Legion – “Great Resignation Slowing But Hourly Employees Remain Deeply Dissatisfied” with Sanish Mondkar

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Ladies and gentlemen, this is William Tincup, and you’re listening to the RecruitingDaily Podcast. Today, we have Sanish Mondkar from Legion and our topic today is the great resignation slowing, but hourly employees remain deeply dissatisfied. So that deeply dissatisfied is the part we’re probably going to explore the most. But Sanish, would you do us a favor and introduce both yourself and Legion?

Absolutely, so my name is Sanish Mondkar. I’m the founder and CEO of Legion and Legion is in the space of workforce management. We provide solutions to help labor intensive industries like retail, hospitality, food and beverage with operators in these industries. We help them effectively manage their labor and the hourly workforce that works for these companies by a variety of tools and technologies that we provide through our platform. We have been in this business for over six years. The company was founded in 2016 by myself prior to Legion, I’ve been in the enterprise software business for a very long period of time. I was formerly chief product officer at SAP and Aruba and I have had extensive experience in building complex software that solved business problems.

So really small companies that people haven’t heard of is what I got there. Just kidding. Everyone’s heard of SAP and Aruba. So the platform just so before we go into it, the platform itself, what are some the… Obviously there’s different products to the platform, but what are we solving for?

Yeah, that’s a great question. So let’s say you are running a retail business and you’ve got stores that sell some products and you got workers, employees that work in the stores and they are doing the sales and the inventory and all the typical things that happen that take place in stores, the challenge you probably have is you’re trying to figure out how many workers in need at what point during the day so that I can maximize sales and customer satisfaction so any retailer-

Intelligence, intelligence, scheduling.

Absolutely. And you definitely are on the right track with your guest there. When we define intelligence scheduling, it starts with forecasting, like figuring out how many customers would I have at, I think given time. Now keep in mind customers today may buy your goods and services, not just through walking into your stores, but they may buy it online and pick it up offline. They may use same day delivery, they may do drive-through if you are in food services type of businesses. So the variety of ways customers are coming at you in terms of wanting to buy a goods and services. So forecasting labor to service each one of these ways that customers are coming at you and then once you forecast the amount of labor you need than creating the right schedule that meets the demands of the customers is part A of the challenge.

(04:05)
Part B of the challenges, if you think about this whole thing from an employee standpoint, employees who do these jobs, they are very motivated by very different factors. They like flexibility because many of the workers in these jobs, they may have multiple jobs, or they may be doing this on the side with maybe they have a school, they’re going to school or they may have some other commitments. So these types of scheduling and flexibility type of things are a great motivator or in many cases are a driver of attrition for workers doing these jobs.

(04:45)
The other thing that also motivates employees a lot employees that do these jobs is a better experience like communication tools, modern communication tools getting paid instantly, which is one of the newer things that’s really emerging as one of the top features. So if you combine these two things as a business, I want to accurately predict customer demand so that I can very efficiently deploy labor to meet the customer needs. But as an employee, I’m looking for flexibility, I’m looking for better experience, I’m looking for getting paid as soon as my shift is over. What Legion does is it combines these two sets of value propositions together in a single platform.

I love that. Do you have the need, obviously things are all mobile friendly, if not mobile first. Do you have the ability to do shift swapping and things within the platform?

Absolutely. So when an employee thinks about flexibility, there are many layers to it. One is, hey, if I prefer to work on Thursday Fridays, can I generally speaking get schedules that match my preference? But furthermore, there is also more things to it. Like if say I have a unforeseen situation and I cannot make it on Thursday, even though I may have preferred Thursday, generally speaking, do I have the right tools for me to then manage that situation and swap that shift with somebody else without necessarily bothering my manager? Or do I have other ways to it where I can actually handle that problem without creating a problem?

(06:26)
Those are the type of tools that are part of when we think about, when we define at Legion, we define employee flexibility and employee self service that it essentially is a set of tools for employees to personalize their schedules to their needs. And furthermore also have these types of feature functionalities available where they can swap shifts, they can claim a shift from an OpenShift marketplace, they can give up their shift to somebody else, they can do all these other self-service actions like time off requests, so on and so forth.

I love it. Okay, so let’s talk about the deeply disappointed. And so again, hourly as worth, or at least as I’m thinking about it, is everything from hourly nurses to retail, hospitality, food service, right? Convenience stores, et cetera. And I’m sure it’s broader than that, but let’s just say hourly because there’s obvious stuff, warehouses and all kinds of other things, they’re deeply dissatisfied. Tell me a little bit more about that. What are you learning from the both system and what are you learning from clients?

Yeah, so we have been doing a survey of hourly workforce every year. So we have a lot of data on this. We have seen this pre pandemic, we have seen this post pandemic. We also have a lot of our own customers in all those industries that you mentioned who give us, share a lot of their data with us. So there is a lot of really good dataset that very strongly correlate to a few conclusions. First is that the hourly workforce, as in many industries, this hourly workforce had a very difficult time during the pandemic.

