23 July 2002; Manager 2, Interview 8 June 2001; Manager 18, Interview 12 June 2002). Store managers had the task of dividing the store’s salary budget for each period amongst the departments within the store. They calculated the cost, per hour, per department, based on award rates and the mix of full-time, part-time, casual, junior and senior staff in a given department (Manager 19, Interview 29 July 2002). A software based labour management system calculated the number of hours that department managers were allocated to run their department each week (Manager 13, Interview 18 December 2001). The number of labour hours allocated was: based on sales, production levels and gets into the amounts of certain types of labour that are required, for example, how many baker hours, packers hours etcetera. It is up to the individual department manager to determine the break up of seniors, juniors, in liaison with store management (Manager 13, Interview 18 December 2001).
Since trade varied from week to week, staffing hours for each department were divided into a ‘fixed’ component and a ‘variable’ component. The fixed component included management, clerical employees, qualified trades people and the base level of other employees required to complete the basic daily tasks of the business across the trading hours in the week. Employees whose jobs comprised ‘fixed’ duties within a department were usually employed on a permanent full-time or permanent part-time basis. These employees formed the core labour component. The variable component fluctuated according to advertising, holidays, trading peaks, rostered days off and annual leave. According to Manager 13 (Interview 12 December 2001), ‘there are no set quotas for different forms of employment status. It is really just how it pans out’. Yet, a senior HR
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Manager admitted that she had set targets, although these were not rigidly applied (Manager 19, Interview 29 July 2002). In relation to casual hours: I like to measure it more on hours than heads…I think around 25 but you’ve got areas, in Byron Bay, that’s got to have more flexibility than say, Mt Ommaney because of the transience and change in sales, etcetera. So I have said to my stores that you need to look at that on a store basis. I can’t stand here in my office and say this is the per cent for the whole region, because Warwick could be very fixed, whereas Byron Bay can’t be (Manager 19, Interview 29 July 2002). The budgetary constraints and system of establishing fixed and variable hours, based on patterns of sales, constrained store and department managers in their staffing choices. While the organisation had an expressed commitment to maximising permanent fulland part-time employment under s. 6.9 of the FQSCA, the extent to which this was practicable, or implemented, differed from store to store. 5.4.1
Rostering Staff
Prior to the introduction of the new management structure, the store services manager completed rosters for the entire store. Since mid June 2001, department managers were responsible for rosters for their respective trading area (Manager 2, Interview 8 June 2001). There has been an entire shift in focus from the administration manager doing rosters for all the store, to department managers being more responsible for all staffing issues. If one of their employees wants a day off then they have to discuss it with the department manager, who should be in a better position to be aware of the needs of the business (Manager 13, Interview 14 May 2002).
In the event of one department being short staffed on any given day, it was possible to transfer an employee from another department, but this required negotiation between managers (Manager 13, Interview 14 May 2002). It also necessitated the cost of the labour being transferred between departments. Cost transfer only occurred when an employee worked for an hour or more in another department. The administrative procedures associated with transferring staffing costs between departments meant that staff were rarely moved between departments. While it was: …relatively easy to transfer costs in store - just tell the payroll officer who allocates wages to departments - this requires some internal negotiation between managers, otherwise one manager will off-charge an employee for eight hours when they only actually worked six (Manager 13, Interview 14 May 2002). The company announced a push towards cross training in mid 2002, but at store level this just equated to ensuring that all employees were register-trained (Manager 13,
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Interview 14 May 2002). For this reason, and because departments were individual cost centres, employees designated as a grocery employee would generally spend their entire working day performing duties within the grocery department. Within the parameters of the allocated hours dictated by head office and the store manager, department managers devised staff rosters based on the sales history of each department, knowledge of scheduled advertising and an intimate knowledge of the work process (Manager 13, Interview 14 May 2002). The exception to this was the front end where software packages were used to determine staffing levels and to allocate hours to individual workers (Manager 15, Interview 12 December 2001). 5.4.2 Calculating Staffing for the Front End The number of customers presenting goods for purchase dictated demand for employees in this area. Customer flow was variable since most customers did not consistently buy the same items at the same time each week. As such, demand for employees was variable. There was, however, a degree of consistency to trading patterns. Some stores had ‘on’ and ‘off’ weeks depending on when the fortnightly pension day fell (Manager 15, Interview 12 December 2001). Pension payments could create significant variances in a store’s sales, depending on the degree to which consumers in the local store area were dependent on government support. The organisation used to average the number of items sold for the previous two-week period in order to predict how many items would be sold in the forthcoming week. Given the vagaries of trade in some stores, from 2001, the organisation decided to average the two preceding ‘on’ weeks in all stores in order to predict the quantity of sales likely in the next ‘on’ week. A software package, Standard Management System (SMS), was used to examine historical sales data for each store in each half-hour period over the trading day and establish how many items had been sold. The number of items sold was considered more important than the dollar value. The SMS package then calculated how many people were required to process this quantity of sales, for every given half-hour period across the trading week. Overall, staff levels were not permitted to vary from the predicted SMS figure by more than plus or minus two persons for any period over the trading day (Manager 15, Interview 12 December 2001). Stores had to achieve this budgeted staffing level, or be within one half-hour up or down, across each day. The aim was for a zero difference but this was not always possible given that the minimum an employee could be called in to
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work was three hours. Head office provided this information to stores, so the individual stores had little control over staffing patterns at the front end. The system had some built-in redundancy, though, as there were always two supervisors rostered ‘on’ at any given time. These supervisors provided ‘some duplication and back up should sales patterns shift unavoidably’ (Manager 15, Interview 12 December 2001). At store level, an additional software package ‘dynamic rostering’ was used to roster staff for the front end (Manager 15, Interview 12 December 2001; Manager 13, Interview 18 December 2001). It was the service manager’s task to enter the details of every employee and the hours that they were available to work each week (Manager 13, Interview 18 December 2001). It was an employee’s responsibility to inform the service manager if they were unavailable on any given day. The rostering package started with full-time employees and permanent part-time employees who required a fixed number of hours and then filled in the gaps with casual employees (Manager 15, Interview 12 December 2001). However, the starting times of full-time and part-time employees were not stable and varied from day to day, week to week. The FoodCorp Queensland Supermarket Certified Agreement, 2001 stipulated that: s. 4.1.1. As the Company is a 24 hour operation, all employees hours are considered ordinary hours, whether rostered within the spread of ordinary hours or within overtime. Employees may be rostered on any day of the week, provided the appropriate ordinary time, overtime or penalty rate is paid. s. 4.1.2 The ordinary hours of work shall be any time rostered at any time [sic] seven days of the week Monday – Sunday, provided the appropriate rate is paid for the hours worked.
On the surface, the dynamic rostering system appeared to be an omnipotent force, allocating staff to shifts free of management intervention or prejudices. Indeed, one store services manager stated that ‘the computer rosters staff’ so she had ‘no control and could not play favourites’ (Manager 6, Interview 10 July 2001). Clearly, the software had a series of protocols, but the industrial engineer in charge of the system was not prepared to disclose these (Manager 15, Interview 12 December 2001). On further investigation, however, one disgruntled trainee services manager stated that: Employee 8: You can override the system at any stage. It does print out what the rosters are, but they can override it at any stage. They can cross that person out entirely. Interviewer:
So, there’s quite a degree of latitude?
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Employee 8: Oh yes. If you’re not accepted, you don’t get the hours. You can chop and change and manipulate it to suit; however you want (Employee 8, Interview 6 June 2003). The dynamic rostering software also allocated meal breaks depending on how many hours it was since a person started work. Full-time, part-time and casual employees who worked more than five hours on any day received an unpaid meal break of between 30 and 60 minutes (FQSCA s.4.6). All employees who worked a minimum of four hours, but less than 7.6 hours, on any day were entitled to a ten-minute paid rest pause (FQSCA s.4.5). Employees, who worked a minimum of 7.6 consecutive hours, not including the meal break, were entitled to two ten-minute rest pauses. The timing of rest pauses was entirely at management’s discretion (Manager 4, Interview 10 July 2001). The minute customer flow dies off, staff are sent on breaks. If it is really busy then they don’t go to tea at all. They will get a longer break on another day or get to leave early instead. People have refused to go early and found that they’ve missed out altogether because it has got really busy later (Manager 4, Interview 10 July 2001). Hence, while the certified agreement stated that staff were entitled to rest pauses, the day-to-day demands of the business meant that staff did not always receive these entitlements. Similarly, if the store became busy, staff were called back to work from their tea breaks early (Personal Observation Store C). 5.4.3
Monitoring Working Time and Payroll
FoodCorp used a fingerscan time and attendance clock that collected and electronically transferred each employee’s start and finish times to a computer in the store’s cash office (FoodCorp 1999a: 36). Employees were required to enter their employee codes into the machine and then place their finger on a reader when they commenced work, started and finished a meal break, or ceased working for the day (Personal Observation). Scanned fingerprints were matched against existing employee fingerprints stored in the system. The times that employees scanned on to work were compared to times scheduled in the roster and a software payroll package calculated the appropriate rates of pay (FoodCorp 1999a: 34). The store’s payroll information was transferred to Queensland head office where the payroll was compiled and sent to the organisation’s bank for payment. Since the restructure of operations and HR functions in mid 2002, the payroll for all Australian stores has been compiled from the Queensland head office (Manager 19, Interview 29 July 2002).
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5.5
DISCUSSION
It is apparent that FoodCorp were actively pursuing cost minimisation strategies and benchmarking their business against world’s best practice firms, such as Tesco and Wal Mart. The firm had been restructured into regions, as opposed to states, to create a more logical, numerically equivalent management structure. This evened out workloads for the management team and reduced the spans of control. This firm had actually increased the number of personnel employed in HR and other support functions. This was contrary to arguments in the Australian literature that retailers were delayering their management (see Bramble, Parry & O’Brien 1996). It was established that senior store management were no longer strictly merchants, in accordance with the literature (see Freathy & Sparks 1997); similarly control over many operations had been transferred to head office. Yet senior store management positions retained a high degree of complexity. As such, these positions could not be said to have been deskilled; it was just that the nature of the roles had changed. Department level managers, however, performed many of the same functions as service assistants, while retaining responsibility for the financial results of a department. These positions did appear to have been deskilled. In the UK, the HR role had been delegated to HR managers in each store, whereas in FoodCorp much of the HR function had been centralised and taken away from stores and given to specialist HR personnel in head office, in order to improve the quality of people selected and to achieve economies of scale. Within FoodCorp, wages and working conditions were also centrally determined in each state and plans were in place to bargain over wages at national level to achieve still greater consistency. The firm had capitalised on the introduction of enterprise bargaining and had effectively reduced pay rates for many staff by eliminating or reducing penalty payments. This finding was in line with other assertions within the Australian retail industry literature (Mortimer 2001a, 2001b). Contrary to arguments in the literature that retailers were poor at training their staff, FoodCorp had a strong organisational focus on training and developing employees. Not all employees were able to access training, though. Concurrently, store level management had been given greater accountability for ensuring that workers achieved certain levels of skills. They were directly accountable for ensuring that employees
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undertaking self-paced training packages and traineeships achieved the required level of competence, and for signing employees off when they had achieved competence. This devolution of responsibility was designed to force department managers to manage. Similarly, department level management had been made responsible for their own rosters in order to force them to develop greater ownership of their individual cost centres. As such, some HR functions had been devolved to line management, in line with international findings (Freathy 1997; Maxwell 1995; Renwick 2003; Whittacker & Marchington 2003), but with much stronger internal controls over the actions of individual managers. The documents provided by the organisation at the beginning of this study espoused rhetoric of ‘soft HR’ practices and teamwork, supporting and developing workers with extensive training programs and rewarding them with access to share plans. The findings of this study suggest that the reality was somewhat different, as not all employees were able to access these HR interventions. For most employees, working for FoodCorp was more likely to mean fingerscans, low pay, and missed meal breaks.
5.6
CONCLUSION
This chapter examined the corporate business strategies of FoodCorp, specifically FoodCorp’s project with its focus on cost minimisation, and the technological advances which enabled better control of the supply chain. The study examined the manner in which the organisation had recently restructured and centralised operations, as well as examining the rationale for doing so. The HR policies and practices of the organisation were outlined, as well as the budget-driven nature of staffing and how performance management revolves around the achievement of KPIs. At the same time, the organisation expounded rhetoric of fairness and egalitarianism, operated a strong internal labour market and provided opportunities for accredited training, share ownership and discount cards. However, these opportunities were provided on a differential basis depending on the employment status of the individual worker. Within the organisation, there were contradictions inherent in the organisation’s practice of labour cost minimisation and soft HRM practices. The following chapter examines the structure of employment within the organisation that resulted from the implementation of these business and HR practices.
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CHAPTER SIX The Nature of Labour Usage in FoodCorp
This chapter examines the nature of labour usage in the case study organisation, FoodCorp. The first section examines the structure of employment within the entire range of retail brands operated by the organisation, and in the supermarket division specifically. The second section of the chapter examines the structure of employment within the three stores investigated as part of this study in mid 2002, prior to the introduction of Sunday trading, and a year later in mid 2003. This section demonstrates that there was little change to the overall composition of employment after the introduction of Sunday trading, although a reduction in the numbers of people employed was identified. Another change was the growth in the numbers of young people under 21 years of age with permanent employment status. These changes in the proportions of staff working under different employment contracts resulted from a combination of increased stability of trading patterns and changes in management labour use strategy.
6.1
CHARACTERISTICS OF RETAIL EMPLOYMENT IN FOODCORP LIMITED
FoodCorp was the one of the five largest private sector employers in Australia with more than 145 000 employees in total and 100 000 in the supermarket division in 2002 (FoodCorp 2002a: front inside). Across the company as a whole, males dominated fulltime employment while females dominated the part-time and casual employment classifications (refer to Table 6.1). Employment patterns in FoodCorp reflected the industry wide growth of part-time employment discussed in Chapter Three. While employment grew across all classifications as a result of the growth in size of the organisation from 1993 to 1999, a marked increase occurred in the number of male and female employees employed on a part-time basis. Male part-time employment grew from 1 277 persons to 6 483 (408 per cent) while female part-time employment grew from 6 602 persons to 19 008 (188 per cent) over the same period. The number of employees in casual employment also grew in the period from 37 691 in 1993 to 49 785 in 1999, an increase of 31 per cent. In 1999, casual employees comprised 46 per cent of the organisation’s total workforce. Of the total FoodCorp Limited employees, 45 107 were young people aged between 15 and 20 years (FoodCorp 1999b: 141). This
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represented approximately 41 per cent of total employees and appeared to be a deliberate cost cutting strategy.
Table 6.1
Classification
FoodCorp Ltd, Employees by Employment Status and Gender, 1999
Gender
Female Male Total Female Part-time Male Total Female Casual Male Total Female Total Male Total Source: FoodCorp 1999b: 137. Full-time
1993
1999
% Variation 1993-1999
13,078 12,841 25,919 6,602 1,277 7,897 24,510 13,451 37,961 44,190 27,569 71,759
15,360 18,310 33,670 19,008 6,483 25,491 29,858 19,927 49,785 64,226 44,720 108,946
17 43 30 188 408 224 22 48 31 45 62 52
Percentage of employees, by employment classification 1999 31 23 46 100
In 1999, the FoodCorp Supermarket division employed 81 229 people or 75 per cent of the organisation’s workforce (FoodCorp 1999: 90). The composition of FoodCorp supermarket employees in 1998, the most recent data available in disaggregated form, is in Table 6.2.
Table 6.2
FoodCorp Supermarkets, Total Employees by Employment Status and Locality, 1998
Classification Number of Employees Metro Full-time 13 427 Part-time 11 637 Casual 19 693 Total 44 757 Rural/Regional Full-time 10 941 Part-time 9 483 Casual 16 048 Total 36 472 Total Rural/Regional 81 229 Source: FoodCorp 1999b: 138
Percentage of Employees 30 26 44 100 30 26 44 100
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It was noticeable that the proportions of employees engaged under each employment status were matched across urban and regional / rural areas. While this may be a coincidence, it suggested that FoodCorp tried to structure their supermarket employment to achieve this mix. A similar structure of employment was found across the three stores examined in this research, which adds further weight to the argument that this was a deliberate strategy designed to deal with known fluctuations of trade as identified in the literature. The following section examines the structure of employment in each of the case study stores. As each store was located in a distinctly different market, basic economic data for each suburb are provided as well.
6.2
CASE STUDY STORE A
Store A was located in the outer western suburbs of Brisbane in a recently developed suburb. Median weekly incomes in the suburb were $481, which placed the suburb in the top 15 per cent of the state for median weekly incomes in the 2001 Census (ABS 2015.3). Average household size was 3.3 persons. Only 10 per cent of residents were renting properties; the remainder either owned their home or were paying it off. Mortgage payments in the suburb were high, with a median monthly repayment of $1 306. Rents were also high at a median weekly rate of $271. Despite the high level of median weekly incomes in this suburb, rents represented 56 per cent of median weekly earnings and mortgage repayments 68 per cent of median weekly earnings, which suggests that disposable income might be limited. The store was located within a medium sized undercover shopping centre that also contained a major competitor’s supermarket, large Big W and K Mart discount department stores, and around 50 other small specialty stores. This FoodCorp store had 3 500 square metres of trading floor space and carried around 35 000 SKUs (Stock Keeping Units) 4. This was one of the busiest trading stores in South East Queensland. Patterns of trade were quite stable, as the area did not have many retirees or people reliant on social security benefits (Manager 3, Interview 23 July 2002). However, the store manager stated that rates and private school fees had an impact on sales figures: I mean paying rates on a $500 000 house at Suburb A is a huge slug. So things like rates, house payments and school fees - because most kids around here go to 4
An SKU or Stock Keeping Unit is the term given to each individual line stocked, by size, flavour or colour. Therefore a 1kg box of cornflakes has one SKU and a 2kg box a different SKU.
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private schools - tend to have a direct effect on disposable income and therefore, our sales (Manager 3, Interview 23 July 2002). Despite these fluctuations, trade varied most in accordance with the strength of the marketing plan: We no longer have any real slow times because the company, through Shared Services, has put marketing programs in place to build business in the times that used to be quiet. We’re trying to even out peaks and troughs (Manager 3, Interview 23 July 2002). Sales fluctuated across the day according to the seasons. In summer, trade was busy late afternoon and evenings, whereas in winter there was a trade peak in the early morning, a gap in the middle of the day, then trade built after school and died off after 6.30 p.m. (Manager 17, Interview 12 June 2002). This store also had a petrol site, which the store manager had pushed for and believed was a great tool for smoothing out fluctuations in trade. The advent of a petrol site had increased the store’s turnover by 5 per cent (Manager 3, Interview 23 July 2002). The petrol site was managed by the supermarket as a separate department and is excluded from this study. In July 2002, the store’s pattern of trade was Monday (14%); Tuesday (12%); Wednesday (13%); Thursday (19%); Friday (18%) and Saturday (24%) (Manager 3, Interview 23 July 2002). In 2002, the store had a salaries to sales percentage5 in the ‘low 7s but ran on less than this’ (Manager 3, Interview 23 July 2002). 6.2.1 Structure of Employment in Store A In July 2002, Store A had 233 employees included on the Employee Schedule Report, or staff roster. Of these 233 employees, 12 permanent employees and 5 casual workers were taking annual leave or otherwise unavailable to work during the week studied. The roster examined here was for the week from Monday 8 July 2002 to Sunday 14 July 2002 and includes 4 744 hours of rostered labour. This was prior to the introduction of Sunday trading on 1 August 2002. At this time, trading hours were Monday to Friday 8.00 a.m. until 9.00 p.m. and Saturday 8.00 a.m. until 5.00 p.m. The structure of employment in Store A in 2002 is outlined in Table 6.3. Of the store’s employees, 106 (45 per cent) were employed on a casual basis, 46 (20 per cent) as permanent part-time, and 81 (35 per cent) as permanent full-time employees. There were 98 male employees (42 per cent) and 135 female employees (58 per cent). Nearly 5
Salaries to sales percentage is the total dollar value of weekly wages expressed as a percentage of weekly sales.
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half the store’s employees (45 per cent) were under 21 years of age and subject to junior rates of pay.
Table 6.3
Total Employees Store A, 2002
Male Female Male Female Male Female Casual Casual PPT PPT FT FT 4 5 Age 15 4 11 Age 16 4 17 1 Age 17 7 10 3 1 1 Age 18 3 6 1 1 2 3 Age 19 6 3 1 2 6 2 Age 20 13 13 11 26 32 34 Age 21 + Total 41 65 16 30 41 40 CASUAL 106 PPT 46 FT 81 Source: Employee Schedule Report Store A 2002
Total 9 15 22 22 16 20 129 233
Percent 4 6 9 9 7 9 55 100
By June 2003, Sunday trading had been operating for almost a year and the store’s pattern of trade had changed to reflect this. Sunday trading in this store was from 9.00 a.m. until 6.00 p.m. Trade had moved from Tuesday, Thursday, and especially Friday and Saturday, into Sundays (Manager 3, Interview 10 June 2003). The Store Manager estimated that the pattern of trade was now Monday (14%); Tuesday (10%); Wednesday (12%); Thursday (15%); Friday (14%); Saturday (20%) and Sunday (12%)6 (Manager 3, Interview 10 June 2003). The salary to sales percentage remained in the low 7s (Manager 3, Interview 10 June 2003). The advent of longer trading hours had little impact on the structure of employment within Store A, although overall staff numbers dropped slightly from 233 employees to 226 employees (refer to Table 6.4). Of the 226 employees included on the Employee Schedule Report for the week Monday 2 June 2003 to Sunday 8 June 2003, 10 permanent workers and 6 casual workers were on annual leave, or otherwise unavailable to work. This roster scheduled 4 811 hours of labour for the store, an increase of 67 hours (1.4 per cent) over the 2002 figure. Of the total employees on the roster, including those absent, 77 (34 per cent) were permanent full-time, 55 (24 per cent) permanent part-time and 94 (42 per cent) were casuals. This represented a slight increase in the number of workers with permanent employment status over the 2002 figures. 6
A
These figures are estimates that add to 97 per cent only.
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sizeable proportion of the store’s employees (44 per cent) were under 21 years of age and receiving junior rates of pay. The gender mix remained similar with 55 per cent female employees and 45 per cent male employees.
Table 6.4
Total Employees Store A, 2003
Male Female Male Female Male Female Casual Casual PPT PPT FT FT 5 5 1 Age 15 8 7 1 Age 16 4 12 1 3 1 Age 17 4 11 1 2 2 Age 18 4 3 1 1 3 2 Age 19 3 1 1 1 2 4 Age 20 12 9 10 29 36 20 Age 21 + Total 43 51 15 40 44 33 CASUAL 94 PPT 55 FT 77 Source: Employee Schedule Report Store A 2003
6.3
Total 11 16 21 20 14 12 116 226
Percent 5 7 10 10 6 6 56 100
CASE STUDY STORE B
Store B was located inland from the Gold Coast in an older established suburb. Median weekly incomes in the suburb were $353, which placed the suburb in the bottom 40 per cent of the state for median weekly incomes in the 2001 Census (ABS 2015.3). Average household size was 2.7 persons. Thirty four per cent of households were renting properties, while the remainder either owned their home or were paying it off. The median monthly mortgage payment was $874. Median weekly rental payments were $166. Median rental payments represented 47 per cent of median weekly incomes in the suburb and median mortgage payments 62 per cent of median weekly income. The store was located within a small undercover shopping centre where FoodCorp was the major tenant. The centre also contained around 30 other variously sized specialty retail outlets. Another small shopping centre was located approximately 800 metres distant on the other side of a road. This centre contained the major competitor’s supermarket as the major tenant. Store B had 4 400 square metres of trading floor space and an estimated 30 000 SKUs (Manager 18, Interview 12 June 2002). As such, this store was physically larger than Store A, with a more spacious layout, and yet carried fewer SKUs. Trading hours were Monday to Friday 8.00 a.m. until 9.00 p.m., Saturday
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from 8.30 a.m. until 5.30 p.m. and Sunday from 9.00 a.m. until 6.00 p.m. throughout the entire research period. Store B was initially established as a Franklins store and was purchased by FoodCorp as part of the Franklins store sell off. The store was refitted and re-badged prior to opening as a FoodCorp store in October 2001. FoodCorp retained all existing Franklins employees as a condition of the sale of the Franklins business. For a period in the late 1990s, the Franklins organisation took a different approach to structuring employment than either of its competitors. They actually negotiated with us, an agreement, which would see the end of regular casual employment. That was actually implemented and for a number of years, the company did that. There has now been a change of management, senior management, and they have drifted back to old ways of employment, you know, regular casuals (Union Official, Interview 4 September 2000). Therefore, having been a FoodCorp store for nine months before this research commenced, this store was expected to exhibit higher levels of permanent employment. Franklins also paid higher wages than their competitors as a result of receiving several concessions from the union on casual loadings for Sunday employment (Union Official, Interview 4 September 2000). These wage differences were minimal, though. As at 1 Jan 2000, the Franklins full time adult pay rate was $486.90 per week, while the FoodCorp full time adult pay rate was $473.20 (Franklins Retail Operations Queensland Certified Agreement 1998, FQSCA 1998). As part of the conditions governing the sale of the business, ex-Franklins employees were entitled to receive Franklins pay rates, until such time as the FoodCorp pay rates equalled or exceeded the Franklins rate (Manager 13, Interview 14 May 2002). This meant that Store B operated on a higher salary to sales percentage than Store A of around 11 per cent (Manager 18, Interview 12 June 2002). Patterns of trade in Store B were very stable across the year (Manager 18, Interview 12 June 2002). The Gold Coast is a tourist region and subject to large influxes of visitors, yet this store was far enough inland from the beach to be unaffected by these fluctuations. The store did not have a petrol site, nor one located close enough to have gained any advantage from the petrol discount strategy. The store’s pattern of trade was Monday (13.5%); Tuesday (11%); Wednesday (13.5%); Thursday (17%); Friday (15%); Saturday (17%) and Sunday (13%), at both the start and the end of the research period (Manager 18, Interview 12 June 2002; 17 June 2003).
