Dive Brief:
- Home improvement giant Lowe's will layoff of thousands of assembly and maintenance workers, whose jobs will be outsourced to third-party companies, The Wall Street Journal (WSJ) reported.
- "We are moving to third-party assemblers and facility services to allow Lowe's store associates to spend more time on the sales floor serving customers," a Lowe's spokesperson told HR Dive's sister publication Retail Dive in an email.
- The company had several maintenance employees and assemblers of wheelbarrows, grills and other products in each of its roughly 1,800 U.S. stores, WSJ reported. Workers have been notified of the job eliminations and will be able to reapply for openings, although not necessarily at the same pay grade. Like other retailers, Lowe's is scrutinizing labor costs as it competes for a growing number of online customers and feels the pressure to increase wages to attract talent in a tight labor market, WSJ said.
Dive Insight:
The name of the game for employers in the current market is agility — the ability to make staffing adjustments as needed to withstand economic volatility. Lowe's shift to hiring contractors for the cut positions is an example of how employers are changing their staffing decisions to build in better support during peak activity times or even fully replace employees for any number of reasons, including rising employee costs.
As WSJ noted, the talent shortage is pressuring employers to increase pay, which may be forcing retailers to adjust their staffing plans to make up for the costs. Forty-five percent of employers in a SunTrust survey have raised wages to compete for talent; Walmart, Target and Amazon have all announced wage hikes for their front-line retail employees. But employers have also invested in employees beyond pay. More employers have buffed their benefits for part-time employees and put a deeper focus on employee development — making employees a more expensive investment than they may have been in the past.
In some cases, employers may not have a choice. Minimum wage increases to $15 per hour have been signed in numerous states, including Connecticut, Maryland and New Jersey. The House passed a federal version of a $15 per hour minimum wage, too — and while that has little to no chance of passing in the Senate, more business leaders, including the CEO of Walmart, have come out in support of a higher federal minimum.
Regardless, employers are seeking ways to make their organizations more agile. In fact, 80% of respondents in a Forbes Insight and Scrum Alliance survey said agility is the most important characteristic of a successful organization. And HR can be the one to provide it.
