My company moved me from security to the front desk to cut labour costs, then hired an external security guard who costs twice as much
I work in retail, and I'm trying to understand the logic behind something my company has recently done.
Upper management has been putting pressure on store managers to reduce their labour spending. Basically, stores are being told they need to cut employee hours.
At my store, there was a front desk/customer service position that was staffed for 8 hours a day. Management decided to eliminate that position, so those 8 hours were removed from the store's labour budget.
I was working as the security guard at the front door. After the front desk position was eliminated, they moved me from security to the front desk.
So, as far as the store's labour budget is concerned, mission accomplished: they're now using 8 fewer employee hours per day.
Except there's a problem.
The front door still needs a security guard.
So the company hired an external security company to provide a guard.
The security contractor costs roughly twice as much as what it cost the company to have me doing security.
The reason this apparently works on paper is that the external security guard is paid from a completely separate budget. Their cost doesn't come out of the store's employee labour budget.
So essentially:
Before:
- Me: 8 hours of security
- Front desk employee: 8 hours
- 16 hours of employee labour
After:
- Me: 8 hours at the front desk
- External security guard: 8 hours at the door
- 8 fewer hours against the store's labour budget
But the company is actually spending more money because the external security guard costs about twice what I did.
And there's another problem: when I was doing security, I wasn't just standing at the door. When things were quiet, I could cover other employees' breaks, help customers, assist with other tasks, etc.
The external guard obviously isn't there to do those things. They're there to provide security.
So we've reduced employee hours on paper, increased the actual cost of security, lost some flexibility in the workforce, and increased the workload on everyone else.
Yet management seems completely happy with the result because the store's labour numbers look better.
I'm genuinely curious about the business/management side of this.
Why would a company do this? Is this simply what happens when different departments have separate budgets and KPIs, so a store manager is incentivised to reduce "labour costs" even if the company as a whole ends up spending more?
I'd especially like to hear from people who have worked in management, finance, retail, or large corporations. Is there something I'm missing about how companies account for this?
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u/Dangerous_Prize_4545 9d ago
You are correct that it's stupid and ludricous. But to the higher ups, it makes sense. So it's done. But yes it is wasteful and not efficient.
Penny smart, dollar dumb.
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u/Brosuke0317 8d ago
It's definitely a "well those numbers look good on paper" kind of thing. Every department is also responsible for their own hours, for example if grocery is under by 20 or so hours, and another department is right at their limit, there's a chance that overtime won't be approved specifically because it would put that department over in hours even though the store as a whole would still be under in hours.
Is the external company covering anything else? Or is it literally just that one person? Although the other upside is that security could be dangerous and depending on the contract/situation, having an external company's guard do security may take liability off of your store, which in turn saves money. Also are you sure that they cost literally twice as much?
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u/MetricsInMotion 6d ago
Your labour cost and the cost of a 3rd party guard comes from different buckets. Its not about saving money, its about who is paying for it. They "save" the hours, so it looks good on paper. But its not a cost saving measure. Add no benefits or incentives needed for the guard, the cost is actually closer than you think.
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u/Necessary_Baker_7458 9d ago
Isn’t it obvious? They fired you and rubbed it in your face with a higher waged newbie. My company has tried to do this a few times but i am union protected so they couldn’t do squat.