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6.3.1 Structure of Employment in Store B In June 2002, Store B had 164 employees rostered to work for the week Monday 10 June 2002 to Sunday 16 June 2002, totalling 3 529 labour hours (refer to Table 6.5). In addition to this, there were 11 casual employees whose names were on the roster but who were listed as not available, and therefore store management did not provide their gender or age. This made a total of 175 employees7. In this store, only two full-time and two permanent part-time employees were taking annual leave in the week examined. Of the total 175 employees, 62 (35 per cent) were permanent full-time, 33 (19 per cent) permanent part-time and 80 (46 per cent) were employed on a casual basis. Of the rostered employees, there were 78 male employees (48 per cent) and 86 female employees (52 per cent). Significantly fewer employees in this store were under 21 years of age: only 31 per cent compared to approximately 45 per cent in Store A.
Table 6.5
Total Employees Store B, 2002
Male Female Male Female Male Female Casual Casual PPT PPT FT FT 5 3 Age 15 8 5 Age 16 5 6 Age 17 4 5 1 Age 18 2 3 Age 19 2 2 Age 20 9 10 9 23 33 29 Age 21 + Total 35 34 10 23 33 29 CASUAL 69 PPT 33 FT 62 Source: Employee Schedule Report Store B 2002
Total 8 13 11 10 5 4 113 164
Percent 5 8 7 6 3 2 69 100
The structure of employment in Store B disproved the contention that the pattern of employment in an ex-Franklins store would exhibit higher levels of permanent staffing than in FoodCorp. In this instance, in 2002, 58 per cent of Store B’s rostered employees, and 54 per cent of Store B’s total employee complement, were permanent. This compares with Store A’s 55 per cent of employees who were permanent at this time: there were thus no significant differences in the structure of employment. However, Store B’s employees tended to be older than those in Store A or Store C, therefore the cost of labour in Store B was higher since fewer employees were subject to youth 7
The casual employees are included in the totals for the purposes of calculating the percentage of each employment type, but not in the table with the age distribution.
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wages. This, coupled with the Franklins’ pay rates, explained the significantly higher salaries to sales percentage in this store. By 2003, the pattern of trade remained unchanged, although the sales figures had reduced due to the increased promotional activity of competitors (Manager 18, Interview 17 June 2003). Employee numbers reflected this reduction in sales and had declined to 154 from 175 in 2002 (refer to Table 6.6). Of the 154 employees included on the Employee Schedule Report for the week Monday 9 June 2003 to Sunday 15 June 2003, there were 4 casual workers and 6 full-time employees on annual leave or otherwise unavailable. The Employee Schedule Report accounted for 3 429 hours of labour, 100 hours (2.9 per cent) fewer than in 2002, reflecting the sales reduction. Salaries to sales remained the same, at around 11 per cent (Manager 18, Interview 17 June 2003). Of the total employees on the roster, including absentees, 63 (41 per cent) were permanent full-time, 24 (16 per cent) were permanent part-time and 67 (44 per cent) were casual. This represented a slight decrease in casual employment from 2002 and a shift from permanent part-time to permanent full-time employment. The gender mix altered slightly: from 48 to 45 per cent male employees and from 52 to 55 per cent female employees.
Table 6.6
Total Employees Store B, 2003
Male Female Male Female Male Female Casual Casual PPT PPT FT FT 1 Age 15 11 6 Age 16 6 6 1 1 Age 17 4 4 2 1 1 Age 18 1 6 2 2 Age 19 2 2 1 1 3 Age 20 8 10 3 14 28 27 Age 21 + Total 32 35 5 19 33 30 CASUAL 67 PPT 24 FT 63 Source: Employee Schedule Report Store B 2003
Total 1 17 14 12 11 9 90 154
Percent 1 11 9 8 7 6 58 100
The most notable change was that the proportion of young people increased significantly from 31 per cent of the workforce in 2002 to 42 per cent in 2003. This indicated a strategy of recruiting younger, cheaper workers, although the store was not apparently able to recruit 15-year-old workers. The growth in the numbers of young
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people in full-time and part-time employment demonstrated that store management were prepared to create permanent positions for young people. The store manager of this store expressed a belief in ‘setting up permanent jobs for permanent people’ in 2002 and appears to have been active in putting this into practice (Manager 18, Interview 12 June 2002). He argued that: anyone who does 12 hours per week regularly is ppt, whether they are 15 years old or not. This provides the employee with stability, a reward for good work and continuity of productivity because people improve with practice (Manager 18, Interview 12 June 2002). It should also be noted that section 6.10 of the FQSCA gives a commitment that FoodCorp will maximise ‘full-time and part-time employment wherever possible provided that the Company retains reasonable flexibility to meet its operational needs’. The growth in permanent employment in this store indicated that this store was adhering to the clause in the agreement.
6.4
CASE STUDY STORE C
Store C was located in the Southern suburbs of Brisbane in a low socio-economic area. Median weekly incomes in the suburb were $272, which placed the suburb in the bottom 10 per cent of the state for median weekly incomes in the 2001 Census (ABS 2015.3). Average household size was 2.6 persons. The majority (51 per cent) of residents were renting properties, the remainder either owned their home or were paying it off. Median monthly mortgage payments were $545 and median weekly rent was $109. Despite the fact that income levels were low in this suburb, median rental represented only 40 per cent of median weekly income and median mortgage payments 50 per cent of median weekly income. The store was located within an uncovered sprawling centre with several distinct strips and blocks of shops surrounded by a large car park. The store did not have a covered entry so the storefront was exposed to the elements. This meant that the front interior of the store required continual cleaning and that customers were inclined to shop elsewhere on days when it was raining (Manager 2, Interview 8 June 2001). Store C was also located in the most competitive marketplace of any of the stores studied. It had three major competitors within walking distance in the centre. It was physically the smallest of the stores studied, with only 2 500 square metres of floor space, yet the store
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manager estimated that it held approximately 40 000 SKUs (Manager 2, Interview 18 June 2002). Within the store, weekly sales figures fluctuated according to the strength of the competition’s promotional offers, pension days and the weather (Manager 2, Interview 8 June 2001). The store had suffered a reduction in sales in recent years, as FoodCorp and competitors had opened new stores nearby. When this store was initially approached to be part of the study, trading was relatively unpredictable given the level of competition in the immediate area, but by 2002, trading patterns had stabilised (Manager 2, Interview 8 June 2001). The store manager attributed this to the fact that: In this area people have a high disposable income, which translates as people dispose of all their income. There’s a heavy reliance on pensions. Dole day used to be Wednesday for everyone but now people on the dole can choose which day they receive their payment and this seems to have made an impact on trading patterns. The store no longer has an ‘on’ and ‘off’ week (Manager 2, Interview 18 June 2002).
The strategy of linking up with two petrol stations and offering a petrol discount had also helped even out trading patterns (Manager 2, Interview 18 June 2002). These petrol sites were not managed by the store. The intensity of competition was a major concern for the store because it was so easy for customers to walk from one store to the next to check prices. Store C’s pattern of trade in June 2002 was Monday (13%); Tuesday (11%); Wednesday (15%); Thursday (21%); Friday (19%) and Saturday (21%) (Manager 2, Interview 18 June 2002). The store operated on a salaries to sales percentage of around 7.6 per cent. When interviewed, just prior to the introduction of Sunday trading, the store manager was holding off employing any new staff (Manager 2, Interview 18 June 2002). The reason for this was the Voluntary Work – Extended Trading Hours – Non-Exempt Shops – Award – State, that stipulated that all staff employed prior to the introduction of extended trading hours could not be compulsorily required to work on Sundays. All employees recruited after 1 August 2002 could, however, be required to work on Sundays. 6.4.1 Structure of Employment in Store C Store C had 165 employees included on the Employee Schedule Report for the week Monday 17 June 2002 to Sunday 23 June 2002, totalling 3 582 labour hours (refer to Table 6.7). Of these 165 employees, two permanent employees and seven casual
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employees were taking annual leave or were otherwise unavailable, but are included in the total employee figures. Of the store’s employees, 89 employees (54 per cent) were employed as casuals, 30 employees (18 per cent) were permanent part-time and 46 (28 per cent) were permanent full-time. This was the most heavily feminised of the three stores examined with 108 female employees (65 per cent) and 57 male employees (35 per cent). Over half (53 per cent) of the store’s total employee complement were under 21 years of age.
Table 6.7
Age 15 Age 16 Age 17 Age 18 Age 19 Age 20 Age 21 + Total
Total Employees Store C, 2002 Male Female Casual Casual 4 11 8 18 9 8 2 5 4 5
Male PPT
Female PPT 1 2 2 2
5 10 2 21 32 57 2 28 CASUAL 89 PPT 30 Source: Employee Schedule Report Store C 2002
Male FT
Female FT
1 1
1 1 1 20 23
1 20 23
Total 15 27 20 11 12 2 78 165
Percent 9 16 12 7 7 1 47 100
FT 46
In the week Monday 16 June 2003 to Sunday 22 June 2003, the number of employees on the Employee Schedule Report had reduced slightly to 153 employees, in line with the pattern in the other stores (refer to Table 6.8). The number of scheduled labour hours had decreased from 3 582 in 2002 to 3 547 in 2003; a reduction of 35 hours (1 per cent) of labour. Sunday trading now accounted for 10 per cent of the store’s weekly sales (Manager 21, Interview 27 June 2003). Sales had not increased overall as Sunday sales had come from reduced sales on Monday, Thursday and Saturday (Manager 21, Interview 27 June 2003). The salaries to sales percentage had also been reduced to 7.3 per cent. The store manager had changed during the year, with the previous manager receiving a transfer to a larger store nearby. This was the only one of the three stores where the store manager changed during the course of the research. Of the 153 employees on the roster in 2003, 43 (28 per cent) were permanent full-time, a proportion unchanged from 2002. However, the proportion of the workforce employed on a casual basis reduced from 54 per cent in 2002 to 47 per cent in 2003 (refer to Tables 6.7 and 6.8). The percentage of employees working on a permanent part-time
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basis increased accordingly, from 18 per cent to 25 per cent. Although the reasons were not disclosed to the researcher, potential explanations included the stabilisation of trading patterns and the new store manager’s labour usage practices. The percentage of female employees remained constant at 65 per cent of the employee population, while the proportion of young employees reduced slightly from 53 per cent in 2002 to 51 per cent in 2003.
Table 6.8
Total Employees Store C, 2003
Male Female Male Female Male Female Casual Casual PPT PPT FT FT 1 2 Age 15 3 8 Age 16 5 15 Age 17 8 7 1 1 Age 18 3 2 1 6 2 Age 19 2 3 1 4 1 2 Age 20 4 9 3 22 19 18 Age 21 + Total 26 46 5 33 22 21 CASUAL 72 PPT 38 FT 43 Source: Employee Schedule Report Store C 2003
Total 3 11 20 17 14 13 75 153
Percent 2 7 13 11 9 8 49 100
To summarise, several patterns are identifiable in the employment structure within the FoodCorp supermarket division and the stores studied. The numbers of employees in each of the three stores declined over the period 2002 to 2003 (refer to Tables 6.3 to 6.8). In Store A, the total number of employees fell by 10 per cent from 233 to 210. In Store B, the number of employees fell from 175 to 154 (12 per cent) and Store C from 165 to 153 (7 per cent). A number of reasons could explain this change. As outlined in Chapter Two, the retail grocery environment had become much more competitive over the period 2002 to 2003 as competitors began to actively promote their businesses, and Aldi established branches in Queensland. At the most elementary level, the reduction in staff numbers could reflect the reduced labour hours allocation available to managers in Store B and Store C, but this would not explain the reduction in employee numbers in Store A where sales and labour hours had increased. It was possible that Sunday trading had evened out trading peaks across the week and reduced the necessity for casual employment. While this could have contributed to changes in employment levels in Store A and Store C, it has no explanatory value in Store B, which has had Sunday trading for a number of years. Additionally, it could be that the organisation’s expressed
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commitment to permanent full-time and part-time employment has resulted in longer hours employment for which fewer employees were required. The likelihood of this is examined in the following section, where the working time arrangements of employees are examined. As well as a reduction in the number of employees, there was a shift in the employment composition of the workforce. In 2002, these three FoodCorp stores operated with a casual workforce comprising between 45 per cent and 54 per cent of the total workforce (refer to Tables 6.3 to 6.8). In line with the reduction in overall employment levels, the proportion of casual employees in every store declined over the period 2002 to 2003. In 2003, the levels of casual employment were between 42 per cent and 47 per cent. This change suggests that the organisation was taking steps to reduce or limit the numbers of casual employees. In those stores, Store A and Store C, which were not trading on Sundays in 2002, the reduction in casual employment appears to have led to an increase in part-time employment in 2003. However, in Store B, casual employment fell as a proportion of total employment, along with permanent part-time employment, while full-time employment remained stable. Another significant change, apparent in all the stores examined, was a shift in the structure of the workforce under 21 years of age. While the overall proportion of young workers remained constant at around 45 per cent for Store A and 53 per cent for Store C, the proportion of young workers in Store B grew significantly from 31 per cent in 2002 to 42 per cent in 2003 (refer to Tables 6.3 to 6.8). This demonstrates that, where employees left the organisation, younger, and consequently cheaper, workers were recruited to replace them. This was also the case with the composition of the youth segment of the workforce, where 15- to 17- year-old workers dominated. The pattern of youth employment represented a ‘bell curve’ with numbers peaking between 16 and 18 years of age and then tapering off towards 21 years of age. As young people got older, and therefore more expensive, fewer of them were employed as casuals. Some of these workers may have found another job and left the organisation, while those whose performance was deemed acceptable appear to have been transferred to permanent employment. The overall numbers of younger workers with permanent employment increased over the period. In Store A, the number of young people in permanent part-time employment
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grew from 9 employees in 2002 to 11 in 2003, with full-time employment of youth growing from 15 to 16 employees. In Store C, young people with permanent part-time employment grew from 7 in 2002 to 13 in 2003 with full-time employment remaining constant at 6 people. The growth in youth employment was most pronounced in Store B, which had 1 young permanent part-time employee in 2002 and no full-time employees. By 2003, these figures had grown to 7 young permanent part-time employees and 8 full-time employees. As an ex-Franklins store, the structure of employment in Store B in 2002 reflected Franklins recruitment policies, but by 2003 it was possible that the natural attrition of Franklins staff permitted the new FoodCorp management team to recruit a younger workforce. This suggests that many ex-Franklins employees were not happy with the changes in their workplace. The veracity of this statement will be tested, to some extent, by the employee survey findings examined in Chapter Seven; however, the survey captured only the views of existing employees, not of those who had left the organisation. In the light of these shifts in employment, a degree of staff turnover was clearly beneficial to the organisation as it enabled the recruitment of younger, cheaper workers. The following section explores the working time arrangements of employees across the three stores to determine if the reduction in the number of employees is a result of increased working hours by fewer employees.
6.5
WORKING TIME ARRANGEMENTS
In the previous section it was surmised that, since there were fewer employees in each of the stores, the number of working hours performed per employee might have risen despite reductions in sales in two of the stores. At a general level, if total labour hours for each store are averaged across the number of employees, then a slight increase in working hours becomes apparent.
Table 6.9
Average Working Time per Employee, by Store, 2002, 2003 2002
2003
Store A
20.36
21.28
Store B
20.16
22.26
Store C
21.70
23.18
Source: Employee Schedule Report, Stores A, B & C, 2002, 2003
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This holistic assertion was supported by more detailed examination of the working time arrangements in the three stores. In Store A, the number of employees working between 1 and 5 hours per week and 6 and 10 hours per week diminished over the period 2002 to 2003 (refer to Figure 6.1). There was a corresponding increase in the number of employees working between 11 and 15 hours per week. Similarly, fewer employees were working between 26 and 30 hours, while the number working 31 to 35 hours grew. The pattern of employees working in excess of 36 hours per week remained largely unchanged between 2002 and 2003.
Hours Worked by Number of Employees, Store A
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
2002
56 to 60
51 to 55
46 to 50
41 to 45
36 to 40
31 to 35
26 to 30
21 to 25
16 to 20
11 to 15
6 to 10
1 to 5
2003
0
Percentage of Employees
Figure 6.1
Hours Worked
Source: Employee Schedule Report Store A 2002, 2003 When the distribution of working hours across employees in 2002 was examined, employment status correlated with working hours (refer to Table 6.9). In general, casual workers worked shorter hours. Store A had 67 casual employees working less than 10 hours per week, 32 of whom received only one shift of between 3 and 5 hours in the week examined. By 2003, this figure had been reduced to 48 employees working less than 10 hours per week. There was a significant increase in the numbers of casual workers doing between 11 and 15 hours per week, in part as a result of the large number of permanent employees taking annual leave at this time. This was also the situation with some permanent part-time employees, as they had been ‘flexed up’ to longer hours contracts in order to cover staff absences during the week examined. Perhaps as expected, and in line with company policy and the requirements of the FQSCA
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(s. 2.1.5), once employees regularly worked in excess of 12 hours per week, they were transferred to permanent part-time employment status.
Table 6.10
Hours Worked by Employment Status, Store A
Casual Casual PPT PPT Hours 2002 2003 2002 2003 5 6 3 5 0 32 22 1 to 5 35 26 6 to 10 16 29 14 11 11 to 15 13 10 11 14 16 to 20 2 1 9 12 21 to 25 2 4 6 26 to 30 3 6 31 to 35 1 1 1 36 to 40 1 41 to 45 46 to 50 51 to 55 56 to 60 Total 106 94 46 55 Source: Employee Schedule Report Store A 2002, 2003
Full-time 2002 9
Full-time 2003 5
1
1 10 39 8 6 6 1 81
2 5 2 42 9 7 5 77
The increase in working hours was also apparent in Store B. The proportion of casual employees working between 1 and 5 hours per week decreased, as did the proportion working between 11 and 15 hours per week, while the proportion working between 6 and 10 hours per week increased slightly as did the proportion working between 16 and 25 hours per week (refer to Figure 6.2 and Table 6.10).
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Figure 6.2
Hours Worked by Number of Employees, Store B
Percentage of Employees
30 25 20 2002
15
2003
10 5
56 to 60
51 to 55
46 to 50
41 to 45
36 to 40
31 to 35
26 to 30
21 to 25
16 to 20
11 to 15
6 to 10
1 to 5
0
0
Hours Worked
Source: Employee Schedule Report Store B 2002, 2003 In this store, the greatest increase in working time occurred in the numbers of employees in the full-time categories of between 36 to 45 working hours (refer to Figure 6.3). There was a corresponding reduction in the number of part-time employees. It appeared as though part-time employees had been promoted to full-time employment. The number of full-time employees grew as a proportion between 2002 (38 per cent) and 2003 (41 per cent). Additionally, the proportion of casual employees working longer hours, especially in the 16 to 25 hours category, also grew. However, in Store B in the week examined, there were six full-time employees on annual leave in 2003. It was therefore possible that these increases in working time were only a temporary measure to achieve staff coverage in the absence of other employees. It was also possible that difference could be influenced by the four-day / six-day rostering cycle for permanent full-time employees.
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Table 6.11
Hours Worked by Employment Status, Store B
Casual Casual PPT PPT Hours 2002 2003 2002 2003 4 4 1 0 17 11 1 1 to 5 18 20 2 1 6 to 10 19 13 4 3 11 to 15 8 11 8 6 16 to 20 2 7 8 7 21 to 25 1 8 5 26 to 30 1 1 2 31 to 35 36 to 40 41 to 45 46 to 50 51 to 55 56 to 60 Total 69 67 33 24 Source: Employee Schedule Report Store B 2002, 2003
Full-time 2002 2
1 13 14 19 6 4 3 62
Full-time 2003 6
11 5 25 12 2 2 63
This trend towards increasing the number of hours worked by casual employees went against the general trend within the organisation. It also went against the rhetoric of the store manager about making people permanent so that they ‘have more stability in their life and they’re more inclined to stay loyal’ (Manager 18, Interview 17 June 2003). However, this shift reflected the economic reality for this store, with more active competitors and another FoodCorp opening nearby in the future. We’ve got a situation in November when Store X opens, and this store will drop $40 000 to $50 000 per week and the same with Store Y. There’s another [FoodCorp] coming in the middle of us, which is 12 kilometres north, so with that there we’ve still got a commitment to make sure our costs are in line and that’s when we do look at our casual content (Manager 18, Interview 17 June 2003). For Store B, casual employment provided an expedient means of dealing with these vagaries of trade, without the need to make permanent employees redundant or negotiate changes to hours. The working time arrangements in Store C followed the pattern established by Store A, with an increase in the number of working hours for most employees. Again, there was a reduction in the overall number of workers on short hours contracts of less than 10 hours (refer to Figure 6.3). The number of employees undertaking between 11 and 15
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hours work per week grew, as did the number of employees on these hours with permanent employment (refer to Table 6.11).
Figure 6.3
Hours Worked by Number of Employees, Store C
Percentage of Employees
25% 20% 15%
2002 2003
10% 5%
56 to 60
51 to 55
46 to 50
41 to 45
36 to 40
31 to 35
26 to 30
21 to 25
16 to 20
11 to 15
6 to 10
1 to 5
0
0%
Hours Worked
Source: Employee Schedule Report Store C 2002, 2003 The number of employees working between 31 and 35 hours per week and 41 and 45 hours per week grew, while the number working between 36 and 40 hours per week fell (refer to Figure 6.3 and Table 6.11). This indicated that fewer staff were on a standard 38 hour week contract and that the store had decided to deploy its available labour more flexibly by adopting a four-day / six-day roster. The FQSCA (s.2.1.5) provides for the averaging of working hours of permanent part-time and full-time employees over a four-week period thus providing the organisation with flexibility to deal with variations in trade, and coverage for other full-time employees taking a rostered day off. In most instances, full-time employees averaged 38 hours per week as standard, but this took no standard form, and it was common for full-time employees to be rostered for between 30 and 55 hours in any given week. Management averaged significantly longer hours across all the stores.
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Table 6.12
Hours Worked by Employment Status, Store C Casual 2002 9 15 32 11 13 5 1 2 1
Casual 2003 2 7 26 22 11
PPT 2002 1 1 1 4 3 8 6 4 2
PPT 2003 1
Hours 0 1 to 5 2 6 to 10 7 11 to 15 8 16 to 20 5 21 to 25 4 7 26 to 30 7 31 to 35 1 36 to 40 41 to 45 46 to 50 51 to 55 56 to 60 Total 89 72 30 38 Source: Employee Schedule Report Store C 2002, 2003
Full-time 2002 2
Full-time 2003
2 2 28 1 2 6 3 46
1 6 24 5 3 4 43
This store manager generally met staff absences and fluctuations in trade by using casual employees, or by placing employees on fixed term contracts (Manager 21, Interview 27 June 2003). He was loath to ‘flex up’ permanent part-time employees ‘because of the clause in the agreement which says they are entitled to new permanent hours based on their average for any year’ (Manager 21, Interview 27 June 2003). Therefore, permanent part-time employees were perceived as less flexible overall, in concordance with Jamieson and Webber’s (1991) findings. When the hours worked per employee were compared across all the three stores, there were some marked similarities in the patterns of employment across stores (refer to Figure 6.4). In each case, there were a large group of employees providing between 6 and 15 hours of labour per week, and another sizeable group providing 36 to 40 hours labour per week, with comparatively few employees in between.
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Hours Worked by Employees, All Stores, 2003
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
Store A Store B
56 to 60
51 to 55
46 to 50
41 to 45
36 to 40
31 to 35
26 to 30
21 to 25
16 to 20
11 to 15
6 to 10
1 to 5
Store C
0
Percentage of Employees
Figure 6.4
Hours Worked
Source: Employee Schedule Report Stores A, B and C, 2003 The fact that this pattern of employment was largely consistent across three stores in very different markets suggests that FoodCorp structured its employment in this way deliberately. In terms of the number of hours worked per week, this pattern suggests a segmentation of the workforce as identified by Doeringer and Piore (1971), Piore (1975) and Freathy (1993). The following chapter examines the distribution of work across departments, and the nature of work performed by different classifications of employees within departments, in order to determine whether this organisation had structured the nature of employment along the lines of a core and periphery as outlined in the ‘flexible firm’ model.
6.6
DISCUSSION
As established in Chapter Five, head office set targets for the proportions of working time performed by different types of labour; however, these were general targets only so the actual composition of the labour force within each store varied. In Store A, casual labour comprised 45 per cent of the store’s labour force in 2002 and 42 per cent in 2003, Store B had 46 per cent casuals in 2002 and 44 per cent in 2003 and Store C had 54 per cent casuals in 2002 and 47 per cent in 2003. Although numerically the dominant group, these casual workers provided between 19 and 27 per cent of the total labour hours rostered in the stores. The proportion of labour provided by casual labour decreased between 2002 and 2003 in Store A and Store C, but increased in Store B.
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Whilst there was no policy or targets for the number of workers based on employment status, the configuration of employees by employment status across the three stores suggests an accepted model within the organisation. Additionally, the shift in the employment structure of Store B, after its acquisition from Franklins, supports this view. Store B exhibited higher rates of permanent employment than the other two nonFranklins stores in 2002, but by 2003, the structure of employment more closely resembled the FoodCorp employment pattern. This suggests that FoodCorp were indeed adopting a strategy of structuring their workforce with a high proportion of casual employees, many of whom were paid youth rates.
6.7
CONCLUSION
Initially, it was established that employment within the organisation had grown as a result of the growth in the number of retail brands and sites. The majority of this growth was in part-time employment, in line with the growth in part-time employment across the retail industry as a whole. FoodCorp had a pattern of employment with around 30 per cent of the workforce in permanent full-time positions, 25 per cent in permanent part-time positions and the remaining 45 per cent with casual employment status. There was a reduction in the size of the labour force across the three case study stores and an across the board shift away from the casual employment. Accompanying this change was the growth in the number of employees working longer hours, especially in Store A and Store C. This change was not so apparent in Store B, which was about to experience an increase in competition due to the construction of another FoodCorp nearby. Combined with a shift towards longer working hours, the organisation was trying to increase the number of people who had the necessary skills to be able to be transferred between departments within the store to deal with fluctuations in trade. Another identifiable pattern was the growth in the numbers of young people with permanent employment status, both part-time and full-time. While this was in accordance with the clause in the certified agreement stating that the company aimed to increase permanence for its employees, it also appeared to be an attempt to reduce labour costs by store management, since most of the permanent appointments were young people on youth rates.
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CHAPTER SEVEN The Nature of Labour Usage by Department in FoodCorp
The previous chapter established that there was a reduction in the numbers of workers employed in the three stores examined, as well as an increase in the average number of working hours performed by employees across the three stores in the period 2002 to 2003. This chapter examines the distribution of those working hours within departments, across tasks, and across the working week, in order to determine whether different classifications of employees work in different departments, at different tasks and at different times of the week.
7.1
CHARACTERISTICS OF LABOUR USE BY DEPARTMENT
While previous researchers have investigated the structure of retail employment at firm level, this study takes the investigation one step further by examining how labour is structured within each department in a store. Data gathered from the Employee Schedule Reports for each store for 2003, interviews with management, informal discussions with employees and personal observation were used as the basis for this analysis. The data on the labour process were collected by shadowing staff within each department during a two-week period during July 2001 in Store C. This was the quietest of the three stores examined and the only store where the store manager would permit the researcher to shadow staff. Since it was subsequently determined that the work process was the same across all stores, and subject to the same head office directives, the data are reported collectively. As established in Chapter Five, each store in this study had ten cost centres or departments. For the purposes of this analysis, the petrol department attached to Store A was excluded, as this was the only store among those examined with a petrol outlet. 7.1.1
Grocery or Dry Goods Department
The grocery department was the largest in terms of sales volume in each of the stores (Manager 2, Interview 18 June 2002). Demand for employees was governed by the need to have shelves well stocked, laid out properly and with correct shelf labelling. Head office sent out ‘planograms’ to identify where every item should be placed on the
159
shelves and how many facings8 each item should have, along with an estimate of how long it would take to achieve the relay (Employee 2, Interview 10 July 2001). Stores received a new planogram ‘every second day’ and spent around 12 to 15 hours each week relaying the floor (Manager 2, Interview 18 June 2002). Relays could take much longer, however. For example, head office estimated that a relay for a range of health foods in Store C would take 32 hours of labour. No extra allowances were made in the labour hours allocated or wage budgets to account for these additional tasks. Catalogue lines, which were usually placed on the end of aisles to maximise the number of facings and sales, also needed to be relayed each week. Additionally, new products were added to a store’s grocery range and slow selling items counted and ‘actioned’; a process whereby shelf labels were changed to reflect a lower clearance price and often individual ‘reduced to clear’ prices placed on each item. Damaged stock needed to be removed from sale, written off and disposed of. Fast selling items needed to be regularly refilled, as the shelf space allocation was usually inadequate to hold a day’s supply. In some instances, this back-up stock was stored on the ‘capping’ or top shelf, whereas for other bulky products such as potato chips and soft drink, back-up stock was stored in a stockroom. Approximately 90 per cent of stock refilling was conducted at night, after the stores had ceased trading, because the fill rate increased from 20 cartons per hour to 40 cartons (Manager 3, Interview 6 June 2001). Individual merchandise was not price marked so shelf labels containing prices were produced in store (Employee 1, Interview 10 July 2001). Labels were often damaged, or prices altered, and considerable employee time was spent replacing these shelf labels. In order to complete these tasks, there were employees scheduled to work in the grocery department 24 hours of the day. The daily work process began when employees termed ‘orderers’ checked the shelves in the early morning and re-ordered items that were out of stock by entering data into a handheld Telxon machine (Personal Observation). None of the stores studied had automatic computerised ordering in place by July 2003. There were two permanent grocery ‘orderers’ in each store to achieve coverage across the week (Employee Schedule Report Store A, B & C). In two stores, one orderer was fulltime and the other part-time, but in Store C both orderers were part-time. Ordering required a significant amount of store specific knowledge in relation to an item’s rate of sale and was generally considered a highly skilled task. 8
A facing is the term given to the number of a particular item that is displayed across the width of the shelving.
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During the trading shift, a number of employees relayed and refilled the shelves and changed shelf labels. In most cases, these were permanent part-time and full-time employees. Rosters were staggered so that there was at least one, and usually several, employees in the department during trading hours (Employee Schedule Report Store A, B & C). The department used casual labour to achieve a minimal level of staff coverage over the weekends, if permanent staff were not rostered on. With the exception of ordering, there was no demarcation between the duties performed by casual or permanent employees. The grocery department also had a nightfill shift where the day’s order was delivered in store and shelves refilled. Stock was delivered on pallets, shortly before close of trade on Monday to Saturday and after close of trade on Sunday (Employee 2, Interview 10 July 2001; Manager 18, Interview 12 June 2002). A number of permanent employees started to disperse cartons of stock from the delivery as soon as the store was closed for trade (Personal Observation). This process was termed ‘dropping’. Around an hour later, the droppers became ‘fillers’, and other staff arrived and began their shift filling the shelves from the cartons dropped on the floor in front of the fixtures. Depending on the size of the delivery, this filling process took between four and five hours and most nightfillers were rostered for a four or five hour shift (Employee Schedule Report Store A, B & C). Each store also had several permanent full-time nightfill employees, usually exempt, as outlined in Chapter Five, and who were expected to keep working until all the stock was put away. This eliminated the need for the store to pay overtime and provided some flexibility to deal with fluctuations in delivery size. Exempt employees accumulated time off in lieu of overtime. In 2003, Store A had two ‘exempt’ nightfill employees, Store B had three and Store C had four (Employee Schedule Report Store A, B & C). Another means of achieving flexibility on the nightfill shift was to call in casual employees when the delivery was too large for the permanent employees to put away overnight. Since the size of the order was often not known until early afternoon, casual workers were often called and told they were not required, or asked to come in and work, at short notice (Manager 12, Interview 25 July 2001). When casual workers were not available, part-time workers were ‘flexed up’. Delivery quantities varied significantly depending on the volume of trade. For example, the average workload for
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Store C was 2800 cartons, or around fifteen pallets, but on a slow night the store could have as few as 1400 cartons, or on a busy night around 5000 cartons (Employee 4, Interview 25 July 2001). While these fluctuations in trade appear to make casual labour essential, several employees noted that ‘fluctuations in groceries really come back to how good your orderer is and how many out of stocks and overstocks you have’ (Manager 17, Interview 12 June 2002; Employees 3,4,5,6, Interviews 25 July 2001). Central computerised ordering, such as the organisation plans to introduce, may reduce some of these staffing difficulties. Staffing for nightfill was calculated using a set formula: number of cartons in the delivery divided by forty equals total allowable labour hours (Manager 12, Interview 25 July 2001). This figure of forty included time for unloading the truck, dropping the stock, removing packaging, shelf filling and removing rubbish afterwards. Nightfillers were actually expected to fill at 60 cartons per hour. Filling was a physically demanding job and it required significant manual dexterity and attention to detail to slit a carton open, remove the stock, place it in the correct location on the shelf and then cut the carton open and squash it flat for disposal (Personal Observation). The majority of nightfill workers were adult employees (Employee Schedule Report 2003, Store A, B & C). This was not a deliberate strategy; rather, adult employees were the only ones who were prepared to work during the night (Manager 12, Interview 26 July 2001). There were, however, two junior staff in Store A, one in Store B, and one in Store C. Nightfill was scheduled so that most nightfill workers received the same hourly rate as day workers. The FQSCA (s. 4.3) sets penalty rates (30 per cent loading) for hours worked between midnight and 5.00 a.m. from Monday to Saturday, and higher penalty rates for work performed on Saturday and Sunday nights, so most of the work in the department was structured around minimising penalty rates payable to employees. Higher penalty rates of 50 per cent applied to work between 6.00 a.m. and 9.00 p.m. on Sunday so staffing levels within the grocery departments of all three stores were kept to a minimum at these times. While Store A and Store B restocked each night after close of trade, including weekends, Store C did not refill on Sundays until midnight, ostensibly Monday morning, so that reduced penalty rates applied (Employee Schedule Report Stores A, B & C). Other than the initial differentiation between droppers and fillers, all employees performed the same tasks. Permanent part-time employees selected the nights they wanted to work, while full-time employees worked a variety of
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rotating rosters and casual employees stated their availability in advance, but often had their hours changed at short notice (Employee 6, Interview 26 July 2001; Manager 12, Interview 25 July 2001). 7.1.2
Bakery Department
Each of the three stores studied had in-store bakeries and most of the product sold was produced in store on a daily basis. Patterns of labour use therefore revolved around the production of adequate amounts of bread and cakes (Manager 11, Interview 11 July 2001). While bread was reduced to clear each day, excess cakes were carried over for the next day. The working day began in the bakery at 3.00 a.m. when two employees, usually a baker and an apprentice or assistant, began baking (Employee Schedule Report Store A, B & C). Since penalty rates applied to work performed before 5.00 a.m., scheduling an assistant or apprentice at this time, as opposed to two skilled tradespeople, reduced the overall departmental wages bill (FQSCA s. 4.3). Additionally, two employees were required to work in the department at all times during the production process, in case a worker was injured (Manager 11, Interview 11 July 2001). Other employees arrived between 5.00 a.m. and 7.00 a.m. to pack and label the goods produced, ice the cakes and place the products on display. Since the working day started early, all employees finished work by 4.00 p.m. and the department was often left unmanned for the evening’s trade. In some cases, one assistant would work in the department to manually mark down bread, but usually this was done before 4.00 p.m. In 2003, the bakery used a nominal amount of casual labour. Store A employed one casual, Store B employed five casual workers and Store C employed one (Employee Schedule Report Store A, B & C 2003). In the case of Store B, the five casual workers were covering the absence of a full-time staff member on annual leave in the week examined. Where used, casual workers were either relief bakers and pastrycooks or assistants. Assistants usually worked alone on an evening shift, or late afternoon weekend shift, refilling and marking down stock. In Store A, the casual worker provided eleven hours of labour and in Store C, ten hours of labour, while in Store B, 46 hours of casual labour were provided. The bakery department employed both bakers and pastrycooks, who were skilled trades people and were paid higher rates accordingly. Single trade qualified employees were paid at Retail Employee Grade 4, while dual certificated employees were paid at Grade
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5, a difference of $30 per week (FQSCA s.3.2). It was desirable to recruit employees who were dual trade qualified since they could be employed more flexibly, but not all the stores were in the position of having dual qualified workers (Manager 11, Interview 11 July 2001). Due to the low unit prices of bakery products and the payment of higher wages, the bakery ran on the highest salaries to sales percentage of all departments (Manager 3, Interview 23 July 2002; Manager 18, Interview 12 June 2002; Manager 2, Interview 18 June 2002). There were various strategies for reducing the overall cost of skilled labour associated with the bakery. The bakery manager was not necessarily a trained baker. As one store manager stated ‘it takes two months of extensive training to take someone from perishables and turn them into a bakery manager’ (Manager 3, Interview 23 July 2003). Likewise, advancements in production technology had simplified or deskilled the bakery process: The stuff comes pre-mixed and you just add water. Most of the preparation just involves adding water and stirring. We also get lots of stuff that’s parbake and we just have to heat it. There are economies of scale in doing that. It’s much better for Sara Lee9 to make it, snap freeze it and all we have to do is defrost it. There is a lot less dependence on skill (Manager 3, Interview 23 July 2003). By simplifying the process it was possible to reduce the reliance on skilled labour. Each store also had at least one apprentice in order to reduce the overall wages cost ‘but it’s probably better if we have two. Their wages are cheaper’ (Manager 11, Interview 11 July 2001). This manager also noted that many of the permanent part-time assistants were under 21 years of age to reduce the wage bill. Calculating staffing levels was relatively predictable because the number of staff required reflected the quantity of merchandise that needed to be produced (Manager 11, Interview 11 July 2001). It was the manager’s task to predict the sales levels and order ingredients. The stores experienced difficulties replacing skilled trades people when they were on leave or left the organisation, due to the dearth of skilled bakers and pastrycooks available in the labour market (Manager 19, Interview 29 July 2002). Store C was in the fortunate position of having a casual baker / pastrycook on their Employee Schedule, but the other stores used a specialist labour hire organisation to cover rostered days off and annual leave (Manager 11, Interview 11 July 2001; Employee Schedule Reports Store A and B). 9
Sara Lee is the business name of a large food manufacturer
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Due to the nature of skill and qualifications required, there were clear lines of demarcation between employees in the bakery department. A baker or pastrycook was always present when stock was being produced, but with a lower cost employee, such as a bakery assistant or apprentice, accompanying them. A store trained cake decorator iced the cakes. Bakery assistants packaged the products, labelled them, stocked shelves and performed general cleaning duties. Bakers and pastrycooks were all permanent fulltime employees, as were apprentices. All stores had one permanent full-time bakery assistant, while the rest of the employees were permanent part-time (Employee Schedule Report Store A, B & C). 7.1.3
Meat Department
The patterns of labour usage in the meat department were also dictated by the need to produce enough stock to meet expected sales levels. There was, however, more latitude in patterns of production than in the bakery, since meat was not as perishable. As in the bakery, the meat manager determined the quantities of stock required to achieve the desired level of sales and placed all orders (Manager 10, Interview 11 July 2001). Duties in the meat department were strictly demarcated into butchers, who were skilled tradespeople, and apprentices and packers, who were unskilled. Butchers were male in all stores, as were apprentices, while packers were a mix of male and female employees. As with baking, the task of butchering meat had been partially deskilled. Increasingly, meat was delivered to stores boxed (Manager 3, Interview 23 July 2002). Most of our beef comes in cartons. So we’ll get a carton of beef rumps all cryovaced10. It is all broken down into various cuts. Lamb is currently on the hoof11, but soon we’re going into carton lamb. Say we have a promotion on legs of lamb then we’ll just receive cartons of lamb legs (Manager 3, Interview 23 July 2002). FoodCorp was moving slowly towards the organisational practice of deskilling meat departments and delivering all meat pre-packaged (Manager 19, Interview 29 July 2002). During 2002, pre-packaged meat was trialled across several stores within FoodCorp, but gross profits were not as high so the company was loath to introduce radical changes. Unlike the bakery, the meat department did not experience skill shortages and stores were generally able to recruit skilled butchers.
10 11
Cryovacing is a process whereby products are vacuum packed in plastic for extended shelf life. ‘On the hoof’ means that the product is delivered as a whole beast, cut into two halves lengthwise.
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The working day for butchers in the meat department began between 5.00 a.m. and 6.00 a.m. across all stores so that product was prepared and ready for sale when trading commenced at 8.00 a.m. (Employee Schedule Report Store A, B & C). Unlike the bakery, it was not uncommon for two or more butchers and an apprentice to commence work at the same time. The meat packers commenced work slightly later. Stock was produced, packed, weighed and labelled, and then stored until such time as it was required on the sales floor to replenish supplies. While the majority of butchers and packers started early and finished early, one butcher and an assistant usually started around midday and worked through until close of trade from Monday to Saturday so there was staff coverage across the department at all times during trading hours. All stores rostered minimal staff on Sunday in order to reduce the impact of penalty rates on the wages bill. In order to achieve staffing coverage and production levels, Store A had five butchers, while Store B and Store C each had three butchers (Employee Schedule Report Store A, B & C 2003). Store A also had three apprentices, while Store B had one and Store C had two. Since the department was production focused and the product durable, workloads were more predictable and most employees were permanent. Store A had only two casual employees, both of whom worked on the weekend, providing a total of 23 hours labour. Store B had two casual workers, one who came in and cleaned the department for three hours, five nights a week, and another who was relieving a fulltime assistant absent on holidays. Store C had one casual cleaner, shared between the bakery and the meat departments, who performed seven hours labour in meat each week. Relief staff from a labour hire company covered any butcher’s absence (Manager 10, Interview 11 July 2001). If meat assistants were absent, staff were drawn from other areas within the store. One additional requirement that constrained the organisation’s ability to cover the absence of meat assistants was the requirement that all employees working in fresh food departments had completed a self-paced training module on food safety. This was also the case for workers in the delicatessen, the next department examined. 7.1.4 Delicatessen Department The delicatessen department used a significant amount of labour, as it was a full service department. One strategy for reducing the overall cost of labour in the department
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appeared to be a shift in the size of delicatessen departments. During the course of this research, when stores were renovated, or new stores opened, the size of the full service section of the delicatessen and the range of products sold unpackaged diminished, while the breadth of the pre-packaged range of delicatessen products grew (Personal Observation). In part, this shift was enabled by advancements in packaging technology, such as the advent of resealable sliced meat packaging. However, a reduction in the size of full service departments also enabled FoodCorp to increase predictability when staffing the department because it was much easier to calculate staff numbers to restock packaged product. The labour process within the delicatessen divided into two main groups of generic tasks, preparation and replenishment of stock, and serving customers. The replenishment task involved slicing meats and cheeses and filling refrigerated cabinets with fresh merchandise such as assorted cuts of chicken, olives and prepared salads (Manager 3, Interview 10 June 2003). Two employees started their working day between 5.00 a.m. and 6.00 a.m. each day in order to have the department stock replenished for the start of trading. After the initial daily preparation of stock and receipt of any deliveries, more staff were needed to sell than to replenish stock levels (Manager 9, Interview 11 July 2001). As in other fresh food areas, the department manager calculated the number of employees required at different times of the day and rostered employees based on their knowledge and experience of trading patterns (Manager 3, Interview 10 June 2003). The delicatessen was a department where customer traffic flow had a direct impact on number of staff required. An attempt had been made to control this customer traffic by introducing a ‘take a number’ service system. In the event of staff shortages due to unexpected surges in customer demand, staff were temporarily transferred from other areas of the store. Permanent full and part-time employees provided the majority of the staffing coverage, with casual employees providing additional staff coverage in periods when full-time employees were absent, usually late nights and weekends. As in other departments, permanent staff had staggered starting times so that there were permanent employees in the department across the entire trading week. This department had higher levels of casual staffing than most other fresh food departments, although there were differences in the employment patterns between stores. Store A had 12 casual employees across a broad age range, while Store B had three, all juniors (Employee Schedule Report Store
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A & B 2003). Store C, however, had ten casual employees, all except two of whom were aged 16 to 17 (Employee Schedule Report Store C 2003). The department manager of Store C recognised that this heavy reliance on junior casual staff created rostering difficulties within the department. ‘The ones during the day don’t work or go to school and the rest are school or uni students. This means problems staffing the department during events like Schoolies week and uni exams’ (Manager 9, Interview 11 July 2001). However, he felt that the cost savings and flexibility provided by using young casual labour made dealing with these problems worthwhile. There was only limited demarcation between employees within this department. The more experienced permanent employees were the ones responsible for cooking the chickens and slicing products, whereas the casual employees tended to be primarily involved in serving customers (Personal Observation). This was not necessarily a deliberate demarcation, though. It was largely just a function of the way in which the labour process was organised, with products prepared in the morning and sold later in the day. Casual workers tended to be rostered to work late afternoon and evening shifts, after school or university, so their job was largely a service role. However, casual workers had the training and capabilities to perform the entire range of tasks, with the exception of ordering stock (Manager 3, Interview 10 June 2003). 7.1.5
Fish Department
The fish departments across all stores were very small, in terms of both floor space and staff numbers. In each store, the fish department was simply just an extension of the chilled display cabinets in the delicatessen. In Store A and Store B, the department had a full-time manager and a full-time 2IC. These two employees worked four days one week and six days the next, and their staggered start times enabled the department to have staff coverage for most of the trading week (Employee Schedule Report Store A & B). In each case, a permanent part-time employee and several casual employees provided staff coverage when a full-time employee was not present. In Store C, the fish department did so little trade that the department did not have a manager and operated with one permanent full-time and one permanent part-time employee and two casual employees on weekends (Employee Schedule Report Store C). As in the delicatessen, the working day in Store A and B commenced before trading so that product could be restocked for the day (Employee Schedule Report Store A & B).
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This meant that one employee started work at around 6.00 a.m. and worked until 4.00 p.m. Another employee started work at 4.00 p.m. and worked until after close of trade in order to clean the department. It was only on Saturday and Sunday afternoons that there was more than one employee staffing the department. In Store C, a similar situation applied with a full-time and a part-time employee, with staggered start times, providing staff coverage over most trading hours (Employee Schedule Report Store C). Two casual employees, also with staggered start times, provided coverage on weekends when the permanent employees were rostered off. There were times across the week when the fish department in Store C was left unmanned. At these times, it was expected that staff from the adjacent delicatessen would serve customers if needed. One person in each store was responsible for ordering, usually the manager or most senior employee. As in the delicatessen, the work process involved removing stock from a freezer, displaying it in a cabinet and selling it, as well as placing orders and receiving deliveries (Personal Observation). 7.1.6
Perishables Department
As suggested by the name, merchandise in this department was perishable therefore a large part of the daily work routine revolved around checking ‘use by’ dates and ensuring that refilling was done from the rear, so the oldest stock was placed at the front and sold first (Manager 8, Interview 11 July 2001). Stock that was approaching the ‘use by’ date was progressively reduced to clear, since it had to be thrown out once the expiry date had passed. Staff in the department were responsible for ordering, refilling and rotating stock. Orders were placed daily using a Telxon machine and arrived mid morning the following day (Manager 8, Interview 11 July 2001). Milk and eggs were manually counted each day and ‘ordered up to patterns of sales’ by a permanent employee (Manager 8, Interview 11 July 2001). Given the limited shelf space devoted to perishables in most stores, most stock had only one facing, and required constant replenishment. This was a very busy department and there were ‘not really enough staff to get all the jobs done properly. Trying to keep the shelves full is the hardest thing’ (Manager 8, Interview 11 July 2001). Staff numbers within the department were limited. Stores A and B each had four fulltime employees in the department, while Store C only had three permanent full-time employees (Employee Schedule Report Store A, B & C). Each of the stores had two
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permanent part-time employees as well, but often their hours were spread across several departments. Store A had four casual workers, two of whom were adults, while Store B had three junior casual workers and Store C, two junior casuals. Planned staff absences were covered by ‘flexing up’ permanent part-time employees or by putting casual employees on fixed term contracts (Manager 18, Interview 17 June 2003). Unplanned absences were covered with casual employees. Labour usage was staggered to achieve a level of staff coverage from 5.00 a.m. or 6.00 a.m. until around 10.00 p.m. on Monday to Friday and from 7.00 a.m. until 9.00 p.m. on weekends (Employee Schedule Report Store A, B & C). At most times of the day there were no more than two employees in the department, and frequently there was only one. Usually staff shifts overlapped in the middle of the day so that there were more employees available to put away the delivery. There was no demarcation between workers. All employees, including the manager, spent their working day continuously restocking the shelves, relaying the range in accordance with planograms, moving and ticketing promotional stock, counting and ordering (Personal Observation). 7.1.7
Fresh Produce Department
This department sold fresh fruit and vegetables as well as fresh flowers. Although some FoodCorp stores offered a floral arrangement service, none of the stores examined did so. The department had staff coverage from 5.00 a.m. until an hour after the close of trade each day across the three stores (Employee Schedule Report Store A, B & C). The labour process involved ordering, receiving and storing deliveries, preparing product for sale, restocking, labelling, reducing to clear and dumping damaged stock (Personal Observation). FoodCorp traded on its ‘fresh food’ image and placed considerable emphasis on ensuring their fruit and vegetables were in excellent condition (Manager 3, Interview 23 July 2002). The supply of fruit and vegetables was subject to the vagaries of the weather, so prices and quality varied according to the success of the season. Each store checked the prices of their local competition daily and retail prices were altered to ensure FoodCorp’s prices were competitive. When this research commenced, much of the fruit and vegetable preparation occurred during the nightfill shift; however by 2003, departmental staff prepared products during the day, presumably to avoid the need to pay penalty rates (Personal Observation). Significant preparation of fruit and vegetables occurred in each store. Pumpkin was
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washed, sliced into smaller manageable portions and shrink wrapped, as was watermelon, rockmelon, pawpaw, and pineapple. Vegetables like lettuce and onions had the outer layers removed to improve visual appeal, and broccoli was cut into smaller pieces. Orders were placed daily by the 2IC or manager, in accordance with a printout of sales volumes by kilogram, and delivered from a FoodCorp warehouse the following day (Manager 5, Interview 10 July 2001). It was up to each individual manager to determine how factors such as price increases might impact on sales and adjust order quantities accordingly. According to one manager, the ‘key to success in fruit and veg is to get the ordering right and ensuring that stock is rotated so that the oldest stock goes on the floor first’ (Manager 5, Interview 10 July 2001). Stock was also easily damaged so the department attempted to minimise the double handling of stock, which also reduced labour costs (Manager 5, Interview 10 July 2001). Each of the three stores had a mix of permanent full-time, part-time and casual employees working in the department. Store A had seven full-time, two permanent parttime and nine casual employees. Store B had five permanent full-time employees, three permanent part-time employees and five casual employees (Employee Schedule Report Store B). Store C had four permanent full-time employees, four permanent part-time employees and six casuals (Employee Schedule Report Store C). As in other departments, starting times of permanent employees were staggered to achieve adequate staff coverage across the working day. Casual employees were rostered either for fouror five-hour shifts during the evening trading period or for longer shifts on weekends (Employee Schedule Report Store A, B & C). A number of the permanent full-time employees in each store were classed as exempt employees and regularly worked 45 hours per week. These employees provided additional flexibility by working longer hours to cover staff shortages or extra workloads. There was no demarcation between employees in terms of the tasks undertaken, with the exception of the ordering role. All employees, including department managers, undertook the full range of tasks. 7.1.8
Variety Department
The variety department was another relatively small department, in terms of sales and space allocation, in Store B and Store C, but was significantly larger in Store A. Whereas Store B and C had direct competition nearby from discount variety operators, this was not the case with Store A. The size of weekly sales was reflected in the number of the staff in each store. Store A had four permanent full-time employees, one
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permanent part-time employee and no casuals (Employee Schedule Report Store A). The department had some staff coverage over all trading hours, with relays and major refills undertaken after the store had closed for trade. Store B had one permanent fulltime employee, another full-time employee who worked one night fill shift in variety, two permanent part-time and a two casual nightfill employees (Employee Schedule Report Store B). This store had two workers rostered for the times when stock was received early in the mornings, but was often left unmanned during the evening trade. One employee worked each night after close of trade to replenish stock. Staff at Store C did not provide the Employee Schedule for this department for 2003, so the data used pertained to 2002 when Store C had one permanent full-time employee, three permanent part-time employees and one casual employee (Employee Schedule Report Store C). In 2002, this store refilled during the day. The labour process within this department revolved around receiving deliveries and putting stock out on display. Some lines were regarded as standard, while others were special purchases available only on a ‘one off’ basis (Manager 7, Interview 7 July 2001). It was the manager’s task to estimate the quantities required. Again, planograms were sent from head office dictating the placement of stock within the store. Each department gets a selling kit from head office with specials for the month. You look at previous sales and try to estimate what sales you will do. You have some leeway since stock doesn’t go out of date like perishables, but you need to watch large quantities in case a central decision is made to delete a line and you’re left with a lot of it to mark down (Manager 7, Interview 7 July 2001). While there was a degree of skill involved for the manager in estimating the volume of sales, the remaining staff in the department spent most of their working time on the low skill task of counting and refilling stock (Personal Observation). 7.1.9 Front End The sophisticated process of rostering staffing for the front end was detailed in Chapter Five. Due to the variability of trading patterns and the manner in which the software was programmed to match labour hours to customer demand patterns, this department had the highest number of employees of any department, the majority of whom were casual and short shift employees. An examination of the hours worked by staff within the front end across the three stores demonstrated these working time patterns (refer to Table 7.1).
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Table 7.1
Hours Worked by Store, Front End 2003
Hours Worked
Store A Store B Number of People Number of People 1-5 10 8 6-10 12 7 11-15 19 8 16-20 10 10 21-25 4 6 26-30 5 3 31-35 3 36-40 6 5 41-45 2 46-50 1 51-55 1 Total 71 49 Source: Employee Schedule Report Store A, B & C, 2003
Store C Number of People 1 14 16 9 2 4 2 2 50
In Store A, 58 per cent of employees worked fewer than 15 hours per week, while in Store C, the figure was higher with 62 per cent working fewer than 15 hours per week. Store B had the lowest percentage of short hours employees with 47 per cent working less than 15 hours. A small proportion of these employees also worked in other departments. The majority of these workers were employed on a casual basis. It was the labour scheduling software that directly led to these employment patterns. The practice of precisely matching estimated customer demand patterns and labour usage resulted in the employment of large numbers of workers for very short periods of time. To illustrate this, the following charts show the distribution of working time, by employment status, for the front end in Store A on Monday, Wednesday and Saturday in 2002 (refer to Figures 7.1, 7.2 & 7.3).
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Figure 7.1
Number of Employees by Hour, Monday, Front End, Store A, 2002
Number of Employees
16 14 12 10
Casual
8
PPT
6
FT
4 2 22.30-23.00
21.00-21.30
19.30-20.00
18.00-18.30
16.30-17.00
15.00-15.30
13.30-14.00
12.00-12.30
10.30-11.00
9.00-9.30
7.30-8.00
6.00-6.30
4.30-5.00
3.00-3.30
1.30-2.00
24.00-0.30
0
Time of the Day
Source: Employee Schedule Report, Store A, 2002 As Figure 7.1 shows, Store A had two trading peaks on Mondays, between 10.30 a.m. and 11.00 a.m. and between 4.00 p.m. and 5.00 p.m., and trade fell slightly in the middle of the day. Monday was the day when many permanent employees on a rotating four-day / six-day roster were rostered off, in lieu of working over the weekend, and therefore casual staff were required for coverage. Yet there were very few casual staff working until around 4.30 p.m. An entirely different picture emerges if the employment structure for the front end on Thursday is examined. With the exception of the increase in customer demand at 2.00 p.m. and again at 5.30 p.m., demand was remarkably stable across the day at around fifteen employees (refer to Figure 7.2). A similar stability was exhibited in the pattern of trade for Saturday (refer to Figure 7.3). What was noticeable was the decline in the numbers of part-time employees working after 4.00 p.m. on Monday and Thursday and almost no permanent part-time employees worked on Saturday. Likewise, the numbers of full-time employees working tapered off during the afternoon on Monday and, to a lesser extent, on Thursday. There were also very few full-time employees working in the store on Saturday.
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Figure 7.2
Number of Employees by Hour, Thursday, Front End, Store A, 2002
Number of Employees
25 20 15
Casual PPT
10
FT
5
22.30-23.00
21.00-21.30
19.30-20.00
18.00-18.30
16.30-17.00
15.00-15.30
13.30-14.00
12.00-12.30
10.30-11.00
9.00-9.30
7.30-8.00
6.00-6.30
4.30-5.00
3.00-3.30
1.30-2.00
24.00-0.30
0
Time of the Day
Source: Employee Schedule Report, Store A, 2002
Figure 7.3
Number of Employees by Hour, Saturday, Front End, Store A, 2002
Number of Employees
30 25 20
Casual
15
PPT
10
FT
5 22.30-23.00
21.00-21.30
19.30-20.00
18.00-18.30
16.30-17.00
15.00-15.30
13.30-14.00
12.00-12.30
10.30-11.00
9.00-9.30
7.30-8.00
6.00-6.30
4.30-5.00
3.00-3.30
1.30-2.00
24.00-0.30
0
Time of the Day
Source: Employee Schedule Report, Store A, 2002 While these charts show a need for differing numbers of employees across the week, the way in which the organisation had structured this labour usage was not so apparent. For example, at first glance, the Saturday pattern of labour use looks like there are approximately 20 casual employees working an eight hour shift between 9.30 a.m. and 5.30 p.m. This was not the case. If the hours worked per individual worker were broken 175
up, then there were actually 45 employees working a shift on that Saturday. Of these workers, many worked only a short shift (refer to Table 6.13).
Table 7.2 Number of Workers
Number of Workers by Shift Length, Saturday, Store A, 2002 3 hr
3.5 hr
4 hr
4.5 hr
5 hr
7 hr
8 hr
8.5 hr
10 hr
3
2
7
9
15
1
6
1
1
Source: Employee Schedule Report, Store A, 2002 Under the terms of section 4.5 and 4.6 of the FQSCA, employees must work for four hours before they are entitled to a rest pause, and in excess of five hours before they are entitled to a meal break. It was therefore cheaper for the organisation to work a greater number of employees for shorter periods and this was what they chose to do. This also enabled the organisation to match fluctuations in demand, such as fewer employees rostered on between 12.00 p.m. and 2.00 p.m. when demand drops slightly. There was a clear delineation between the duties of supervisory staff and checkout operators. Supervisory staff were directly responsible for the performance of the checkout operators. It was their job to provide assistance to checkout operators, respond to customer queries and ensure that sufficient operators were available to prevent excessive customer queues. The staffing software package was programmed to schedule two supervisors to work at all times and, if necessary, one of these employees would open a register, thereby providing spare labour capacity (Manager 15, Interview 12 December 2001). Another means of achieving flexibility was to call employees from other departments within the store to the registers (Manager 3, Interview 10 July 2003). It was possible for the payroll officer in store to transfer the cost of this labour from the employee’s home department to the front end, but this was only done when the time worked exceeded 15 minutes (Manager 13, Interview 14 May 2002). It became common practice, during the course of this research, to ensure all staff, even those recruited specifically for other tasks within the store, underwent register training so that they could fill in, if needed on the registers (Manager 13, Interview 14 May 2002).
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It was also common for the front end to be used as a source of employees for other areas of the store with short-term staff absences, because the front end had such a large employee base to draw from (Manager 3, Interview 10 June 2003). Likewise, the front end was the entry point for the internal labour market in stores. I’m going more and more towards the checkout area because they are familiar with customer service. So we’d canvas people on the checkouts for any interest in a given department and then we would transfer them, and then more likely, we would re-interview for service cashiers (Manager 3, Interview 10 June 2003).
In line with this, and with a view to improving functional flexibility by cross training, senior management within the organisation announced a move towards cross training in mid 2002, and by mid 2003 the number of employees scheduled to work across different departments had increased (Employee Schedule Report Store A, B & C 2003). In 2002, there were eleven employees in Store A whose working week was scheduled across two or more departments (Employee Schedule Report Store A 2002, 2003). By 2003, this figure was fifteen employees. In Store B which, being an ex-Franklins store with more permanent employees, might be expected to have a greater degree of cross department working, there were nine employees working across departments in 2002 and eleven in 2003 (Employee Schedule Report Store B 2002, 2003). In Store C, there were only four employees working across departments in 2002; by 2003, there were thirteen (Employee Schedule Report Store C 2002, 2003). The vast majority of these employees spent at least one shift each week working as a checkout operator. In this way, the organisation was able to create longer hours jobs for employees. The nature of the checkout operator’s job had the potential to become monotonous. Checkout operators were expected to stand at their registers, greet customers, package their purchases and take payment (Manager 6, Interview 10 July 2001). Operators were not permitted to leave the register area for security reasons. If quiet, they were expected to tidy and refill confectionery lines or clean their checkout area. There was an expectation that operators would scan approximately 19 items per minute (Manager 6, Interview 10 July 2001). This figure remained unchanged in 2003 and appeared to be quite achievable as operator scan-rates were on public display in the tearoom of all stores (Personal Observation). Checkout operators were rarely permanent full-time employees. Across the three stores, Store A had four permanent full-time checkout operators, Store B had six and Store C only two. One of the front end supervisors in Store C argued that part-time hours made for a better quality of service since:
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If people stand for eight hours on a register they end up with sore feet and a sore back. You can’t leave the register. It’s boring. You need a special sort of personality to be able to stand all day’ (Manager 4, Interview 10 July 2001). In this way, supervisory staff within stores were able to justify the large number of short hours jobs that resulted from the rostering software. Staff absences amongst checkout operators were common, especially in Store C, where several department managers noted that finding people to work in this area was difficult (Manager 4, Interview 10 July 2001; Manager 6, Interview 10 July 2001; Manager 7, Interview 11 July 2001). Supervisors at the front end had a series of available options for dealing with unplanned staff absences. First, supervisors could phone around and try to get a casual employee to come in and work (Manager 4, Interview 10 July 2001). Second, the supervisor could ask casual staff if they wanted increased hours; and third, permanent part-time staff could be asked to flex up. The third option was the least desirable since flexing up involved completing a new contract giving the reasons for the change to working hours and the implications associated with higher average hours for the part-time worker (refer to Chapter Five) (Manager 21, Interview 27 June 2003). The literature reviewed in Chapter Three argued that the checkout operator’s job had been deskilled with the introduction of scanning and computerised registers (Penn 1995; Smith 1988). If skill is defined as the physical task of registering and processing sales, this research supported this contention. Checkout operators received one day’s training at FoodCorp and were quite capable of performing the checkout function after this minimal amount of training, although they tended, at first, to be quite slow (Informal discussions with Checkout Operators). The organisation had also taken steps to reduce the complexity of the checkout task. When we first started scanning products we negotiated with fruit and vegetable suppliers so that all product arrived in store with either varietal labels or bar codes. This took a bit of doing as the growers wanted to have Fred Jones’ apples on their labelling, but we argued that if you put a varietal code on then we can sell Pink Lady’s, Grannys and Hi-Early. Sometimes we will be selling up to 16 varieties of apples. This helped us because it was no longer so important for the person on the checkout to identify the type of apple it was and reduced the amount of training needed and the likelihood of operator error (Manager 3, Interview 23 July 2003).
There were, however, still some products that remained unlabelled by mid 2003, such as rambutan, lychees, fresh dates and all loose salad mixes. Since it was not uncommon for
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staff to incorrectly register these, or to ask the customer what the product was, it is argued that the task still involves some product knowledge (Personal Observation). Also, as checkout operators were often the only company employees that the customer interacted with, they were asked questions about other products and services offered by the company. As highlighted by Sparks (1992: 17), the checkout operator’s job required significant interpersonal skills. Checkout operators were required to deal with customers who were often rushed and rude, and who asked a wide variety of questions about the firm’s products and services, as well as about local facilities (Personal Observation). For these reasons, the role could not be considered unskilled, although the skill required for data entry had been severely diminished. While the checkout operator job was stereotypically viewed as a ‘female’ job, in all stores a number of males worked in the front end. In Store A, 14 of the 71 front end employees were male (20 per cent) (Employee Schedule Report Store A 2003). Two of these employees were full-time, one permanent part-time and the remainder, casual employees. The front end department’s supervisory staff were female, with only one male holding a supervisory position. Most male front end employees in Store A were checkout operators. In Store B, nine of the 49 front end employees were male (18 per cent), and only one was a full-time employee, the rest were casual (Employee Schedule Report Store B 2003). None of the supervisory staff in this store were male. In Store C, there were only five male employees working in the register area (10 per cent), none of whom were either in a supervisory position or permanent employees (Employee Schedule Report Store C 2003). This comparison highlights differences in the gender structure between stores. Explanations for this appear to be the individual preferences of department managers responsible for recruitment and the state of the local labour market. 7.1.10 Non Trade Department As the title suggests, this department incorporated all the staff not directly linked to trading departments. As such, it was not really a ‘department’ at all; rather, it was a cost centre. Included in the roster for non trade were the senior echelons of store management, the store manager, duty manager (if applicable), trading managers and store services manager. Also included were clerical and administrative staff, such as the systems operator, payroll clerk, cash office staff and the stockperson. Nearly all positions in non trade were permanent and most were full-time. The only exceptions
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were in Store A which had a casual stockperson on weekends and Store B which had a casual cash office clerk for a five hour shift. There was evidence of segmentation by gender. Clerical positions were held by female employees and stockpersons were male (Employee Schedule Report Store A, B & C 2003). However, contrary to the literature, while all store managers were male, two out of three other senior management positions in Store A were held by female employees. This was also the case in Store B, while in Store C female employees held two out of four senior positions. The working hours of clerical employees were scheduled around work patterns. The systems operator started early on Monday so that promotional prices were altered in the system before start of trade. The systems operator worked a standard 38-hour week from Monday to Friday and no one performed the job over the weekend. Similarly, the payroll officer was a 38-hour Monday to Friday position. The cash office clerks worked either full-time or part-time with staggered rosters to ensure staff coverage over trading hours. The stockrooms were staffed by a full-time stockperson, usually ‘exempt’, and a part-time employee to ensure staff coverage during the times when deliveries where scheduled. These positions had clearly defined tasks which required a degree of training to ensure competence. It was not possible to state whether these positions had been deskilled. Management, on the other hand, had clearly experienced a centralisation of control, but did not believe that the job had necessarily been deskilled, just that the nature of the job had changed (Manager 18, Interview 17 June 2003). The industrial engineers appointed by the company in mid 2001 had followed managers and timed their activities, much to the disgust of one store manager who commented ‘they wouldn’t do that to me. I’d tell them to get lost. Imagine following you around and timing how long it took you to do things even go to the mensroom. I’d hate that’ (Manager 2, Interview 18 June 2002). The result of following managers around was a much more structured approach to managing stores. As one store manager said of his job: It’s certainly changing. We’re given more instructions from our centralised area. We’ve probably got less liberty in the way of display because the instructions are very specific and for the right reasons. The centralised office is telling us everything what to do [sic] and even in regard to planning our day. We used to write our own plan daily, of what we were going to do, and now they actually send us an email out every day, [shows researcher] ‘management plan day’. That’s only developed in the last twelve months saying this is the job requirements for today. It’s for me personally and I roll it out to the department managers (Manager 18, Interview 17 June 2003).
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These changes were reinforced by a senior HR manager who said that in many instances these changes were a direct response to changes in the regulatory structure governing the industry (Manager 19, Interview 16 February 2004). The organisation had been forced to tighten control over processes to ensure adherence to workplace health and safety legislation, food safety legislation and industrial relations legislation. Store managers were also conscious of increasing workloads. One store manager commented that ‘things have become tighter over the past year. There are just as many jobs to do, if not more, and the timeframes for completing them are just getting tighter and tighter’ (Manager 2, Interview 18 June 2002). Another very experienced manager in another store reinforced this: I think the expectation is getting tougher each year. It really comes about because of the amount of change. The volume of change means that everyone’s working harder. I can remember the days when change was not at this rate and it was a lot simpler and smoother and we simply weren’t working as hard… I don’t know what we’re achieving at the end of the day mind you because some of the things we’ve changed we’ve done the full circle (Manager 3, Interview 10 June 2003). Another store manager, who was having a particularly bad day, remarked ‘sometimes I think we wear our people out. The barriers just keep getting higher every year’ (Manager 2, Conversation 11 July 2001). While this research did not set out to establish whether levels of stress amongst retail managers were increasing as Broadbridge (1999, 2000, 2002b) did, the indicators of stress identified by Broadbridge were apparent in the jobs of managers studied. These stressors were long working hours, time pressures and deadlines, coping with change, taking work home, highly competitive business environment, and tight resource allocations. The findings from this research strongly suggested that Australian retail managers were likely to be experiencing similar levels of stress to their counterparts in the UK. There is a need for further research to add credence to this supposition. Each store and each department within the store was an individual cost centre. Store managers and department managers were subject to a range of strict budgets. Wage budgets, expressed as a percentage of sales, were regarded as sacrosanct and hours and consequently wages were cut in order to achieve these budgets. It was only by increasing sales with existing staff levels that store level management could increase staffing levels. This led to an increase in the intensity of the staff work effort. It also led to a situation whereby department managers negotiated their staffing levels with the
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store manager who held responsibility for ensuring that the store as a whole came in under its wage budget. Head office was also able to limit the discretion of store level management by tightening the wage budget percentages, although over the period examined in this research this had only occurred in one of the stores. Other budgetary controls set by head office included sales and controllable profit, which incorporated wrapping, cleaning, electricity and the phone bill. As well as these direct financial indicators, budgets were also set for related expenses, such as out of stocks, staff turnover, absenteeism, department managers ‘ready now’ for promotion and other store level management KPIs. The merchandise mix, store layout ‘planograms’ and marketing plans all came from head office and the management team in stores were responsible for implementing them. Buying was done centrally, and store level staff were able to stock only the designated lines for their store. They did retain control over the quantities of each line ordered though. This situation was in the process of changing with the gradual introduction of automated stock replenishment, which would further reduce store level discretion. At the time of this study, store level management retained some input into pricing. Yet their discretion did not extend beyond meeting competitor’s prices. Since data were transferred on-line to head office, they retained the capacity to check prices. Therefore, the situation in Australian food retailing demonstrated the same degree of ‘separation of conception from execution’ as the UK and US industries. Decisions were made in head office and relayed to stores, where management were responsible for implementing these strategies. This research found no evidence of the restructuring of the management role or delayering encountered by Bramble, Parry and O’Brien (1996) in another Australian retail organisation. While FoodCorp restructured their management team in stores in early 2001, which took effect in mid June 2001, this restructure resulted in renaming senior store management jobs and shuffling responsibilities, not delayering. Likewise, the management changes introduced, as part of aligning Operations and HR, did not result in a delayering, although spans of control changed. In fact, for FoodCorp, the restructuring process resulted in greater numbers of employees at each level in the hierarchy and smaller spans of control in order to improve responsiveness and achieve greater identification of customer needs.
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7.2
DISCUSSION
This chapter looked at the way in which labour was used within departments across the three stores examined in the study. One of the recurring themes in the literature on retail employment was whether the nature of labour usage was the result of patterns of customer demand or the result of retailers’ cost cutting strategies. This discussion examines the findings from the current chapter in the light of this debate. In the front end, labour usage was clearly a result of patterns of customer demand. Here, the number of items passing through a register per half hour directly dictated the number of employees scheduled to work. Since trade fluctuated across the day, the number of employees also fluctuated across the day. The software package used by the organisation to schedule staff allowed only two employees up or down from the recommended number per half hour. The use of the software therefore encouraged the use of labour on short hours contracts. By virtue of the number of hours they worked, these employees were mostly part-time and predominantly casual. An examination of trading patterns for the front end indicated that it was theoretically possible to have higher base levels of base permanent full-time employees manning the registers. Yet, this was not a practice employed within the organisation. It was the perception of management within stores that to be a permanent full-time checkout operator you needed to be a special sort of person - one with a strong back, comfortable shoes and a high tolerance for boredom. There was an expectation, and a legal requirement in the certified agreement, that permanent full-time employees would have set rotating rosters; therefore these employees were not able to be deployed as flexibly as casual workers in order to deal with fluctuations in trade. Similarly, permanent parttime employees were also regarded as less flexible because they had expectations of stable shifts at the same times each week and it was not always possible for the store to deliver this. It was easier for the organisation to employ a pool of casual staff to man the registers because they provided the flexibility necessary to meet the protocols in use in the staffing software. Additionally, the majority of casual employees were students who were available to work late nights and weekends.
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The other major ‘full service’ departments where customer demand might have been expected to drive patterns of labour usage were the delicatessen and fish departments. In these departments, labour usage patterns were driven by a combination of direct customer demand and the need to prepare foodstuffs. In the morning, the work revolved around preparation of the merchandise for the day’s sales and in the evening, the storage of remaining foodstuffs and cleaning of display cases. During the remainder of the day, the work involved counting and ordering stock, refilling the display cabinet, storing deliveries and serving customers. While all these tasks related to the quantity of sales processed by the department, they were not all a direct result of customer’s demands for service. Labour usage in fresh produce also involved an element of preparation, but once prepared and placed on fixtures this merchandise was self-service. Since stock was capable of being stored, patterns of labour usage revolved around ensuring that all merchandise was ordered, stored, refilled and presented for sale in an attractive manner. This led to a situation where staff numbers were bolstered to deal with an influx of stock and the need to prepare and store stock, rather than to deal with purchasing patterns of customers. In the grocery, variety and perishables departments, the entire labour process revolved around ensuring products were ordered, deliveries unpacked, and shelves refilled. It could not be said that the patterns of labour usage in these departments matched customer demand, although, when customer demand was higher, more stock was reordered and more staff were required. While it could be argued that customer demand drove labour usage, the relationship was tangential. With the exception of grocery nightfill, tasks were located across the day so that the bulk of the labour was provided during normal trading hours and the payment of penalty rates minimised. The exception was the process of nightfill in the grocery department. In this instance, the quantity of goods sold related directly to the number of goods ordered and therefore the size of the delivery, so it could be argued that customer demand dictated patterns of labour usage. While this was the way in which the organisation structured its labour use, it did not need to be. It was theoretically possible for the grocery department to increase the numbers of permanent employees and simply work these employees for longer on the nights where the delivery was larger, as with ‘exempt’ nightfill employees.
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However, the existence of penalty rates for work between midnight and 5.00 a.m. meant that the organisation took steps to avoid paying higher rates by employing more workers for the shorter period between 9.00 p.m. and midnight. Similarly, filling did not need to occur at night. Filling was performed at night because the fill rates were higher without customers present in the store. It was also an organisational belief that filling during the day made the stores appear messy and annoyed customers. So the nature of labour usage in these departments related more to how the organisation chose to structure its work processes, rather than to customer demand. In other departments, like meat and the bakery, customer demand drove sales and stimulated the production of stock but it did not have a direct impact on the patterns of labour usage. These were self-service departments where staffing was dictated by the estimated quantities of merchandise that staff were required to produce. The production of merchandise was distinct from its purchase and merchandise could be stored. In theory, the production and preparation of meat could be relocated to any other time of the day, whereas this was not the case with bread products, which were more perishable and needed to be produced daily. There was no practical reason why employees could not work across departments, provide functional flexibility and achieve longer working hours, but the practice of each individual department, being an accounting cost centre, discouraged this. This narrow focus and each department manager’s responsibility for their own rosters and labour costs meant that labour was rarely shared between departments. There was, however, evidence of an increase in the number of employees working across departments over the course of this research. Whether this was a result of the expressed policy of increasing cross training or another reason was unclear. The contention in the UK retail literature that retailers adopt a rigid cost approach to employment (Freathy & Sparks 1996a; Sparks 1992; Walsh 1990; Baret 2000; Wrigley & Lowe 2002) was well supported by this research. The practices of strict budgetary controls on labour costs, software packages to match labour usage with patterns of customer demand in the front end and formulas for matching labour hours to staffing for the grocery nightfill all demonstrated a rigid cost approach to labour usage. This rigid approach resulted in labour being allocated in such a way as to reduce non-productive time and avoid labour use at high cost times of the day.
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7.3
CONCLUSION
The patterns of labour usage within departments in the store were investigated. Some departments in the store actually used little or no casual labour. These departments were meat, bakery, fish, variety, and non trade. The departments which used the greatest amount of casual labour were the front end, delicatessen and grocery. The front end and grocery departments had strict formulas for calculating labour hours that predisposed them towards the use of casual labour. The delicatessen was a full service department with variable patterns of trade where casual labour allowed for fluctuations in trade to be managed. It was also apparent that the use of all labour classifications had been structured to avoid the necessity for payment of penalty rates. For example, nightfill occurred either before or after the midnight to 5.00 a.m. on Sunday period, to avoid penalty rates of 50 per cent. There was evidence of deskilling, especially in the work performed by skilled tradespeople, such as butchers and bakers. In other areas of the store there was little difference in the tasks performed by employees regardless of their employment status. There was, however, a degree of demarcation between the jobs performed by managers and other employees. Managers were responsible for undertaking the ordering process within departments and for dictating meal breaks. There were exceptions to this, as it was generally part-time staff who did the ordering in the grocery department. Over the period of the research, the salaries to sales percentages set by head office for labour costs in stores tightened in one store only, yet by 2003, stores had more tasks to complete and fewer labour hours allocated in which to do so. This led to a situation where store managers were conscious of work intensification. This is one of the consequences of adopting these labour use strategies highlighted by the employee survey results discussed in the following chapter. Chapter Eight also examines the consequences for the organisation of adopting these labour use strategies.
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CHAPTER EIGHT Consequences of Labour Usage in FoodCorp
The nature of labour usage in FoodCorp outlined in Chapters Five, Six and Seven has consequences for the organisation and for its employees. FoodCorp chose to structure its workforce with a mixture of permanent full-time, part-time and casual employees in order to achieve the flexibility to deal with fluctuations in trade and ‘changes in the retail scene’ (Manager 1, Interview 27 February 2001). In Chapters Two and Three arguments were identified in the literature that structuring the labour force in this manner to maximise flexibility elicits both costs and benefits for organisations; this chapter examines these costs and benefits for FoodCorp and its employees. First, the consequences associated with this employment structure from the organisation’s perspective are considered. Second, the consequences associated with the employment structure for the employees are examined.
8.1
CONSEQUENCES OF THE LABOUR USE STRATEGIES FOR FOODCORP
This section focuses on the consequences associated with the employment structure adopted by FoodCorp. The advantages of adopting this structure are self evident - reduced likelihood of exposure to unfair dismissal claims, considerable flexibility in deploying personnel and the minimisation of labour costs - therefore these benefits are not discussed in this section. Instead, the cost advantages to the organisation are discussed as a consequence for employees. For FoodCorp, the main costs associated with flexible employment structures were high levels of staff turnover and the resulting recruitment and induction costs. However, there was also evidence of employee resistance to changes in their working time arrangements and this presented challenges for the organisation’s management. Additionally, the organisation experienced problems with controlling the availability and use of casual labour. Each of these consequences will now be examined. 8.1.1
Staff Turnover
Within the organisation, staff turnover levels differed between full-time, permanent part-time and casual employees. Within the region that included the stores in this research, staff turnover was 34 per cent in mid 2002 (Manager 19, Interview 29 July
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2002). This region had a total of 11 000 employees, so turnover of 34 per cent equated to the loss of approximately 3 740 employees per year. The vast majority (70 per cent) of employees leaving the organisation were casuals, 17 per cent were permanent parttime employees and 13 per cent were full-time employees. Hence this one region required approximately 3 700 new employees per annum to replace those individuals who left the organisation. This turnover level is higher than the industry average of 22.8 per cent in 2002 (ABS 2002 6209.0). The firm had ten regions across Australia, and while turnover figures for each region were not provided, as a guide, an extrapolation at 34 per cent would mean the firm needed to recruit 37 000 employees each year. These high levels of turnover, especially amongst casual employees, were the primary reason why ‘most retailers try to increase PPT and permanents’ (Manager 19, Interview 29 July 2002). However, permanent part-time employment was only seen as appropriate where there was relatively fixed demand (Manager 1, Interview 27 February 2001). The HR Manager argued that each store had its own idiosyncratic pattern of traffic flow; therefore it was not possible to identify an ideal staffing formula that would apply across the organisation. The high level of turnover was, in part, a function of the organisation’s recruitment policies. One HR Manager stated that turnover was ‘not really a reflection of our organisation because most of these people are students who go off and become doctors and other jobs’ (Manager 13, Interview 18 December 2001). While this may be partly accurate, the levels of staff turnover reflected the recruitment policies. The organisation’s policy of recruiting everyone except skilled tradespeople as casual workers initially, and then promoting them to permanent jobs via the internal labour market, had several effects. First, the policy excluded all those potential employees who were not in a financial position to accept short hours casual work for and this reduced the pool of potential applicants. It also limited potential applicants to people in the secondary labour market who were unable to gain permanent employment elsewhere. Second, the organisational practice of promoting from casual to permanent part-time was potentially a slow process and it was likely that employees tired of waiting and moved elsewhere to organisations offering full-time employment. Indeed, it could be argued that the only people who could afford a job in FoodCorp were students and individuals who were not primary income earners in their households. The low pay levels, discussed in Chapter Five, further exacerbated this.
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As a result of the high levels of staff turnover and the ensuing costs, the organisation instituted a number of retention strategies. I think there are a couple of things. One is skills development, up-skilling them. The second one is giving them a career path, so they can feel they’re doing something, developing. Obviously, it is one of the drivers of turnover. One of the things to combat this is to develop people, give them a career (Manager 19, Interview 29 July 2002). The steps taken by FoodCorp to develop individual employees’ careers and retain key employees were discussed in Chapter Five. Briefly, these involved an internal labour market, access to training and development opportunities and share plans. In the case of retaining young people, the organisation initiated a Youth Development Committee (YDC), which offered ‘a range of fun activities with a view to developing awareness of the potential benefits of retailing as a career’ (Manager 13, Interview 8 December 2001). Associated with the YDC was the use of Traineeships and certificated training. Training was FoodCorp specific, thus reducing the portability of the skills, which potentially bound workers to the organisation. The organisation was also trying to ‘improve articulation through certificate programs’ in a further attempt to retain employees (Manager 1, Interview 27 February 2001). 8.1.2
Recruitment Problems
One of the major issues for this organisation was achieving a balance between the flexibility offered by the employment of young, inexpensive casual workers and the cost to the organisation of recruiting and training casual employees (Manager 19, Interview 29 July 2002). One of the strategies the organisation used to deal with this issue was the centralisation of recruitment to head office (Manager 13, Interview 14 May 2002). This shift enabled the organisation to achieve economies of scale by recruiting for a group of stores, and the use of experienced recruiters improved the quality of the recruitment decision (Manager 19, Interview 16 February 2004). Other attempts were made to reduce the overall cost of the recruitment process by introducing online recruitment. This enabled the organisation to reduce the clerical costs associated with transferring applicant details from a paper based employment format. The use of group interviews with up to fifteen applicants also provided economies of scale (Manager 19, Interview 15 February 2004). When asked if this was a cost-reduction measure, the HR manager was quite evasive and stressed the benefits of discovering how applicants interacted with others (Manager 19, Interview 16 February 2004). Improvements to the
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recruitment process reduced staff turnover, but HR management were not able to quantify this. It did drop but unfortunately we can’t pull a regional figure, and the state figure looks slight, and because we’ve now got national payroll they can’t even give me a state figure from last year because they measured it a bit differently. We think it’s dropped around 6 per cent (Manager 19, Interview 29 July 2002).
An additional cost minimisation strategy associated with recruitment was the reduction in the time taken to induct new recruits over the research period. The procedure was reduced from three days to one day, plus an additional day for register training. Given the number of people recruited each year, and the fact that induction training was paid training, this represented savings for the organisation of at least eight labour hours for each new recruit. Reducing the period of induction training also forced department managers to become more accountable for the performance standards of individual workers within their department, as it was their responsibility to sign off on an employee’s achievement of competency (Manager 13, Interview 14 May 2002). Another strategy to increase retention and thereby reduce recruitment costs, identified in Chapter Six, was a reduction in the overall number of employees in each store and an increase in the working hours of those remaining. Longer hour’s jobs were part of a retention strategy designed to encourage people, especially young people, to remain with the organisation (Manager 19, Interview 16 February 2004). Aligned with the strategy of increasing the working hours attached to jobs, another strategy was to increase the numbers of employees who were working across departments. In part, working across departments enabled the organisation to provide longer hours jobs for employees, since an employee could do three hours in perishables and then two hours in bakery, thereby providing stores with functional flexibility. This push to increase the number of departments that employees could be deployed in was part of a company level push towards cross training announced in May 2002 (Manager 13, Interview 14 May 2002). Cross training did not necessarily involve higher level skills though, as most managers interviewed thought that cross training was the ability to use a register. Not all employees were happy with the idea of working across departments either. One employee at Store B, while completing the survey, laughed when she got to the ‘job title’ question, and wrote ‘jack of all trades’ and ‘bitza’ (Employee 10, Discussion 14
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June 2003). When asked why, she explained that she worked across six departments and had six different bosses and never knew what she was supposed to be doing. Additionally, she experienced frustration from rarely being able to follow a task through to completion. The high levels of staff turnover were exacerbated by difficulties in recruiting people in some parts of Australia. Recruiting school-aged casuals was difficult in the Western suburbs of Brisbane, where Store A was located, since many children attended private schools and their parents were ‘more school focussed than work focussed’ (Manager 19, Interview 29 July 2002). Recruitment difficulties were particularly prevalent in parts of inner city Sydney, which was outside the geographic scope of this research. Store C also experienced similar problems in not being able to get people to work (Manager 6, Interview 10 July 2001). It appeared that the policy of recruiting employees as casuals for short hours relied on a level of labour supply that might not be available in a tighter labour market. 8.1.3
Resistance to Changes to Hours
The stores required a degree of flexibility to relocate staff working hours across the trading week, in order to respond to changes in patterns of trade. While the organisation was prohibited by the FQSCA from arbitrarily altering the number of hours worked by permanent employees, the organisation retained the ability to move an employees’ working hours to different times of the day and week. It was often necessary for the company to relocate hours in order to best meet the needs of the business. As one manager stated: As we streamline a job and decide we don’t need that many hours in the middle of the day, for whatever reason, try and put them on to nights, or whatever- huge resistance! (Manager 19, Interview 29 July 2002). It was resistance to changes in the location of working hours that created the largest number of HR grievances within the company (Manager 19, Interview 29 July 2002). Levels of resistance to the relocation of working hours were highest amongst permanent part-time employees. ‘I think people, once they think they’re part-time, they’ve got it locked in their brain and locked in their calendar on the fridge, or whatever they do’ (Manager 19, Interview 29 July 2002). Some managers within the company accepted that employees often had valid reasons for their resistance. Don’t want to do it. And I guess, why would they? You know, if you’ve got a family and you cook dinner, or even if you don’t cook dinner, it’s getting ready
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for bed and homework, and I think the single ones probably don’t want to be working then. It’s a huge issue around childcare. You know, we had a lady recently and they tried to shift her hours onto a Friday, but because she’s on a childcare waiting list, she can’t do it. You know she’s number fifty [on the childcare waiting list]. She’s got these days but we don’t have the flexibility to change it to fit those because you’ve got to take down considerations of the roster (Manager 19, Interview 29 July 2002).
Across the stores examined, different managers appeared to take very different approaches towards managing the process of labour scheduling and dealing with employee resistance. This also created problems for the HR department, as some store level management ‘do a pretty good job but there’s one or two you pick up at the end’12 (Manager 19, Interview 29 July 2002). In Store A, flexibility on the basis of the individual worker and their needs was more apparent. What you’ve got to respect is, people need quality time and if you’re going to work in an industry that has the spread of hours that we do, you’ve got to recognise people have wants and needs too. So you’ve got to have a staff base big enough to fluctuate with that situation. That is, that they give us their availabilities and we work to those availabilities. With a sufficient staff base then we have the opportunity to meet the needs of our own. Those people can still have a personal life and a work life. Department managers have a roster that’s on a 4-week cycle. They know exactly where they stand. If they have a wedding or something of that nature we look to help them change that roster for that given day. They all know what their roster is and stick to it (Manager 3, Interview 10 June 2003). The situation was somewhat different in Store B and C where the needs of the business were paramount and there was less flexibility (Manager 18, Interview 17 June 2003; Manager 21, Interview 27 June 2003). These were, however, quieter trading stores, and it was possible that this reduced management’s capacity to be flexible and respond to individual workers’ needs. 8.1.4
Control Issues Related to Casual Employees
At face value, casual employment appeared to offer FoodCorp complete freedom to use labour as a variable commodity, calling workers in when needed, and sending them home when they were not needed. However, in order to be able to achieve this, the organisation required a compliant workforce. Employing vast numbers of young students provided the organisation with cost savings, but created control problems as well. Since casual employees had no guaranteed hours each week, they were asked to notify their manager one week in advance which hours they were available to work. 12
‘Picking up at the end’ means that the HR manager ends up handling an employee grievance.
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A range of managers across the company commented on how a reliance on casual labour actually reduced labour scheduling flexibility, because control over work availability passed to the casual employee. They want to go off to school each week and they want exams off and they want the sports carnival off, you know, this off, that off. They’ve tried in some stores to lock them in but you get a fair bit of resistance to that (Manager 19, Interview 29 July 2002).
The biggest issue staffing the store is the fact that most casual workers are school children. The store doesn’t have many uni students. School children are under so much pressure to perform at school these days, that when exams or other things come along, kids say they’re not available and we have difficulty staffing the store (Manager 17, Interview 12 June 2002).
The stores had different methods for reducing this employee control over working time. In Store B, management tried to lock employees into permanent part-time hours. This was promoted as benefiting both employees and the employer. If you make a person a ppt or permanent, they’ve got more stability in their life and they’re more inclined to stay loyal to the structure. If they’ve got casual hours, they might get three hours a week, or ten, or whatever. They have not got any commitment and the minute you lose one, you’ve got to go and replace that person. That’s the biggest cost involved (Manager 18, Interview 17 June 2003). This manager did not find permanent employees restricted the organisation’s labour use flexibility. If you negotiate with them and you ask them to be available on different rostersjust remember we trade from 8.00 in the morning until 9.00 at night, Monday to Friday, 8.00 to 6.00 on Saturday, 9.00 to 6.00 on Sunday- if they make themselves available across the full spread of the week, we can then utilise them. If they all said, I can only work 8.30 till 5.30; we would have all this labour sitting there doing nothing. So, it’s how you negotiate contracts with people!’ (Manager 18, Interview 17 June 2003). The researcher perceived this manager to be the least open and friendly in their interaction with employees, and suspected that there was a fine line between ‘negotiation’ and ‘coercion’ in this store (Personal Observation). This suspicion was supported by the results of the employee survey presented later in this chapter. In Store A, applicants were asked about their availability in the interview process, and then reminded of this when they said that they were not available at certain times.
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We make it very clear that once we’ve trained people we expect that they stay true to the availability which they have provided. We know that changes. We know that they have exams. We know all sorts of things and we take that into account, but it has been the case where some who say they have weekend availability all of a sudden have everything on at the weekends and say they can’t work and we have to sit down with those people and remind of them of their initial employment agreement that we had on interview. By virtue of the nature of our business we need a proportion of our people to work those slots. We try to be fair and spread it around and I certainly think it works both ways. Those people who are fair to us, get a good deal. Those people who are only in it for themselves, are only making it tough for themselves, and that’s not a threat, that’s basically reality. We accommodate people who accommodate us. Life is give and take (Manager 3, Interview 10 June 2003).
A very similar situation existed in Store C, although there it was stressed that the needs of the business came first (Manager 21, Interview 27 June 2003). Managers in Store C noted that the store had ‘lots of trouble with people not turning up’ and that ‘reliable staff tend to leave because they treat FoodCorp as a stepping stone’ (Manager 4, Interview 10 July 2001; Manager 6, Interview 10 July 2001). This store also experienced problems ‘finding people eager to do the job. Many just don’t have any pride, they just want to come along and get the money’ (Manager 7, Interview 11 July 2001). To summarise, structuring a labour force with a minority of permanent full-time and part-time workers and large number of casuals provided benefits in terms of cost minimisation and flexibility for FoodCorp. There were costs associated with this structure, though. These costs were high levels of staff turnover (particularly amongst casual employees), the ensuing recruitment and induction costs, and resistance to changes in working time arrangements amongst flexible workers. Additionally, some control issues arose associated with the use of casual workers.
8.2
CONSEQUENCES OF THE LABOUR USE STRATEGIES FOR EMPLOYEES
Thus far, this research has established the organisation’s labour usage strategies; this section examines the other side of the story. Most of the literature on flexible employment practices stressed that employees were the party who suffered as a consequence of flexible labour use, and one of the aims of this research was to establish what the employees thought about the labour usage strategies they were exposed to. It was neither practicable to speak to individual workers on the job, nor would the firm
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permit this to occur. The researcher used two strategies to deal with this. The first was to purchase significant amounts of groceries at these three stores in order to speak with employees over the course of the research. The second was to survey employees within the organisation. The second strategy was more efficient, cheaper and provided a larger sample. 8.2.1
Employee Survey
The survey was designed to examine employees’ views about working in supermarkets and their working time arrangements. A copy of the survey is in Appendix B. The survey asked a range of demographic questions: sex, age, length of tenure, job title, main income earner in household, current and preferred employment status; hours worked this week, last week and desired weekly hours; days worked this week, last week and desired number of days work; parental status, student status, other paid work and caring responsibilities. As well, survey participants were asked to respond to a series of statements related to satisfaction with hours of work, wages and conditions, and HR interventions. 8.2.1.1 Survey Methodology The survey was designed over the period January to May 2003 after most of the qualitative research had been undertaken. The researcher developed the survey items based on issues that were identified in the literature, during interviews with managers and during discussions with staff. The researcher gained permission from each of the store managers to sit in the tearoom of each store and distribute the surveys. The organisation was not prepared to allow employees to complete the survey on company time. As many of the employees received only a ten-minute tea break, the survey was designed as an instrument that could be completed within ten minutes. Numerous versions of the survey were tested on young supermarket workers known to the researcher and the group of workers who sat outside the researcher’s local FoodCorp and smoked. This store was not one of the stores examined in the research. Many of the items in the survey were reworded and rephrased in response to queries by survey respondents during the trial period. The surveys were contained on a single A4 sheet of paper printed on both sides. Accompanying the survey instrument was a letter on Griffith University letterhead explaining the nature of the research project and stating that participation was entirely
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voluntary and responses were confidential. On the reverse side, a photocopied letter of support for the research from the Human Resource Manager of FoodCorp was provided. As this letter clearly identifies the organisation it is not included in the appendix. A stamped self-addressed envelope was attached to the survey form so that participants who chose to post the survey back to the researcher, as opposed to placing it in the box provided, could do so. Only one survey participant chose to post the survey. The researcher also provided chocolate bars for survey respondents, as a ‘thank you’ for their participation. Surveys were available in Store A from 7.00 am on Friday 6 June 2003 until 3.00 pm Tuesday 10 June 2003. The decision was made to conduct the research over the weekend from Friday to Monday inclusive, as the researcher had already established that these were the busiest trading days with highest staffing levels and the greatest proportion of casual employees working. In this week, Monday 9 June 2003 was the Queen’s Birthday public holiday and the store traded for reduced hours so the decision was made to collect the surveys on the Tuesday. Signs notifying staff of the survey were placed on the doors of both the male and female employee change rooms and bathrooms and above the fingerscan machine in the tearoom. The researcher sat at a table in the tearoom with the surveys, a box for completed surveys and the container of chocolates and asked employees who entered the tearoom if they would be prepared to complete a survey. The researcher also intermittently took surveys outside to the smokers congregated at the rear of the store. The researcher stayed in the store until around 6.00 pm each day, but the surveys were left on the tearoom table for nightfill staff to complete. On Saturday morning all the chocolates had been eaten and not many surveys completed so the researcher decided to staple the chocolates to the covering letter. This practice was observed for the other stores. As this store was the first surveyed, each night the completed surveys were tallied by the researcher, in order to ensure a representative sample was being acquired. Many staff were initially uncomfortable about completing the surveys and asked what it was for, whether FoodCorp would get the data and what it would be used for. After a day sitting in the tearoom, the researcher was able to establish a rapport with staff and it was not uncommon to be greeted by employees with ‘still here’ or ‘back again’. Store A’s store manager used the tearoom to make his coffee and made a point of chatting with
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staff and the researcher. This approach made it possible for the researcher to chat with staff about their feelings about working for FoodCorp and it contributed significantly to the veracity of the data collected, as well as providing the researcher with a greater understanding of the nature of the work. These conversations are reported as personal observations, comments and discussions in the findings. The survey sample at Store A consisted of 103 valid responses, a 46 per cent response rate. The employment structure of respondents was 48 per cent females (compared to 55 per cent in the store population); 36 per cent permanent full-time (compared to 39 per cent), 19 per cent permanent part-time (compared to 24 per cent) and 45 per cent casuals (compared to 42 per cent); 49 per cent under 21 (compared to 44 per cent). This meant that the survey respondents were approximately representative of the structure of employment in the store. Store B was surveyed the week following, from Friday 13 June 2003 at 8.00 am to Monday 17 June 5.00 pm. The atmosphere in Store B was not as warm as in Store A (Personal Observation). In contrast to Store A, the store manager did not communicate with either staff or the researcher when he came in and made coffee. Fewer staff ate in the tearoom and those who did were verbally more disgruntled, although they were prepared to chat after a day of seeing the researcher (Personal Observation). This tearoom was next door to the administration office and store manager’s office so it was possible that staff were uncomfortable expressing a negative viewpoint where it could be easily overheard. Smokers in this store did not congregate in one area so no attempt was made to survey smokers outside. The same survey procedure was followed as in Store A. It needs to be noted that the Monday in the week prior was a Public Holiday. Since penalty rates were payable for public holidays and the week had been a quiet trading week, staff hours for casual workers were being cut during the weekend when the survey was conducted. This had the potential to create a negative attitude towards the allocation of hours amongst casual workers; however, it turned out that dissatisfaction with control over working hours was lower in Store B than in Store C. The survey sample in Store B comprised 75 valid responses, a 49 per cent response rate. The employment structure of respondents was: 56 per cent females (compared to 55 per
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cent of the store population); 47 per cent permanent full-time (compared to 41 per cent), 20 per cent permanent part-time (compared to 16 per cent) and 33 per cent casuals (compared to 43 per cent); and 61 per cent under 21 (compared to 42 per cent). As in Store A, this meant that the survey respondents were approximately representative of the structure of employment in the store. In Store C, the survey was conducted from 8.00 am Friday 20 June to 6.00 pm Monday 23 June 2003. There was only one fingerscan machine in the store and it was located just inside an entry door to the stockroom, not in the tearoom. It was initially thought that this might reduce the response rate, but a large proportion of staff in the store used the tearoom to eat and socialise so this was not a problem. In this store, the smokers congregated outside the local newsagent where tables and chairs were provided, so the researcher took surveys out to these staff on several occasions each day. The survey sample in Store C consisted of 94 valid responses, a response rate of 61 per cent. The employment structure of respondents was 66 per cent females (compared to 65 per cent in the store population); 26 per cent permanent full-time (compared to 28 per cent), 27 per cent permanent part-time (compared to 25 per cent) and 48 per cent casuals (compared to 47 per cent); and 54 per cent under 21 (compared to 51 per cent). As such, the survey respondents were almost perfectly representative of the structure of employment in the store. As a rule, employees took less than ten minutes to complete the surveys, although some young men took around 15 minutes to complete the survey and did not appear to have very high literacy levels. The researcher was present while the majority of surveys were completed, except for nightfill staff, and so was able to answer any questions, though only a small number of respondents actually asked questions. Survey responses were entered into an Excel spreadsheet. Data was entered twice and the sheets were compared to identify and correct missing data and keying errors. The dataset was then imported into SPSS and analysed. 8.2.1.2 Survey Sample Characteristics The survey sample comprised 272 valid responses. Of the total sample, 44 per cent were male and 56 per cent were female. This sample comprised permanent full-time
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employees (32 per cent), permanent part-time employees (22 per cent) and casual employees (46 per cent). As such, the sample is representative of the employment structure of the organisation as a whole (refer to Tables 6.1 and 6.2). The sample included managers (6.6 per cent); supervisory staff (5.5 per cent); service assistants (78.6 per cent); and, skilled tradespeople and specialist clerical employees (7.3 per cent). Of the 265 who responded to the questions related to student status, 19 per cent identified as school students and a further 28 per cent identified as university or Technical and Further Education (TAFE) College students. Only two school students (4 per cent) held permanent employment status, whereas 24 (32 per cent) of university and TAFE students had permanent employment status. The following section describes the research findings in relation to the employee experience of FoodCorp’s labour use strategies. Only those relationships that were statistically significant using the X2 test at 5 per cent probability level are reported in this section. Where relationships are discussed and these were not statistically significant, this fact is noted in the text. 8.2.2
Employment Status
In much of the literature on employment status, it was asserted that casual employees were not employed on this basis by choice. In order to ascertain whether or not this was the case, employees were asked to indicate their current and preferred employment status. Of the permanent employees surveyed, 99 per cent wanted to be permanent employees and 1 per cent did not. Of the casual employees surveyed, 66 per cent wanted to be casual employees, while 34 per cent wanted permanent employment. This suggested that the majority of employees within the company were actually satisfied with their employment status, but dissatisfaction was much higher amongst casuals. It also suggested that the majority of casuals do not want a career in the organisation. One of the reasons for casual employee’s satisfaction with their employment status was the fact that most were not the main income earner in their household. Only 10 per cent of the casual employee sample (12 casuals), were the main income earners in their households. Of these twelve, seven had another job and another one had an aged or invalid relative to care for. The number of casual employees with main income earner status in their household reduced dramatically after a year’s tenure. Some possible reasons for this were people taking the job initially as a ‘stop gap’ measure and then
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leaving when they were able to obtain a better job elsewhere; taking a casual position initially in the hope of gaining permanent employment and then leaving when this did not eventuate; and being transferred to permanent employment (Manager 19, Interview 29 July 2002). There were other potential reasons why casual employees wanted to be casuals. Casual employees received a penalty loading of 20 per cent; so casual employees could have perceived the additional pay made the uncertainty worthwhile. Casual employees also had the capacity to state their availability, which gave them a measure of control over their hours and this might be perceived as a benefit. 8.2.3
Tenure
The survey respondents were asked how long they had worked for this employer. As expected, given the high levels of staff turnover, casual employees’ length of tenure was shorter than for permanent part-time and full-time employees. Of the casual employees surveyed, 27 per cent had been with FoodCorp for one year or less, 29 per cent had a length of service between one and two years, 32 per cent between two and five years service and seven per cent had more than five years service. Five per cent did not answer the question. For the purpose of calculating tenure, employees in Store B were told the pre-existing service with Franklins counted as employment with FoodCorp. These figures showed that the process of being transferred to permanent status does not occur quickly, especially given the high levels of turnover. The tenure of permanent staff reflected the organisation’s policy of recruiting employees as casuals initially and then transferring employees to permanent status. There were only eight per cent of permanent employees with less than one years service, ten per cent with between one and two years service, 26 per cent with between two and five years service, 37 per cent with between five and ten years service, ten per cent with between ten and fifteen years service and six per cent with more than fifteen years service. Three per cent of respondents did not respond to the question. An examination of the tenure across the three stores suggested marked differences in retention rates, although the differences were not statistically significant. In Store A, the number of permanent employees with less than one years service was higher than the other stores (16 per cent in Store A, compared with zero in Store B and 4 per cent in
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Store C). This meant that it was possible to be transferred to permanent tenure with less than one year’s service in this store. At the same time, the proportion of long serving casual employees, with between two and five years service, was higher in this store than in either of the other stores (52 per cent in Store A, compared to 27 per cent in Store B and 16 per cent in Store C). Whereas the rhetoric of the Store Manager about identifying potential in workers and rewarding them with permanent jobs appears to be supported by the data, it appeared that other workers who were not so quickly identified could be stuck on casual status for many years. Indeed, the words of the disgruntled Store A employee (Interview 6 June 2003) that ‘if you don’t get along with the powers that be, then you don’t stand a chance’ appeared to be valid. In Store B, there were no permanent employees with less than a year’s service, suggesting that no workers were transferred from casual status with less than a year’s service. It was not possible to ascertain from the data collected precisely how long it took to be converted to permanent employment status, though. In Store B, six per cent of the casual workforce had more than five year’s service (compared to 5 per cent in Store A and 9 per cent in Store C), so it is assumed that casual workers either left the organisation or were transferred to permanent employment status. Again, it was not possible to determine from the data which of these had occurred. For permanent employees, the largest group was those with between five and ten years service (41 per cent), with an additional eight per cent having more than ten years service. In Store C, the tenure pattern was different again. The bulk of casual workers had less than one year’s service and the number of casual workers steadily declined as length of service did. The tenure of permanent employees increased from 4 per cent of the workforce with less than one year’s tenure to 56 per cent with tenure of five years or longer. In this store it appeared that casual workers were in fact being transferred to permanent employment at a much quicker rate than in the other stores. At the same time though, this store had several very long serving casual workers with over ten years service. 8.2.4
Working Time Duration
Since the duration and location of working time was one of the issues which the FoodCorp HR Manager found most time consuming and contentious, a series of questions addressed employee working time arrangements. Survey respondents were
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asked how many hours they had worked last week and how many they were working this week. These figures were averaged to provide an estimate for weekly working hours. This was done because many individuals worked rotating rosters, whereby their weekly hours varied considerably. Survey respondents were then asked how many hours they would like to work each week. Average hours were then compared with preferred working hours to get an idea of the ‘fit’ between actual and desired working hours. As there were no statistically significant differences between the stores the aggregated results are reported. Due to the wide variations in the number of hours desired, a figure of two hours either side of the desired hours was regarded as the ‘same’ for purposes of analysis. In order to be defined as longer hours, an employee therefore needed to want in excess of two hours more per week. An examination of patterns of working time highlighted two consequences of existing working time arrangements for workers. Generally, most casual workers wanted longer hours and a sizeable group of permanent workers wanted shorter hours. Of the casual employees surveyed, only 6 per cent wanted fewer hours of work, while 51 per cent wanted longer working hours and 43 per cent were content with their existing hours. Of the permanent employees, 28 per cent wanted shorter working hours, 15 per cent wanted longer working hours and 57 per cent were content with their working hours. The permanent employees who wanted longer working hours were predominantly parttime employees (17 respondents); however, five of the full-time respondents wanted longer working hours as well. The reason for full-time employees wanting longer hours was not apparent, as only one expressed dissatisfaction with their pay and all except one were long serving employees. It is possible, though, that the possibility of overtime pay was the attraction. There were weakly significant differences (at the 10 per cent level) between stores in their ability to match employees’ hours with their preferences, suggesting that some stores did a better job of meeting their casual employees’ desired working hours than others. In Store A, 57 per cent of casual employees received their desired number of working hours, while 39 per cent wanted longer hours. In Store B, only 26 per cent of casual workers received their desired number of working hours, while 65 per cent wanted longer hours. In Store C, 43 per cent of casual employees received their desired number of working hours, while 52 per cent wanted longer working hours. This study reported in Chapter Six that casual working hours across all the stores increased
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between 2002 and 2003, but the survey findings showed that a sizeable group of casual employees wanted still longer hours. If casual employees consistently do not receive the desired number of hours, and thereby income, this suggests that they are likely to search elsewhere for employment. 8.2.5
Employee Control over Working Time
Survey respondents were asked to respond to a range of statements related to employee influence and control over working time using a five point Likert type scale ranging from strongly agree through neutral to strongly disagree with a separate column for not relevant / don’t know. For ease of reporting the responses for ‘agree’ and ‘strongly agree’ were combined for analysis, as were ‘disagree’ and ‘strongly disagree’. Missing responses are excluded from the calculations. Totals do not always add to 100 due to rounding. Frequencies for the total group who responded to a statement are reported in Table 8.1. As can be seen from these frequencies, the majority of respondents generally felt that they had a degree of control or influence over their working time arrangements; however, sizeable groups of employees gave a neutral response or disagreed that they had any control or influence over their working time arrangements.
Table 8.1
Frequency Percentages, All Survey Respondents, 2003 Statement
I have influence over the times of the day I work I have influence over the days I work I can refuse to work extra hours if I want to Casual staff have more influence over their working time than permanent staff I am satisfied with how regular my hours are I am satisfied with how much control I have over my working hours Job allows flexibility to balance work and family/personal life Overall, I am satisfied with the number of hours that I work
Agree (%)
Neutral (%)
Disagree (%)
39
27
28
Don’t Know (%) 6
41
27
27
5
69
14
14
2
43
21
26
8
58
19
22
1
54
25
20
1
56
24
18
2
56
26
17
-
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Of all these statements, the only one where there was a statistically significant difference between stores was ‘I have influence over the times of the day that I work’. In Store A, 55 per cent of employees agreed that they had influence over the times of the day that they work, whereas in Store B, the figure was only 30 per cent and Store C, 36 per cent. Across all three stores a similar proportion of employees expressed disagreement with the statement (Store A, 30 per cent; Store B, 35 per cent; Store C, 30 per cent). These figures demonstrated that employees in Store A felt they had more influence over their working time arrangements than employees in the other stores. This is logical given that Store A had the lowest percentage of employees wanting longer working hours. Given the budget constraints that dictated labour usage within the organisation, it was unlikely that this store was actually in a position to permit employees more influence. Although increased sales turnover in Store A might have given management here more latitude in their scheduling decisions, a more likely explanation was that the process of scheduling hours was better managed in this store, so that employees perceived the process as giving them more influence. The survey results also demonstrated that casual employees felt that they had more influence and control over their working time arrangements than permanent employees. Of the casual employees surveyed, 53 per cent agreed that they had influence over the days on which they worked and 16 per cent disagreed. Of the permanent, full and parttime employees, only 35 per cent agreed that they had influence over the days on which they worked and 39 per cent disagreed with the statement. These differences between casual and permanent employees can be explained by the rostering arrangements within the company. Permanent full-time employees within FoodCorp had set rosters, with rotating days off; therefore they were not in a position to influence their working hours. Permanent part-time employees, likewise, worked a fixed number of hours across either fixed or rotating days, depending on their initial employment agreement. It was only casual employees who had the ability to state a week in advance which days they would be available to work on. However, managers within the organisation had the power to limit the working hours allocated to casuals who made themselves ‘unavailable’ too often. Permanent employees were less likely to agree that they could refuse to work extra hours if they wanted to. Of the permanent employees, 65 per cent felt that they could refuse extra hours, while 80 per cent of casual workers felt they could. Seventeen per
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cent of permanent employees disagreed that they could refuse hours and these were primarily management. The eleven per cent of casual workers who did not feel that they could refuse hours were service assistants aged between fourteen and nineteen. Casual employees within stores were often overheard saying ‘if you don’t accept the hours you are given then you won’t get any’ and it is perhaps these employees who do not feel that they can refuse hours (Personal Observation). Another issue related to casual employment status that arose in the literature was that, since casual employees had no guaranteed hours, they had no regular income. Yet some authors argued that some casual employees were not truly casual, since they had regular hours (see Weller, Cussen & Webber 1999). Therefore, respondents were asked about their degree of satisfaction with the regularity of their working hours. Some 69 per cent of permanent employees expressed satisfaction and 47 per cent of casual employees did so as well. This suggested that some casual employees were indeed ‘regular’ casuals, whereas others were not. Of the casual employees surveyed, all but 5 individuals had hours scheduled for the week surveyed and the week prior. However, only 29 of the 126 casual workers (23 per cent) in the survey sample had the same number of hours across the two weeks. Approximately the same percentage of casual (20 per cent) and permanent (18 per cent) staff gave a neutral response when asked about their satisfaction with the regularity of their working hours, while 13 per cent of permanent employees and 33 per cent of casual employees indicated dissatisfaction with the regularity of their hours. The permanent employees who were dissatisfied were primarily full-time members of staff who had regular hours, so it was possible that their dissatisfaction related to the six-day / four-day roster or overtime hours worked. After noting management complaints about casuals refusing to work, and casual employees’ complaints that they had to accept hours, the researcher was curious to determine whether casual employees were perceived to have a greater influence over their working time than permanents. The statement asked was ‘Casual staff have more influence over their working time than permanents’. There was little difference between the views of those with permanent and casual employment status, with 45 per cent of permanents and 51 per cent of casuals, agreeing with this statement (as did 58 per cent of all managers), while 36 per cent of permanents disagreed and only 19 per cent of casuals. These findings suggest that an opinion on who has the most control depends partly on the individual workers’ circumstances and their role within the organisation.
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More casual employees indicated satisfaction with the degree of control they had over their working hours. Fifty-eight per cent of casuals agreed with the statement ‘I am satisfied with how much control I have over my working hours’, whereas only 51 per cent of permanent employees did. Similar proportions of permanent employees (24 per cent) and casual employees (26 per cent) gave a neutral response. Twenty-five per cent of permanent staff were dissatisfied with control over their working hours, compared to sixteen per cent of casuals. Dissatisfaction amongst permanent employees with control over working time was not an issue confined to one group of workers or one store, which suggested that the issue was a result of the business needs of the organisation dictating working time. 8.2.6
Satisfaction with the Job and Organisation
Survey respondents were asked to indicate their response to the statement ‘Overall, I am satisfied with my current job’. Overall, 61 per cent of employees agreed that they were satisfied with their current job, 25 per cent were neutral and 14 per cent disagreed. These figures were lower than those found by Patrickson and Hartman (1996), but the present study included a broad age range of employees, not just older women. Job satisfaction levels within FoodCorp were consistent with those from the 1995 Australian Workplace Industrial Relations Survey for the retail industry as whole, where 63 per cent out of the Australian total retail workforce expressed overall satisfaction with their job, 27 per cent were neutral and 10 per cent disagreed (Morehead et al. 1997: 581). There were no statistically significant differences in satisfaction levels between permanent and casual employees, or across the three stores, although 67 per cent of employees in Store A were satisfied, 65 per cent in Store C and only 49 per cent in Store B. This finding supported those of Deery and Mahony (1994) and Conway and Briner (2002) that there were no differences in the job satisfaction levels of part-time and full-time employees. There were several potential reasons for the differences between stores. First, Store B was the ex-Franklins store and it was apparent that employees there found FoodCorp’s operational procedures and management practices very different and were resisting changes. Second, it was also likely that the different personalities of the store managers in each store had an impact on levels of staff satisfaction.
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While the research was being conducted, a range of employees interviewed suggested that FoodCorp was a ‘good’ firm to work for. The researcher tested this by asking whether respondents liked working for the organisation. In both Store A (72 per cent) and Store C (71 per cent) the majority of employees agreed with the statement, while in Store B, the percentage of employees in agreement was only 52 per cent. In Store B, 20 per cent of employees expressed dissatisfaction, as opposed to 5 per cent in Store A and 6 per cent in Store C. The difference in opinion evidenced in Store B was likely to be a result of the different management practices associated with FoodCorp’s management and operations, as opposed to Franklins, and of opposition to change. This issue is discussed in more detail later in the section on work intensity. In line with the findings in Walsh and Deery (1999), there were statistically significant relationships between control or influence over working time arrangements and job satisfaction. Respondents who felt that they could exert influence over the times of the day at which they worked and the days on which they worked, and who felt that their job allowed them the flexibility to balance other aspects of their lives, were more likely to be satisfied with their current job. Likewise, those workers who were satisfied with the amount of control they had over their working hours were more satisfied with their current job than those who were not. Working hours, and control over them, therefore had a positive impact on whether employees were satisfied with their jobs or not. 8.2.7 Pay Overall, 57 per cent of survey respondents agreed with the statement ‘I am satisfied with my pay’, compared to 27 per cent who were neutral and 17 per cent who disagreed. This figure was reasonably high, although it was notable that the majority of the workers surveyed were not the main income earner in their household (74 per cent) and therefore not solely reliant on FoodCorp’s wages. There was no statistically significant difference in the satisfaction with pay across the stores, or between those with main income earner status. The majority of the main income earners in the sample were not management or supervisory employees. Of the main income earner sample, 22 per cent were managers and supervisors, 13 per cent were skilled tradespeople and the remaining 65 per cent were service assistants. The majority of the main income earners (91 per cent) had permanent employment status; however, 9 per cent did not. The lack of primary income earners in the survey sample probably reflects the recruitment policies of the organisation and the pay level and short hours offered to employees.
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Of the group with main income earner status, most agreed with the statement ‘I am satisfied with my pay’. There were 47 per cent who agreed, 32 per cent who were neutral and 22 per cent who disagreed. Of those survey respondents who were not in the main income earner group, satisfaction with levels of pay was higher, but the difference was not statistically significant. There were 60 per cent satisfied with their pay, while 26 per cent were neutral and 15 per cent disagreed. Where the respondents were young people, 14 to 19 years, they were likely to be more satisfied with their pay (61 per cent). Similarly, those in the 40 plus age group were also more likely to be satisfied with their pay (72 per cent). It was those individuals in the middle age groups, 20 to 29 years (46 per cent) and 30 to 39 years (44 per cent) who were less likely to be satisfied with their pay. Across the employment classifications, 59 per cent of managers and supervisors and 58 per cent of assistants were satisfied with their pay, while only 18 per cent of skilled tradespeople were satisfied with theirs. Perhaps surprisingly, given the retail industry’s reputation as a low pay industry, only 15 per cent of service assistants disagreed with the statement ‘I am satisfied with my pay’, while 27 per cent were neutral. However, the level of acceptance and satisfaction with pay rates within the organisation probably says more about the expectations of retail workers than it does about the level of pay. 8.2.8
Work Intensity
Survey respondents were asked to respond to the statement ‘there should be more employees here to get the work done’. In total, 56 per cent agreed with the statement, 23 per cent were neutral, 15 per cent disagreed and 6 per cent did not know. Perhaps predictably, permanent employees with their longer working hours were more inclined to agree with the statement than casual employees. In Store A, 62 per cent of permanent employees agreed that there should be more employees. In Store B, this figure was 79 per cent and in Store C, 71 per cent. Casual employees, on the other hand, were less inclined to agree that more workers were needed: only 42 per cent in Store A, 48 per cent in Store B and 51 per cent in Store C agreed that there should be more employees to get the work done. Perhaps, though, there was a degree of self-interest at work here, as there was a statistically significant relationship between agreeing that more employees were needed and permanent employees who wanted fewer working hours and casuals who wanted longer working hours. When this data was analysed on the
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basis of management status, 55 per cent of managers in Store A, 100 per cent of managers in Store B and 78 per cent of managers in Store C agreed that more employees were needed to get the work done. These findings lend general support to those of Broadbridge, Swanson and Taylor (2000) and Broadbridge (2002b) that retail employment, especially in a management role, had become more stressful due to increasing workloads. Complaints about the quantity of work and the allocation of the work were particularly prevalent in Store B. The researcher wiped down the tables in the tearoom while the surveys were being conducted and a staff member commented, ‘In the old Franklins, the store manager used to mop the tearoom floor, [FoodCorp’s] management don’t, they just delegate’ (Comment 13 June 2003). Another employee in Store B commented ‘some people around here work their butts off, others do nothing’ (Comment 13 June 2003). Similarly, most managers interviewed commented that the workload in stores was intensifying. 8.2.9 Working on Sundays Since Sunday trading was introduced in two of the stores (Store A and Store C) from 1 August 2002, the researcher decided to assess staff satisfaction with working on Sundays. Store B had traded on Sundays for many years as the Gold Coast was classed as a tourist region. As was perhaps to be expected, the survey results showed statistically significant differences between the stores. In Store A, 53 per cent of the employees agreed that they were ‘happy to work Sundays’ while in Store B the figure was 67 per cent and Store C, 42 per cent. The proportion of employees who disagreed with the statement was 36 per cent in Store A, 15 per cent in Store B and 25 per cent in Store C. There was also a statistically significant difference between the permanent and casual employees in relation to willingness to work Sundays. While 70 per cent of casual employees were happy to work on Sundays and only 10 per cent unhappy to do so, only 37 per cent of permanents were happy to work on Sundays and 40 per cent were unhappy to do so. The relationship between willingness to work on Sundays and tenure was also statistically significant. The shorter the length of employee tenure, the more likely an employee was to be happy to work Sundays. In part, this was probably due to the organisation’s recruitment practice whereby newer employees were selected based
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on their preparedness to work Sundays. It should be noted though, that at the time when this research was conducted, within the South East Queensland region only the major hospitals offered childcare on weekends. A lack of childcare availability would be expected to have a major impact on the willingness of parents, especially single parents, to accept weekend working. 8.2.10 Career Paths Management within the organisation all asserted that an internal labour market operated to promote employees from short-term casuals to management roles. The researcher devised a series of statements to test management assertions and employee awareness of these policies. These statements included, ‘If I wanted to, I could have a long term career with this organisation’ and ‘When it comes to permanent jobs at this organisation, current employees are favoured over outsiders’. A long-standing assumption associated with retail youth employment, that employee hours were reduced as youth got older, and hence more expensive, was also tested with the statement, ‘At this organisation, when junior employees get older their hours are reduced’. There were differences between permanent and casual employees in their awareness of the organisation’s internal labour market. While 69 per cent of permanent employees agreed that you could have a long-term career with the organisation, only 41 per cent of casual employees agreed. This demonstrated that the message about the possibility of a permanent career with this organisation was not filtering through to casual employees very well. Additionally, 36 per cent of casual employees disagreed with the statement, as well as 16 per cent of permanent employees. Not surprisingly, those with longer periods of tenure were more likely to agree that a career with the organisation was possible. Likewise, 66 per cent of permanent employees were aware that current employees were favoured over outsiders, but only 50 per cent of casual employees agreed that this was the case. Indeed, 12 per cent of permanent employees and 21 per cent of casual employees disagreed with the statement. Clearly, FoodCorp need to do a much better job of communicating the fact that they operate an internal labour market to their employees. As well as determining whether employees were aware that the organisation operated an internal labour market, the researcher was curious about whether employees actually wanted to remain with the organisation. These views were tested by asking employees
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to respond to the statements: ‘I would like a long term career with this organisation’ and ‘I want to still be working here in 12 months’. Of the permanent employees surveyed, 41 per cent wanted a long-term career with the organisation, 26 per cent were neutral and 33 per cent disagreed. Of the casual employees, only 19 per cent wanted a longterm career with FoodCorp, 25 per cent were neutral and 56 per cent disagreed. There was not a statistically significant difference between permanent and casual employees with regard to whether they wanted to still be employed by the organisation in twelve months time. More employees wanted to still be working for the organisation in twelve months than wanted a long-term career with the company, which suggested that many employees perceived the job as a short-term position. Fifty-five per cent of permanent employees and 51 per cent of casual employees wanted to still be working for the company in twelve months. The percentage of employees who gave a neutral response was the same for permanent employees and casuals at 22 per cent, while 23 per cent of permanent employees and 28 per cent of casuals did not want to still be working with the company in twelve months. These figures suggested that levels of staff turnover within the organisation show no sign of abating in the next year. Further research needs to be undertaken to examine the factors that explain why permanent and casual employees want to leave the organisation. The response to the statement ‘When junior employees get older their hours get reduced’ showed that casual employees generally agreed with this assertion (52 per cent) as did 43 per cent of permanent employees. However, 32 per cent of permanent employees disagreed along with 17 per cent of casual employees. Members of the management team were more likely to disagree that hours were reduced as employees aged, as were older members of staff. Far fewer employees in Store A were likely to agree with the statement suggesting that employment practices in this store were different from the others. Only 35 per cent of employees in Store A agreed, while 54 per cent of employees in both Stores B and C agreed. 8.2.11 Performance Management Since investigation of the organisation’s HR policies and practices highlighted the fact that casual and permanent employees were subject to differential HR, or core-periphery HR, the researcher wanted to ascertain whether staff perceived that different classifications of employees were treated differently. To assess awareness of this survey
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participants were asked whether ‘At this organisation permanent staff are treated better than casuals’. There was no statistically significant difference between the views of the permanent and casual employees. Roughly one third of respondents agreed, one third disagreed and one third were neutral. Employees were also asked if ‘The performance targets that management sets for me are reasonable’. More casual employees (70 per cent) agreed that the performance targets set for them were reasonable than permanent employees (60 per cent). In large part, this was because permanent employees had more rigorous performance targets. For the majority of casual employees, the only performance target in evidence was the scanning rate, which was achievable after an initial period. Despite the targeted nature of many tasks within the store, only 11 per cent of permanent employees felt that targets were unreasonable. Since the organisation only formally appraised the performance of permanent full-time employees, the survey participants were asked whether their immediate supervisor gave them feedback, positive or negative and appreciated their work effort. As predicted, more permanent employees responded that their supervisor gave them feedback. Fifty per cent of permanent employees agreed with the statement while only 37 per cent of casual employees agreed. Twenty eight per cent of casual employees disagreed that their supervisor gave them feedback, as did almost as large a proportion of permanent employees (27 per cent). These findings indicated very low levels of performance management activity on behalf of department and store level management. Despite the lack of performance feedback, many employees agreed that their supervisor appreciated their work effort. Although the difference was not statistically significant, 54 per cent of permanent employees agreed with this statement and 46 per cent of casual employees. Of note was the proportion of respondents who gave a neutral response: 26 per cent of permanent employees and 39 per cent of casual employees. It was apparent that a sizeable proportion of employees did not know whether their supervisor appreciated their performance or not. Again, this indicated very low levels of performance management, even of an informal nature.
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8.2.12 Training As established in Chapter Five, this organisation encouraged training amongst its permanent employees and provided casual employees with no access to training beyond the initial induction period. It was stated in the literature that this practice was detrimental to casual employees, so the researcher wanted to ascertain the views of casual employees in relation to their access to training. Survey participants were asked to respond to the statement ‘I am satisfied with how much access to training I have’. There was no significant difference between the satisfaction levels of casual and permanent employees. Overall, 55 per cent of permanent and 51 per cent of casual employees were satisfied with their access to training. Thirteen per cent of permanents and 15 per cent of casuals were dissatisfied with their access to training. The high levels of satisfaction with training access amongst casual staff suggested that either they were not aware that they were missing out on training opportunities, or that they did not care. In the light of findings elsewhere, the latter appeared more likely. Many casual employees perceived their job with FoodCorp as a ‘stop gap’ measure and therefore were not concerned about their lack of access to training. 8.2.13 Deskilling Within the retail literature there were numerous assertions that the jobs of retail workers and managers had been deskilled, especially since the introduction of computerised stock control and scanning cash registers. The researcher did not feel that employees would necessarily understand a question that asked whether their jobs had been deskilled, nor would many of them have long enough tenure to enable them to make a value judgement on changes to skill levels. Survey respondents were therefore asked whether they ‘would like to do a broader range of tasks at work’. There was some evidence that employees wanted their jobs to become more skilled. Although not statistically significant, 59 per cent of permanent employees and 63 per cent of casual employees wanted to do a broader range of tasks at work. Yet, 12 per cent of permanent and 14 per cent of casual employees disagreed with the statement. Based on these findings, most employees clearly felt that there was room for them to be exposed to a broader range of tasks and skills.
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8.3
CONCLUSION
This chapter explored the consequences associated with the employment structure and labour use strategies adopted by FoodCorp, both from the organisation’s perspective and that of its employees. For the organisation, the most notable consequence was levels of staff turnover, which the organisation regarded as excessive. Several measures had been put in place in an attempt to reduce turnover levels and retain staff but the success of these measures was unclear at the time the research was conducted. The survey responses of employees, however, indicated that continued high levels of turnover appear likely as a sizeable proportion of permanent and casual employees do not want to be working with the organisation in twelve months time. As a result of the staff turnover levels, the organisation found that it needed to take steps to reduce the cost of recruitment and induction training. Another issue faced by the organisation was the employee resistance to changes in the scheduling of an employee’s working hours and this created friction for management. Despite these issues, there was no indication that the organisation wanted to structure its workforce differently. A survey of employees identified that many casual employees were casual employees by choice, either because they liked the higher rates of pay or the flexibility. There was some evidence of casual employees being transferred to permanent status, but this process appeared to take significant time. Most casual employees wanted longer hours and a sizeable proportion of permanent employees wanted shorter hours. By and large, casual employees felt better able to exert influence over their working time arrangements than permanent employees. Yet this power was a power of veto only. While casuals had some control over the distribution of their working time across the week, they had little control over the number of hours they received. The introduction of Sunday trading and preparedness to work on Sundays had higher acceptance levels amongst casual employees than among permanent employees. In part, this related to length of tenure, as casual employees had shorter tenure and many had been recruited since the introduction of Sunday trading. Longer serving employees were less inclined to want to work on Sundays, with the exception of Store B which was located in an area that has had Sunday trading for many years.
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Overall, levels of job satisfaction within the stores were quite high (61 per cent). Likewise, most of the respondents were satisfied with their pay; however, this finding needs to be interpreted in the context of most employees not being the primary income earner within their households. The comparison of pay rates under the retail award and the organisation’s certified agreement showed that enterprise bargaining had been detrimental to employee earnings and that FoodCorp’s employees were not well paid. Satisfaction with pay therefore appears to reflect low wage expectations amongst employees. Notably, those individuals who had primary income earner status were less satisfied with their pay. Overall too, the survey respondents were conscious that supermarket work was being done at greater intensity, since the majority felt that more staff were needed. Remarkably few casual employees recognised that the organisation had an internal labour market, and even fewer expressed a desire to have a long-term career with the organisation. Not only were many employees ignorant about the career paths available in the organisation, many of them had no desire to still be working at FoodCorp in twelve months time. This lack of desire for a career was also indicated by the number of casual workers who were satisfied by their access (or lack of access) to training. These findings suggest that structuring an internal labour force into a core of permanent workers and a large pool of casual workers, with a relatively limited range of tasks, encouraged high levels of turnover. The steps taken by FoodCorp to attract and retain employees will be wasted if the organisation cannot provide longer hours jobs and cannot communicate the career path to employees better. These issues are discussed further in Chapter Nine.
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CHAPTER NINE Discussion and Conclusions
This chapter examines the implications of the empirical findings for the study of the nature of labour usage in food retailing and the associated employment relations consequences. It presents a model that outlines the nature and structure of labour usage within an Australian market-leading food retail firm, and highlights the consequences associated with these labour use strategies. The contribution of this research and the implications of the research for existing theories of internal labour market structures within the retail industry and current employee resourcing practices are discussed. Finally, the limitations of the research are outlined and suggestions made for further research.
9.1
KEY FINDINGS AND IMPLICATIONS
This research set out to establish the nature of labour usage strategies and the consequences associated with these strategies within a market-leading food retail firm in Australia. As part of the research process, it was first necessary to establish the business strategies of Australian retailers and the contextual factors in the Australian retail environment that might be expected to have an impact on labour use decisions within the industry. Second, the thesis examined theories of internal labour market structuring that might apply to the retail industry. Third, in the light of arguments by the academics at the University of Stirling that the retail workforce had been restructured as a result of changing business strategies, it was necessary to examine whether this had occurred in Australian food retailing. This research also investigated the extent to which head office human resource strategies, policies and practices dictated the nature of labour usage decisions. In order to achieve this, it was necessary to establish how the labour force was structured across stores within the firm and across departments within the store. Finally, the research examined the employment relations consequences associated with these strategies, from both an employer and an employee perspective.
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9.1.1
Theories of Retail Business Strategies
First, this thesis established that Australian retailers replicated the business strategies of their international counterparts. Structural changes in the retail industry generally, and in food retailing in particular, created by mergers and acquisitions, led to increased levels of industry concentration in the UK and in Australia. This meant that the food retail industry was intensely competitive as large firms jostled for market share. As a result, food retailers adopted a broad range of business strategies to assist in achieving a greater proportion of the market. A range of business strategies were identified in both the Australian and international literature. First, food retailers broadened the range of store formats and brands away from large stores to smaller outlets, in order to circumvent planning restrictions and capitalise on shifts in population. Second, food retailers targeted their marketing strategies and product mix towards giving supermarkets a larger ‘share of stomach’ by selling pre-prepared meals, own brand labels and generic lines with higher profit margins, and by increasing the focus on fresh foods. This strategic shift enabled retailers to compete directly with fast food outlets and restaurants for consumer food dollars and to increase the overall proportion of food related sales purchased through supermarkets. Third, food retailers diversified into other retail formats, adding pharmacy, liquor, general merchandise, newsagency lines and hardware to their product offering, as well as allied services, such as petrol, e-retailing and financial services. Fourth, food retailers, facilitated by improvements in information technology, actively pursued cost reductions by centralising their buying to achieve economies of scale, and introduced just-in-time paperless stock replenishment systems to reduce the costs associated with stock holdings. As well as cost reductions, technological advancements enabled retailers to shift power away from manufacturers. All of these business strategies were in evidence in the case study organisation, which actively replicated the strategies of successful international food retailers in order to maintain its market-leading status. This research identified that FoodCorp pursued a business strategy of increasing market share by growth and acquisition; diversification into a broader range of retail formats; and cost reductions by improvements to the supply chain and logistics. These strategies all exerted an impact on the nature of labour usage within the organisation.
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Systems designed to reduce the amount of stock held by the organisation, and therefore overheads associated with this stock, meant that the refilling task in stores occurred daily as little excess stock was kept in stores. This made refilling a 7-day a week task and meant that for many service assistants in stores their entire working day was spent unpacking and putting away merchandise. Just-in-time deliveries had created just-in-time staffing arrangements in the grocery nightfill team. Although the automated stock replenishment system had not yet been introduced when the study was conducted, this too would be expected to change the nature of labour usage. Initially, it would lead to the elimination of ‘orderers’ at store level and later, to a reduction in the autonomy of department managers who currently make decisions in relation to the quantities of merchandise required. 9.1.2
Theories of Structuring Employment
This research also tested the explanatory value of Doeringer and Piore’s (1971) dual labour market theory and Atkinson’s (1985) flexible firm model to an Australian food retailer. At the outset, as highlighted by Freathy (1993), any discussion of the level of skill and autonomy required in retailing must be tempered by the fact that many functions are centrally controlled, such as buying, stock placement, advertising and pricing. This situation also existed within the research organisation. Buying, store layout and advertising were all centrally controlled. The store level management role was no longer that of a traditional merchant, which was not to say that the level of skill required of store management had reduced but rather, that the role had been transformed into one with a more operational focus. This research supported the contention that the internal labour market within supermarket retailers was divided into either primary and secondary (Doeringer & Piore 1971) or core and peripheral (Atkinson 1985) segments. However, the location of workers within the segments, the conditions attached to their employment and the career path structure differed in significant ways from the existing theories (refer to Figure 9.1).
As suggested by Berger and Piore (1980) and Freathy (1993), primary or core employment within the firm was subdivided into three segments, inner, middle and outer core. All core employees had a degree of autonomy in their positions and a range of organisationally specific knowledge and skills. All core or primary segment
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employees had reasonable working conditions, employment security, and access to company developmental and task related training. However, core workers within this organisation were not necessarily well paid. This reflected payment systems within the retail industry generally.
Figure 9.1
FoodCorp’s Flexible Firm Model
INNER CORE GROUP Senior store management
MIDDLE CORE GROUP Department Managers
OUTER CORE GROUP Supervisors, Trades, Designated jobs
PERIPHERAL/TRANSITIONAL Permanent Service Assistants- FT/ PT
PERIPHERAL GROUP Casual Service Assistants/Operators/Fillers
EXTERNAL GROUP Agency Temporaries, Contracted Services
Source: Based on Atkinson (1985: 16) In the case of FoodCorp, inner core employment conditions applied to store managers, trading managers and services managers. Their positions were purely managerial in nature, delegating tasks to department managers, checking task performance,
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monitoring stock movements and budgets. While head office dictated and monitored the tasks performed by senior store management via the daily ‘management to do plan’, managers had some autonomy over how and when tasks were performed. The nature of the department manager’s position was somewhat different. Department managers had less autonomy than members of the senior store management team and their jobs were more ‘hands on’ and less managerial. For this reason, they have been located in a middle core group. Supervisors, tradespeople and those with designated tasks, such as the stockperson and systems operator, were also included in the core group. These workers were classified separately as the outer core. They held positions of responsibility with specific skills and a degree of autonomy over allocation of tasks, but not over the content of the tasks. Some of these workers were responsible for overseeing the performance of others, but none was formally responsible for other workers’ performance. Lower primary or outer core employment applied to 2ICs of larger departments, front end supervisors, skilled tradespeople, and other key positions. These employees exercised a reasonable degree of autonomy in their jobs. While operating within strict head office guidelines, individual workers had some control over the order in which tasks were done and the pace of their work. Outer core employees required, and received, a certain amount of company specific task-related training in order to perform their job competently. They were not on salary packages and did not receive performance related bonuses, but otherwise had similar working conditions and benefits to those in the inner and middle core segments. The vast majority were full-time permanent employees; many were also ‘exempt’, and all were subject to the organisation’s performance management system. Compared with inner and middle primary sector employees, workers in the outer primary segment were subject to higher levels of internal control, and not held directly responsible for the financial performance of departments. This research therefore supported Freathy’s (1993) contention that the primary sector of retail supermarket employment divided into three segments. In Atkinson’s (1985) model, the peripheral segment contained several heterogenous groups of employees: full-time employees with jobs, not careers; part-time employees providing numerical and functional flexibility; employees on short-term contracts. Within the FoodCorp organisation, not all permanent full-time and part-time service
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assistants performed the same jobs. Some permanent full-time and part-time service assistants performed designated tasks, such as grocery ordering, which required significant organisationally specific knowledge and was essential to the efficient operations of the firm. These employees had fixed tasks and fixed rosters and did not provide functional flexibility, although they did provide numerical flexibility in terms of the number of hours worked. These employees were key employees and, in terms of skill, can be located in Atkinson’s model within the outer core. The majority of permanent full-time and part-time service assistants, though, performed mundane tasks, under supervision. These permanent part-time and full-time employees provided flexibility because their working time could be re-located across the week and also functional flexibility since they could be transferred between departments, or multiskilled to work across departments. According to Atkinson, these workers would be classed as peripheral. Permanent full-time and part-time service assistants, designated as ‘service assistant, filler and checkout operator’, did not have organisationally specific knowledge or high levels of skill. These were workers in rudimentary jobs that involved stocking shelves, preparing products, changing shelf tickets and registering sales. Their jobs were governed, in many instances, by targets such as ‘fill rates’ and ‘scan rates’ and they had little autonomy. These workers were clearly peripheral, yet were part of the organisation’s internal labour market and had the potential for career advancement. Indeed, given the organisation’s preference for internal recruitment, these workers were the managers of the future. To further complicate matters, permanent full-time and part-time employees were subject to differential HR practices, regardless of whether they performed designated tasks or not. Permanent part-time staff did not have their performance formally appraised, because it was not seen as financially viable given the levels of staff turnover, whereas permanent full-time staff did. Likewise, many permanent part-time employees did not regard certificated training as financially viable for them, in terms of the time investment. Several points can be drawn from this analysis. First, employment status was, in the case of FoodCorp, a poor indicator of the skill requirements of the job; not all skilled tasks were permanent and full-time. The tightness of labour matching prevalent within
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this organisation meant that some part-time employees were core employees with key responsibilities, although their wages and access to HR interventions did not reflect this. FoodCorp, though, used permanence as an indicator of fixed or core employment, as opposed to casual employment, which was generally regarded as variable or peripheral employment. Therefore, permanent service assistants, full-time and part-time, were incorporated in the organisation’s internal labour market. For this reason, the revised model outlined in Figure 9.1 describes these employees as ‘transitional’. Their jobs are peripheral but they have the potential to progress within the organisation. Another group of employees, clearly peripheral, performed mundane tasks, under supervision, that were necessary to the operations of the firm; however, their work patterns were variable in accordance with patterns of trade and required limited firm specific knowledge. The organisation recognised this by the reduction in the initial induction training period to one day for general company related information and legal requirements and one extra day for cash register training. However, checkout operators with one day’s training are unlikely to be able to deal with all eventualities that arise in the operator role, their skills develop over time as they are subjected to a range of situations. Hence, the checkout operator position was not ‘unskilled’, but the skills employed were general skills that would be applicable in any other retail environment. In this organisation, these employees, who were primarily night fillers or checkout operators, were employed under casual contracts. A sizeable proportion of young people performed the checkout operator role while night filler positions tended to be held by adult employees. This was not a deliberate structuring of the workforce; rather it represented the supply of people prepared to work the hours being offered by the firm. These peripheral casual workers were subjected to working time arrangements that changed from week to week and day to day. They were paid a premium in lieu of regular working time arrangements and various leave entitlements. These employees did not have their performance appraised, were not able to undertake training beyond the initial induction, and were paid at the lowest wage grade. Responses to the staff survey indicated that, despite this treatment, around 60 per cent of casual employees were satisfied with their pay, their control over working time and their job, probably because the majority had no intention of pursuing a career within the firm. The existence of a large component of casual workers represented a significant difference between the Australian grocery retail workforce and the grocery superstore
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workforce in the UK. This difference appeared to be a direct result of different systems of industrial regulation operating in the respective countries. Since awards and certified agreements within the Australian retail industry have historically established limits on the way in which part-time labour could be used and prescribed sick leave and annual leave payments for permanent part-time staff, part-timers were regarded as a relatively inflexible labour source. The perceived inflexibility of permanent part-time staff led to the recruitment of a large pool of casual labour and to casual employment being the port of entry to this organisation. A third group of workers, who received a brief mention in Chapter Five, performed services under a contract for service and were not legally classed as employees. In Atkinson’s (1985) terminology, these were the external workers, performing either highly specialised or very mundane tasks. Being in the external group of workers was unlikely to lead to employment by FoodCorp and for this reason the revised FoodCorp model shows this group as a broken ring. In this organisation, the publicly subsidised trainees in the Atkinson (1985) model were permanent employees prior to commencing their traineeship and were therefore attached to the firm. In FoodCorp, the structure of employment roughly resembled that espoused by Atkinson (1985) with an inner ‘core’ with reasonable working conditions and an outer ‘periphery’ with lower wages by virtue of their lower hours, few additional incentives and highly flexible working arrangements. However, Berger and Piore’s (1980) and Freathy’s (1993) assertion that the core divided into three segments was a more accurate representation. There was evidence of a structuring of jobs on the basis of those which were specific to the firm and those which required more general skills, as Atkinson (1985) asserted. Despite the fact that the organisation regarded all permanent employees as ‘core’, it was only the management, clerical, skilled trades and people engaged to perform designated key tasks who possessed significant amounts of organisationally specific knowledge. Indeed, only those individuals whose jobs were identified on the roster as associated with a specific task (for example, stockman, systems operator, orderer) could be considered core employees in terms of their skills. While the permanent full- and part-time service assistants were included in the core for rostering purposes, the tasks performed and skills exhibited could not be considered firm specific or particularly skilled. Employees with non-firm specific skills were designated as ‘service assistant, checkout operator or filler’. These were rudimentary jobs that
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involved the tasks of restocking shelves, changing tickets and the registration of sales. Despite the fact that the performance of these tasks was necessary for the efficient functioning of the organisation, and hence the firm employed them for a fixed number hours on a permanent basis, the nature of the tasks could not be considered highly skilled, autonomous, nor firm specific. Hence, these employees were located within the periphery of Atkinson’s model, or the transitional group in the revised model. It would not, however, be wise to generalise that these findings represent a necessary alteration to Atkinson’s (1985) model since the situation may be specific either to the retail grocery industry or to this particular firm. As Freathy (1993: 76) stated, part-time employment was a clear labour market trend within retailing, with 80 per cent of UK sales assistants, the equivalent of an Australian service assistant, working part-time. As highlighted earlier, it might be that the tightness of labour matching that exists in this industry leads to these patterns of labour usage. One major difference between the theories of the dual labour market and core-periphery and the findings in this research was that the theories assert that employees are recruited from different segments of the labour market into the core/ primary and the periphery / secondary segments (refer to Figure 9.2). Workers recruited from the primary segment of the external labour market into the firm’s internal labour market are then able to access a career path (refer to Figure 9.2), whereas workers recruited into the secondary or peripheral segment of the labour market generally drift in and out of secondary jobs and are unable to access the internal labour market.
This was not the case in this organisation. All employees were recruited into this company from the secondary labour market as ‘casual’ workers, with the exception of skilled tradespeople (refer to Figure 9.3). From their initial casual appointment, employees were subject to promotion via a strong internal labour market. This career progression was from casual to permanent part-time and then full-time employment, then from a 3IC or supervisory position to a 2IC within a department, and finally to a department manager position. Department managers were then required to have experience as a trading manager or service manager before progressing to store manager.
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Figure 9.2
Dual Labour Market Model
ILM
Primary External Labour Market
Primary Employment
Secondary External Labour Market
Secondary Employment
This organisation’s policy was to recruit from people in the external labour market who were seeking casual employment. As a result, the workers recruited were from the secondary labour market, or temporarily displaced from the primary labour market. This practice enabled the organisation to use casual work as probationary employment and thereby to avoid the costs associated with unfair dismissal and performance management of employees who proved unsuitable.
Figure 9.3
FoodCorp Internal Labour Market Model Inner Core Employment
ILM
Middle Core Employment Outer Core Employment
Permanent Transitional Employment Secondary External Labour Market Casual (Peripheral) Employment
People seeking casual employment
Casual (Peripheral) Employment
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This practice conflicts with the notion of a dual labour market model as espoused by Doeringer and Piore (1971). For this organisation, the internal labour market was almost entirely derived from the secondary external labour market; this provides a modification to dual labour market theory. Yet, it could not be said that this organisation was necessarily a secondary sector employer. The organisation relied on its management to identify talented individuals with a desire to progress to primary or core jobs and these individuals were groomed for core positions through an extensive training system. This research established that an internal labour market that used casual employment as a port of entry had numerous consequences for an organisation. First, the pool of potential applicants attracted to the organisation was reduced since many people could not afford to accept short hours casual work. Second, the recruitment of large numbers of casual workers led to very high levels of staff turnover as workers tended to view the firm as a ‘stop gap’ job. This had flow on effects throughout the firm, which in this case led to the centralisation of recruitment to achieve economies of scale and better quality selection. Additionally, there was a reduction in the induction period to reduce training costs; also, and some training had been removed from a classroom situation and developed into self-paced training packages. These consequences are discussed in greater detail later in the chapter. 9.1.3
Theories of Restructuring Retail Employment
In Chapter Two, a number of consistent opinions regarding changes in the nature of retail work were identified in the retail employment literature. First, the centralisation of retail operations increased financial control by head office and effectively turned each store into a cost centre. Second, this process of centralisation, enabled by the introduction of computerised information technology, resulted in the relocation of control from stores to head office. Third, the complexity of the management task and flexibility required of store level management had increased as stores became larger. Fourth, successful retailers matched customer demand and staffing levels. This research supported the first three contentions but not the fourth. The first two opinions relate to the centralisation of operations and are dealt with together. Each store, and each department within the store, was an individual cost centre. Store managers and department managers were subject to a range of strict
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budgets. Wage budgets, expressed as a percentage of sales, were regarded as sacrosanct and hours, and consequently wages, were cut in order to achieve these budgets. It was only by increasing sales with existing staff levels that store level management could increase staffing levels. This led to an increase in the intensity of the staff work effort. It also led to a situation whereby department managers negotiated their staffing levels with the store manager who held responsibility for ensuring that the store as a whole came in under its wage budget. Head office was also able to limit the discretion of store level management by tightening the wage budget percentages, although over the period examined in this research this had only occurred in one of the stores. Other budgetary controls set by head office included sales and controllable profit, which incorporated wrapping, cleaning, electricity and the phone bill. As well as these direct financial indicators, budgets were also set for related expenses, such as out of stocks, staff turnover, absenteeism, department managers ‘ready now’ for promotion and other store level management KPIs. The merchandise mix, store layout ‘planograms’ and marketing plans all came from head office and the management team in stores were responsible for implementing them. Buying was done centrally and store level staff were able to stock only the designated lines for their store. They did retain control over the quantities of each line ordered. This situation was in the process of changing with the gradual introduction of automated stock replenishment, which would further reduce store level discretion. At the time of this study, store level management retained some input into pricing, but their discretion did not extend beyond meeting competitors’ prices. Therefore, the situation in Australian food retailing confirmed the same degree of ‘separation of conception from execution’ as the UK and US industries. Decisions were made in head office and relayed to stores, where management were responsible for implementing these strategies. As discussed in Chapter Five, the HR role had been centralised to specialist HR personnel in head office, along with the setting of wages and working conditions and most employee training which is contrary to the literature. Yet at the same time, store level management had been given greater accountability for ensuring that workers achieved certain levels of skills. Similarly, department level management had been made responsible for their own rosters in order to force them to develop greater
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ownership of their individual cost centres. As such, the implementation of some HR practices had been devolved to line management, in line with international findings (Freathy 1997; Maxwell 1995; Renwick 2003; Whittacker & Marchington 2003), but with much stronger internal controls over the actions of individual managers. All these changes altered the nature of the retail manager’s job. As asserted by Freathy and Sparks (1996a: 180; 1997: 17), the retail management job had become more ‘storebased and process orientated’ with control being relocated to head office away from stores. Within FoodCorp, managers were subject to numerous budgetary controls, as well as the task controls dictated by the daily head office ‘to do’ email. Assessed against the traditional role of the merchant, the management task had become deskilled, as managers had no input into which stock was carried or how it was arranged within the space available; nor did they have much input into staff selection and training. At the same time, these managers were running multi-million dollar businesses with over 150 staff, and significant amounts of skill were required to enable the business to run smoothly and within the budgetary limits set by head office. It cannot be said therefore that the job had necessarily been deskilled; the nature of the job had just changed. As observed by one of the store managers interviewed, the job continued to change. In line with these changes, certificated training had been introduced and management were encouraged to undertake this training. This research therefore supported the contention within the retail literature (Freathy & Sparks 1994, 1996a, 1996b, 1997; Penn 1995) that the retail management role remained a complex and skilled job. While this research did not set out, as Broadbridge (1999, 2000, 2002b) did, to establish whether levels of stress amongst retail managers were increasing, the indicators of stress identified by Broadbridge were apparent in the jobs of managers studied. These stressors were long working hours; time pressures and deadlines; coping with change; taking work home; highly competitive business environment; and tight resource allocations. The findings from this research strongly suggest that Australian retail managers are likely to be experiencing similar levels of stress to their counterparts in the UK. There is a need for further research to add credence to this supposition. This research for this thesis found no evidence of the restructuring of the management role or delayering encountered by Bramble, Parry and O’Brien (1996) in another Australian retail organisation. While FoodCorp restructured their management team in
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stores in mid June 2001, this restructure resulted in renaming senior store management jobs and shuffling responsibilities, not in delayering. Likewise, the management changes introduced as part of aligning Operations and HR during the project did not result in a delayering, although spans of control changed. In fact, for FoodCorp, the restructuring process resulted in greater numbers of employees at each level in the hierarchy and smaller spans of control, in order to improve responsiveness and achieve greater identification of customer needs. The fourth contention derived from the literature was that retailers closely matched labour usage to patterns of customer demand and that this process had resulted in changes to the structure of the retail workforce, primarily the growth in part-time employment. As discussed in Chapter Seven, this research found that while this was the case for the front end of the store, it was not the case for every department. Hence, stating that the structure of labour use in retail is a result of matching labour usage to customer demand represents an oversimplification of the situation. 9.1.4
The Retail HR Literature
As asserted in the retail HR literature reviewed in Chapter Two, this research found that HR practices were applied differentially on the basis of employment status. In this organisation, all of the management team were on salaries with performance bonuses and, for store managers, company cars. The expectation was that managerial employees would work a four-day / six-day roster of approximately 46 hours per week, but in practice working hours were often significantly longer. In the larger departments, 2ICs and other key employees, many of whom were ‘exempt’ employees, were management in waiting. These employees were paid 25 per cent above the standard wage for working 45 hours per week. However, such exempt employees were not entitled to overtime, nor to any of the performance bonuses provided for the management team. The remaining employees were paid the standard hourly wage under the terms and conditions in the organisation’s certified agreement. Permanent full- and part-time employees were entitled to overtime, but casual employees were not. Likewise, permanent full- and part-time employees were able to access certificated training while casual employees were not. Beyond the initial induction period, only permanent fulltime employees had their performance appraised; part-time employees and casual employees did not. In theory, all employees were able to access the Employee Share
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Plan and Employee Share Issue Plan, although in practice the requirement for 12 months and 18 months continuous full-time service or equivalent meant that it took years for most part-time and casual employees to accumulate the required number of hours. It could not be said therefore that the share plans were equitably available for all employees. The retail literature on HR practices in Chapter Two highlighted the difficulties experienced by retailers in recruiting in a tight labour market; management spoken to during the course of this research also elucidated these concerns. Whereas in the UK retailers had turned to post-career workers, this situation had not occurred within FoodCorp, perhaps because the South East Queensland labour market was not as tight. Additionally, both the entrenched culture of young school and university students working in retail and hospitality and the practice of employers paying ‘youth rates’ provided a cheaper option. This research failed to support the contention of Turnbull and Wass (1997) that different categories of workers were recruited into different positions within the firm. In this organisation, all employees were recruited into casual positions in the periphery. Those individuals perceived by management as displaying potential and as desirous of a retail career or management position were then provided with longer hours and permanent jobs, prompted to undertake certificated training, and able to move through the internal labour market to better quality jobs. There was no overt gender or age bias apparent in this process. Many of the managers encountered during the course of this research were middle-aged women. This research supported previous findings that retail workers were not well remunerated. At first glance, and as asserted by Boreham et al. (1996), FoodCorp, as a large retailer with a certified agreement, paid better than smaller retailers still paying their employees under the retail award. However, upon closer examination, given the number of employees working late nights and weekends, many employees would be financially better off if they were paid the penalty rates under the award, rather than FoodCorp higher hourly rate with fewer penalties. An examination of the changes negotiated by FoodCorp since the introduction of enterprise bargaining in Australia demonstrated an orchestrated attempt to reduce penalty rates and increase the span of working hours attracting ordinary rates, as well as greater control over the deployment
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of employees. It was outside the scope of this research to establish whether store-based retail managers were paid less than their counterparts in head office as asserted by Rhoads et al. (2002). This presents an opportunity for further research. The retail HR literature in Chapter Two indicated a growth in the provision of retail management training in the UK at tertiary level, often supported by major retailers. This research demonstrated that there was a similar growth in tertiary retail education and training in Australia. Penn’s (1995) UK finding that training was applied differentially according to the nature of the retail task was also supported. In the research organisation, training beyond induction was only available for permanent employees. Once permanent, employees were able to access government-sponsored certificated training for service assistants through to management. The organisation relied upon its training to provide for management succession and spent significant resources training and upskilling its employees. While this research did not quantify the firm’s training expenditure, FoodCorp’s training focus runs contrary to the arguments of Boreham et al. (1996) and Whitehouse, Lafferty and Boreham (1997) that Australian retail organisations with a high proportion of casual employees spend less on training. It did, however, support Campbell’s (2001) argument that casual employees suffered disadvantage because they were unable to access the training which would enable them to obtain better quality permanent jobs. The nature of training expenditure within the retail industry is an area that requires further investigation. The argument reviewed at the end of Chapter Two that the individual operator exerted a significant effect on the structure of employment within the retail industry was supported by this research. The manner in which the employment structure in Store B changed over the course of the study supported the assertion that the HR practices and policies of an individual firm or store operator exert an impact on the structure of employment. Similarly, differences in the structure of employment between the stores examined supported Lynch’s (2001) assertion that store level management have some discretion over the structure of employment within their stores. 9.1.5
The Consequences of the Labour Use Strategies
As already discussed, there was a clear segmentation of the retail workforce in the research firm. The stratification existing in UK retail firms, which was outlined in Chapter Three, was replicated in Australia, with some variation. The existence and
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widespread acceptance of casual employment in Australia meant that this was the preferred employment option, hence the proportion of casual workers was significantly larger than in the UK. Contrary to Walsh (1990: 114) and as discussed earlier in this chapter, this employer deliberately set out to structure its workforce along the lines of the core and periphery. FoodCorp management stated that their division between core and periphery was based on a division between fixed tasks and variable tasks. Despite this being the stated method of division of labour, the reality was somewhat different. Labour usage patterns indicated that casual employees tended to be rostered to work during evening trading shifts and on weekends, although some permanent employees were rostered on at these times. All stores required labour on late nights and weekends, as these were busy trading periods, so it was theoretically possible for a certain number of employees to have permanent part-time status. Store level management preferred, however, to maintain the majority of these workers on casual contracts since this gave them greater control over the number and location of working hours. Therefore, the findings of this research supported those of Jamieson and Webber (1991) that casual and part-time employees were used for different purposes and times across the week. As well as segmentation by employment status, the organisation’s workforce was also segmented by gender and age, although not to the extent apparent in UK studies. This organisation did not have such a policy of recruiting young people into management positions as Turnbull and Wass (1997) found. There was some evidence of males dominating management positions, as found by Freathy and Sparks (1997), Freathy (1993) and Sparks (1983), although not to the extent found in the UK. Since all employees entered the organisation as casuals and worked their way up the internal labour market, it was theoretically possible for male and female employees to gain access to management roles. While males were numerically dominant in management positions, between 30 and 45 per cent of the management team were female. Yet, there were no female store managers, duty managers or trading managers within the stores examined. There was also a gender bias apparent in the department manager’s position. Women tended to manage the front end, bakery, perishables and the delicatessen, whereas men managed the traditionally ‘heavier’ departments of grocery, fresh produce and meat. However, there were exceptions across the stores.
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The FoodCorp workforce was also segmented by age. Young people dominated casual employment, with the exception of nightfill casual workers, who tended to be adults. Adult workers dominated permanent positions, both part and full-time. This was perhaps to be expected since permanent employment was only achieved by promotion. FoodCorp argued that any segmentation by gender and age was not deliberate. Stores advertised jobs for a certain number of hours, performing certain tasks and the people they attracted just happened to be women, school children and tertiary students. This convenient supply-side explanation masks the fact that the organisation offered only short hours casual employment to new recruits. While there were potential rewards for permanent employees in the form of training and promotion, for many the waiting period was not an attractive option. This meant that most of these short hours jobs were filled by people who regarded the organisation as a ‘stop gap’ measure until they could find a better, longer hours or higher paid job elsewhere. This was supported by the number of casual employees who, when surveyed, expressed the view that they did not want a career with this organisation. However, there was no significant difference in the proportion of casual and permanent employees satisfied with their current job. This suggested that casual employees actually had fairly low expectations of their casual jobs. It was, perhaps, because the overwhelming majority (74 per cent) of FoodCorp’s workers were not primary income earners in their households. This research supported the contention that for organisations, part-time employment enabled them to save on direct labour costs (Hall, Harley & Whitehouse 1998; Walsh 1991) as well as meeting operational needs (Purcell 1996). Part-time employment also provided benefits for part-time workers, enabling them to coordinate other study and caring commitments with work. Across all employment categories, survey respondents who felt that they could balance their work lives and personal commitments were the most satisfied with their jobs. This finding is in line with previous research (Perrons 2000; Walsh & Deery 1999). Management within the organisation controlled working time arrangements for all workers, but more casual workers felt that they could control their working time than did permanent part-time and full-time workers. With regard to the costs to the organisation, as in Jamieson and Webber’s (1991) research, management felt that permanent part-time employment was relatively inflexible. This was because permanent part-time employees had a fixed number of
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hours each week and an expectation that these hours would fall on certain days and at certain times. Additionally, a provision in the certified agreement stipulated that parttimers’ hours were to be averaged each year and the average would become their new contracted hours. This meant managers were loath to ‘flex up’ part-timers’ hours. Also, consistent with previous research (Akehurst & Alexander 1995; Perrons 2000), the costs of turnover associated with short hours contracts had prompted FoodCorp to shift towards longer hours contracts, although this was a slow process. The literature on the costs to the employees of part-time employment suggested that for many workers part-time employment was dead-end secondary employment, with low pay, poor conditions and benefits (Balchin 1994; Runciman 1989b; Tam 1997; Tilly 1992). While this was true of some employees within FoodCorp, it was not true for all. Many of FoodCorp’s part-time employees were part-time, both permanent and casual, by choice, or part-time in the hope of being promoted to full-time. Permanent part-time employees received the same pro-rata wages and benefits as full-time employees and were part of the firm’s internal labour market. The situation for part-time casual workers was different. While two thirds of casual workers wanted to be casual workers, the remainder wanted permanent employment. Of the casuals surveyed, few were the main income earners and of those who were, over half held another job. This demonstrated that it was virtually impossible to live comfortably solely on FoodCorp casual employment. For many casual workers, though, casual work provided control over working time and an income. For most, however, not enough income, as most wanted longer working hours. This organisation relied on casual employment as the port of entry into the internal labour market. The fact that only 41 per cent of casuals felt that they could have a longterm career in the organisation, and only 19 per cent actually wanted a career with the firm, showed that the firm was likely to experience difficulty attracting and retaining employees in the future. An additional problem with using large numbers of casual employees was that some veto control over working hours passed to the employee, although it was possible for management to limit the working hours given to employees who refused to make themselves available. Those casual workers who proved ‘hardworking’ and ‘flexible’ could then be provided with more hours and permanent
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positions. In this respect, casual employment met the criteria for ‘probationary’ employment as outlined by Weller, Cussen and Webber (1999). Casual employment also allowed the firm to circumvent unfair dismissal legislation. In addition, the employment of casual youth labour enabled the firm to avoid the 9 per cent superannuation payment for workers under 18 years of age and part-time, or earning less than $450 per month. It was not possible to ascertain the precise number of employees who fell into this category since data were not collected for an entire month in any store. Despite this, casual youth labour was clearly very inexpensive labour.
9.2
IMPLICATIONS FOR THEORY
While the structure of labour use generally supported Atkinson’s ‘flexible firm’ model, several alterations were required to the model. In particular, the ‘core’ was not a homogeneous group, as argued earlier by T. Walsh (1991), Kalleberg (2001) and Wong (2001). The approach taken by Freathy (1993) and Berger and Piore (1980) of dividing the core or primary sector into three segments was a more accurate means of representing the structure of labour usage within stores. The research supports the assertions by Freathy (1997) and T. Walsh (1991) that the ‘flexible firm’ model’s focus on demand side factors to the exclusion of supply side factors is a weakness in the model. In the case of this organisation, the decision to offer jobs on a casual basis for short hours was a demand side decision that structured the internal labour market. It was then only those applicants attracted by short hours casual work that were attracted to apply, which meant a workforce numerically dominated by service assistants with part-time hours and casual contracts. The jobs were shaped by the expectations of those available for work, women wanting part-time work during the day and students wanting part-time work of an evening and weekend. Walsh and Deery’s (1999) argument that part-time workers did not belong in the periphery was more contentious. In part, this argument can be traced to its Australian origins, as part-time employment in Australian retailing has historically been permanent and therefore relatively fixed employment. As such, it differed in nature from part-time employment in the UK, which could be used more flexibly. In terms of Atkinson’s model, where the primary grounds for demarcation between core and periphery was
235
‘skill specificity’, it was not possible to argue either that part-time or full-time service assistants in FoodCorp possessed significant organisationally specific skills. The deskilling of the service assistant role within supermarkets meant that, while a number of these workers were required for business operations, they were not necessarily ‘core’ employees as far as their skills were concerned, despite having a fixed number of working hours. In Walsh and Deery’s (1999) study, the location for the research was a department store and labour usage was likely to be constructed differently from that in supermarkets. This was perhaps to be expected given the requirement for full service, greater product knowledge and more limited division of labour existing in department stores. It is apparent, then, that the boundaries separating the core and periphery in the ‘flexible firm’ model will be redrawn in line with the skill requirements of the organisation as Atkinson (1985: 4) suggested. This research argued, based on direct evidence, that the labour usage strategy was a deliberate construction. FoodCorp deliberately set out to structure its workforce in terms of fixed and variable labour hours with a mix of skilled staff with core employment conditions and relatively unskilled staff with peripheral employment conditions. This finding differs from Marchington and Parker (1990: 163), Pollert (1988, 1990) and Purcell (1996). The empirical findings in this research also modified the notion of a dual labour market with separate points of entry into the primary or core segment and the secondary or peripheral segment. While Atkinson (1985: 5) argued that primary labour markets were usually internal labour markets, in this organisation the internal labour market extended from short hours casual employment as the port of entry up to senior store management. It was this practice that produced the majority of the negative consequences experienced by the organisation as a result of its labour use strategies. These consequences are discussed in the following section on implications for practice.
9.3
IMPLICATIONS FOR PRACTICE
Technological innovations in food retailing, coupled with an increasingly competitive business environment, have both enabled and encouraged the use of large numbers of part-time and casual workers within the sector. As a result, food retail employment offers only the select few, long-term career opportunities. Those who attain
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management positions find that their jobs are largely operational and involve extensive and often anti-social working hours, although their remuneration will reflect their effort. For the remaining workers, the industry largely offers short hours, low pay and little opportunity for training. These factors combine to give the food retail industry a welldeserved reputation as a low skilled, poorly paid one. As a result of its reputation, the spread of trading hours and the nature of the deskilled service role within supermarkets, the industry has difficulty attracting workers. High levels of staff turnover exacerbate this problem. While FoodCorp currently only experience difficulties recruiting in some labour markets, there is potential for this problem to become much worse. A decrease in the prevailing levels of unemployment might produce a situation whereby retail employers would experience greater difficulty attracting employees, and could be required to pay more for labour in order to attract workers. Likewise, changes to the social security system, especially increased financial support for students, could reduce the size of the pool from which the organisation recruits. The food retail industry has created a heavily divided labour force with very narrowly defined jobs. The monotony, variable hours and poor pay associated with many of these jobs lead to a situation where there are difficulties retaining existing employees. Food retail jobs need to be restructured in order to provide wages that people can afford to live on. To do this, it would be necessary to deploy workers across departments, broaden their skills and make the jobs inherently more interesting. Apparently, this is the approach taken by Aldi within its discount supermarkets (Manager 3, Interview 10 June 2003), but the secretive nature of the organisation means that the specifics of how the firm achieves this are unclear (Freathy 1997: 426). It is logical, though, that the reduced number of lines carried in Aldi stores would permit the use of less labour than in full line supermarkets. Despite this, the potential exists for FoodCorp to restructure its labour use by using employees across departments. Another possibility is for the organisation to abandon its internal labour market strategy. As established by this research, many of the jobs in this organisation, as they are currently constructed, do not require organisationally specific knowledge or skills and do not justify the maintenance of an internal labour market.
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Many of the tasks required of supermarket employees, such as checkout operations, are routine; thus another option would be to replace checkout operators with automated checkout systems currently available. While the technology exists, this would require changes in the levels of consumer acceptance and customer expectations of personal service and therefore appears unlikely in the short-term. Another implication for the firm is that the cost of recruitment needs to be further reduced, both by reducing the numbers of people recruited and by making the process more efficient. In part, the organisation’s move towards online recruitment will alleviate some of the associated administration costs, while the decision to centralise recruitment should improve the quality of the workers recruited. The empirical evidence in this study points to the necessity for matching the needs of the worker with the needs of the organisation. Management training should enable managers to develop skills to become more attuned to their employees’ needs, although judging by the management style witnessed during the course of this research, the organisation has a way to go. The recruitment process needs to explicitly state the number of hours an applicant can expect to work, and to provide an honest appraisal of the likelihood of longer hours and promotion. This was an area where the organisation clearly performed poorly. Achieving a fit between employee availability and organisational needs will not be easy, as this research showed that most employees would say anything in order to get the job initially, and human nature suggests that managers would tend to exaggerate in order to attract quality applicants. However, the root of the problem lies with tight labour cost budgets, the way in which labour costs are divided up by department across stores and the fact that store management are largely free to structure their labour usage as they choose. This leads to a situation where the best labour is often the cheapest labour. In the Australian context, the cheapest labour is youth labour, in terms of both its hourly rate and the potential to circumvent superannuation legislation. Paying youth lower rates on the basis of their age is blatantly discriminatory. This is especially so for young workers who are between 18 and 21 years of age and legally able to gamble, drive, get married, drink and vote. It is possible that at some stage in the future, employers may be legally required to pay youth higher rates of pay and this would be expected to have a marked effect on the structure of labour usage within the food retail industry.
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An additional factor is the growth in the success of independent operators and foreign firms entering the Australian market. It appears likely that this sector will continue to be highly competitive and suggests that labour usage will become tighter.
9.4
LIMITATIONS OF THE RESEARCH
This research examined the labour usage strategies and employment relations consequences in one of Australia’s market-leading food retail firms. Despite the size of this organisation’s market share, this research makes no claims that the practices identified are representative of the structure of employment and labour use strategies of the food retail sector as a whole. However, the structure of employment within the organisation broadly reflects the structure of employment identified by the Australian Bureau of Statistics, so it is unlikely that the structure is totally unrepresentative. Similarly, because this research was conducted in one state of Australia, the strategies employed may not be representative of those in other Australian states. However, a preliminary investigation of ABS employment statistics by state (ABS 6291.0.55.001) suggests that this is not the case. Further research into labour use strategies in other states is recommended to establish this.
9.5
SUGGESTIONS FOR FURTHER RESEARCH
In the course of this research it became apparent that different retail formats were likely to adopt different labour use strategies. Existing studies by Sparks (1991), Marchington and Parker (1990), Lynch (2001) in the UK and Walsh and Deery (1999) in Australia highlighted the likelihood of these differences. Further research into the labour usage strategies of retailers operating in different sectors of the retail market is therefore recommended in order to ascertain a broader understanding of the labour use strategies within the industry. In particular, it would be necessary to examine patterns of labour usage in retail formats where service assistants are sales people, requiring greater levels of skill, before any generalisation regarding the applicability of the flexible firm model can be made. This research was conducted in one Australian state, Queensland, which retains a government regulated trading hours regime. Other states such as New South Wales and Victoria have totally deregulated trading hours and further study of the structure of
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retail employment in these states would enable an assessment of the extent to which trading hours regulation, and extended trading hours in particular, shapes employment. Preliminary investigations, though, indicate that the structure of employment does not differ (ABS 6291.0.55.001). The research organisation was in the process of trialling an automated stock replenishment system when this research was undertaken. This practice is likely to have an impact on the way in which the Grocery departments stock refilling is conducted. Further research would be required to establish precisely what impact. The practice of recruiting employees as casuals initially and then promoting them internally appears to be fraught with problems. Further research into other retail organisations is required to establish whether this is an industry wide practice. Research into other service sector industries with high levels of casual employment, such as hospitality, could also provide a greater understanding of internal labour markets in heavily casualised industries. This research highlighted the increase of retailer power over other parties in the supply chain. While Wright and Lund (1996, 1998) have investigated the impact on labour usage in the grocery retailer’s distribution centres and have conducted preliminary research on the impact on suppliers (Wright & Lund 2002, 2003), further more detailed research would provide a better picture of the ‘flow on’ effects of retailer business strategy on manufacturer labour use.
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APPENDIX A FOODCORP INTERVIEW SCHEDULE CODE Manager 1 Manager 2
POSITION GM Human Resources Store Manager Store C
Manager 3
Store Manager Store A
Manager 4 Manager 5
Service Manager Store C Fresh Produce Manager Store C Store Service Manager Store C Variety Manager Store C Perishables Manager Store C Deli Manager Store C Meat Manager Store C Bakery Manager Store C Nightfill Manager Store C Area HR Manager
Manager 6 Manager 7 Manager 8 Manager 9 Manager 10 Manager 11 Manager 12 Manager 13
Manager 14 Manager 15 Manager 16 Manager 17 Manager 18 Manager 19 Manager 20 Manager 21 Manager 22
CONTACT Interview 27.02.01 Interview 8.06.01 Interview 11.07.01 Interview 18.06.02 Interview 6.06.01 Interview 23.07.02 Interview 10.06.03 Interview 10.07.01 Interview 10.07.01 Interview 10.07.01 Interview 11.07.01 Interview 11.07.01 Interview 11.07.01 Interview 11.07.01 Interview 11.07.01 Interview 25.07.01 Interview 12.12.01 Interview 18.12.01 Interview 14.05.02 Email 3.06.02 Interview 12.12.01 Interview 12.12.01
Area Training Manager Industrial Engineering Manager Training Coordinator Interview 4.06.02 Service Supervisor Store A Interview 12.06.02 Store Manager Store B Interview 12.06.02 Interview 19.06.02 Interview 17.06.03 Regional HR Manager Email 7.06.02 Interview 29.07.02 Interview 16.02.04 Regional Training Email 5.06.02 Manager Store Manager Store C Interview 27.06.03 (new) GM Human Resources Email 2.03.04
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CODE Employee 1 Employee 2 Employee 3 Employee 4 Employee 5 Employee 6 Employee 7 Employee 8 Employee 9 Employee 10 CODE
POSITION Systems Operator Store C Stockperson Exempt Store C Nightfill Filler Store C Nightfill Exempt Store C Nightfill Dropper Store C Nightfill Dropper Store C Fish Assistant Store C Assistant Service Manager Store A Service Assistant Store B Service Assistant Store B
CONTACT Interview 10.07.01 Interview 10.07.01
POSITION Union Official Union Official
CONTACT Interview 4.09.00 Email 20.02.04
Interview 25.07.01 Interview 25.07.01 Interview 25.07.01 Interview 25.07.01 Interview 11.07.01 Interview 8.06.03 Interview 13.06.03 Interview 14.06.03
FOODCORP DOCUMENTATION Employee Schedule Reports, Store A, week ending 14 July 2002 and 8 June 2003 Employee Schedule Reports, Store B, week ending 16 June 2002 and 15 June 2003 Employee Schedule Reports, Store C, week ending 15 July 2001, 23 June 2002 and 22 June 2003 FoodCorp (1999a) Staff Handbook, in possession of R.Price, Brisbane. FoodCorp (1999b) Submission to the Joint Select Committee on the Retailing Sector, Vol. 12, Submission no.229A, Parliament of Australia, Canberra. FoodCorp (2000) 2000 Concise Report to Shareholders, Sydney. FoodCorp (2001a) 2001 Concise Report to Shareholders, [FoodCorp], Sydney. FoodCorp (2001b) ‘What we believe’, [FoodCorp] News, April 2001, p. 7. FoodCorp (2001c) 'Recruitment guide', [FoodCorp] News, December 2001, p. 17. FoodCorp (2001d) 'Queensland top achievers', [FoodCorp] News August 2001, p. 25. FoodCorp (2002a) Concise Report to Shareholders, [FoodCorp], Sydney. FoodCorp (2002b) 'Regional Operations Organisational Chart Effective August 2002', Email from Manager 19, in possession of R.Price, Brisbane. FoodCorp (2002c) 'Human Resources Organisational Chart Effective August 2002', Email from Manager 19, in possession of R.Price, Brisbane. FoodCorp (2002d) '[FoodCorp] Share Plan', [FoodCorp] News. December 2002, p. 20. FoodCorp Job Descriptions, July 2001, in possession of R.Price, Brisbane. FoodCorp Queensland Supermarkets Certified Agreement, 1998 FoodCorp Queensland Supermarkets Certified Agreement, 2001
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APPENDIX B SUPERMARKET EMPLOYMENT SURVEY
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Supermarket Employment Survey This is a survey about your working experiences in this supermarket. The survey should take less than 5 minutes to complete. The information is strictly confidential and there is nothing on the survey that can be used to identify you. Please place the completed questionnaire in the box provided or return in the prepaid envelope provided to Robin Price c/- School of Industrial Relations, Griffith University, Nathan, Qld 4111. Ph 3875 7319. 1. Are you male or female?
Male
Female
2. How old are you?
14 - 15 16 - 17 18 - 19 20 - 21
22 - 24 25 - 29 30 - 34 35 - 39
3. How long have you worked for this employer?
Years
40 - 44 45 - 49 50 - 54 55 - above
Months
4. What is your job title? 5. Are you the main income earner in your household?
Yes No
6. What is your employment status?
Permanent (with paid sick and holiday leave) Casual (no sick pay or guaranteed hours) Other, please specify……………………….
7. What employment status would you prefer?
Permanent (with paid sick and holiday leave) Casual (no sick pay or guaranteed hours) Other, please specify………………………
8. Do you work part-time or full time hours?
Part-time (less than 36 hours per week) Full-time (38 hours per week or more)
9. How many hours are you working this week?
hours
10. How many hours did you work last week?
hours
11. How many hours would you like to work on average each week?
hours
12. How many days are you working this week?
days
13. How many days did you work last week?
days
14. How many days would you like to work each week?
days
15. Which of the following apply to you? Tick all that apply
I have one or more children to care for I am studying at school I am studying at university or TAFE I have other paid work I look after an aged or invalid relative 244
16. Please indicate whether you agree or disagree with the following statements. Please circle one number for each statement Strongly Agree Agree
Neutral Disagree
Strongly Not Disagree Relevant
Overall, I am satisfied in my current job
1
2
3
4
5
0
I want to still be working here in 12 months
1
2
3
4
5
0
1
2
3
4
5
0
1
2
3
4
5
0
I would like a long term career with this organisation
1
2
3
4
5
0
I have control over which times of the day I work
1
2
3
4
5
0
I have control over which days I work
1
2
3
4
5
0
I can refuse to work extra hours if I want to
1
2
3
4
5
0
1
2
3
4
5
0
1
2
3
4
5
0
I am satisfied with how regular my hours are
1
2
3
4
5
0
I am satisfied with how much control I have over my working hours
1
2
3
4
5
0
My start and finish times are changed at short notice
1
2
3
4
5
0
My immediate supervisor gives me coaching
1
2
3
4
5
0
My immediate supervisor appreciates my work effort
1
2
3
4
5
0
I receive a regular review of my performance
1
2
3
4
5
0
At this organisation, when junior employees get older their hours are reduced
1
2
3
4
5
0
I am paid according to my work performance
1
2
3
4
5
0
I am satisfied with my pay
1
2
3
4
5
0
This company values its employees
1
2
3
4
5
0
At this organization, permanent staff are treated better than casuals
1
2
3
4
5
0
This is a good company to work for
1
2
3
4
5
0
I am satisfied with how much access to training I have
1
2
3
4
5
0
The Employee Share Ownership scheme rewards me for my work performance
1
2
3
4
5
0
I use personal initiative and judgment at work
1
2
3
4
5
0
I would like to do a broader range of tasks at work
1
2
3
4
5
0
I should be allowed to keep my job for as long as I like
1
2
3
4
5
0
If I wanted to, I could have a long term career with this organization When it comes to promotion at this organisation, current employees are favoured over outsiders
Casual staff have more control over their working time than permanent staff My job allows me the flexibility to balance my work and family/personal life
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APPENDIX C LETTER OF INTRODUCTION School of Industrial Relations Griffith University Nathan, QLD 4111 29 May 2003 Dear Survey Participant, My name is Robin Price and I am a PhD student at Griffith University doing research on working in supermarkets. This survey forms part of my PhD research. Over 1.5 million Australian workers are employed in the retail industry, yet very little research has been done on working in retail. My research looks at how supermarkets use their labour, specifically the mix between full-time, part-time and casual workers and the consequences of these labour use strategies for the employer and the employees. I am interested to know how satisfied you are with your working time arrangements and other human resource management practices in this organisation. Since no one has done research on supermarket workers’ opinions before, participating in this research gives you an opportunity to express your opinions and to make an important contribution to knowledge about supermarket workers. It will also enable you to let your organisation know what you think of their working time arrangements and human resource practices. Your opinions are important and will be really valuable. Completion of the survey is entirely voluntary and failure to participate will involve no penalty for any individual. You may pull out of completing the survey at any time without giving a reason. Your responses are confidential. Each completed survey is placed in an envelope with no identifying marks. Collated results will be reported to FoodCorp and copies will also be placed in the tea room for you to look at. This is your opportunity to have your say. If you have any questions or concerns about this research project, or feel you would like to talk about something not mentioned in the survey please feel free to discuss it with me. I can be contacted at the School of Industrial Relations on 3875 7319 and my primary supervisor, Associate Professor David Peetz can be contacted on 3875 7600. Thank you for your assistance with this research project. Regards, Robin Price
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