(08:17)
In many cases they have to risk going to work because they just had to because their jobs did not allow the luxury of working from home. So that was a factor. But then the other thing that also happened was, and continues to happen is as these jobs, as these industries came back from the pandemic, in many cases the experiences of these employees, they felt like it went back to the pre pandemic days where these jobs were not treated like the jobs like many other jobs in other industries.

(08:58)
It went back to poor experiences, no flexibility back to the time where they didn’t have any control over the schedule that would take, there were no communication tools. If I’m working in many of these retail and restaurant establishments, I don’t typically get a company email address. I don’t typically get any company communication tools. So my ability to know what’s going on or be aware of policies and this problem was compounded during the pandemic because there was a need to communicate to employees about maybe the store may be shut down because of local states and cities and even jurisdictions were adopting different policies on what industries may be open, what places may be closed, all that stuff.

(10:07)
So they were just having this lack of communication tools really made their jobs very hard. And coming out the pandemic, I think there is a general disappointment that there wasn’t a lot more investment by many of these companies in enabling these tools in learning from the experiences from the pandemic and saying, “Okay, in some cases essential workers, in other cases, frontline workers. We learned some lessons during the pandemic and now we are coming back to life as normally in many places it’s time to make this investment. It’s time to enhance their experience as an employee.” And I think what we are seeing now is a lot of that resonating in this workforce. So we are all witnessing this labor shortage crisis as it’s called, and labor shortage crisis. If you really think about it’s, there’s no labor shortage. The same number of people are still out there. It’s not like people disappeared.

They’re opting out of it.

They’re opting out of it. They don’t want to do some of these jobs now because they said enough is enough.

And the deep sad irony at the same time, we want to restrict immigration.

That’s a whole different story.

But let’s restrict immigration when people don’t. Well I mean first of all, you got to fix the… We’re not the symptoms, you got to fix the root cause, which is really what you’re talking about. It’s like, “Hey, you want them to do this task.” And I think I’ve said this before, I grew up in an era where hourly jobs, it was a faucet. You just turn on the faucet and people would just show up and actually you were just happy to have a job. Those days are dead. Those days were long days-

Completely dead.

Completely dead hopefully to never return. So you’re talking about acompletely a revolutionary way of looking at employee experience, not the corporate. Because we have a lot of this stuff that happens in corporate, which is great. It just hasn’t come over to-

It’s for the hourly workers. And hourly workers, if you just contrast mean, you and I are talking right now on a Zoom call. We have all these tools and we got email addresses and you got probably messenger and everything going on the back and contrast that with nine out of 10 retail workers do not get a company email address because of a variety of reasons. But at the end of the date, they don’t have basic tools. So in my opinion, the data that we are looking at seems to strongly suggest that employees are out there in the marketplace.

(12:46)
During the pandemic, they found alternatives to make near minimum wage incomes, which is what a lot of these jobs were at anyway. And now when these jobs came back, they don’t necessarily have interest in going back because for the experience that they had prior to the pandemic was so low. So the ball now is in the court of the employers and they have to increase the… It is not just about wage rates. That alone is not going to solve the problem. They have to figure out how to address the question of flexibility, how to address the question of communication tools, how to address the question of instant pay because the alternative lot of these employees have today is to do some of the gig jobs where they get some of these things.

Well the irony finishes is in every one of these, most of these scenarios they’ve given deep thought to the customer experience. When you go into a hotel, they’ve thought about the music, they’ve thought about the smells you’ll smell, they’ve thought about the furniture that you’re interact with. Basically, everything has been manufactured or orchestrated or constructed in a way so that you have a positive experience. And I mean that’s the four Seasons, but that’s also Taco Bell. So everyone that’s in that business yes, has fought deeply and for years, this is a 40-year-old bid, like this isn’t new, but they haven’t transferred the knowledge of what they learned there to employees.

You are absolutely 100% right and all the innovation investment in store operations, for example, the retail was by and large focused on customer experiences as you said. And employees and employee experiences and all those things really took a backseat for a very long period of time. I think now that employee base is speaking up and saying, “No, we should expect something better. And if these industries need to continue expecting a pool of labor to fuel their growth, then there has to be some investment made in the experiences of these employees so that they can go and do this job with more satisfaction than they had before.” So data strongly suggests that.

When you talk to customers, I mean we’re capitalist, quasi capitalist, if not full on capitalist. Why is it just as simple as you’re losing money, the store is open, but literally, you only have two lines open. People get frustrated, they leave the store, they’re not buying, or the restaurant is fully open and only half the restaurant is open because you can’t staff the other half of the restaurant. You’re literally losing money. I know that you’ve talked to owners about this, I know you’ve talked to customers about this, but why hasn’t it transferred over to, “Oh okay, create a better experience for employees, make more money.”

I think that is starting to happen now and that’s the positive, that’s the silver lining in the conversation we are having.

Good point.

Historically, as you pointed out, the notion was it’s a faucet I’m going to open up. I have access to cheap labor anytime I want. And there are people, if you don’t want to do this job, there are three people waiting behind you to do this job. That was historical, that for many, many decades that was the case. So that just trained a lot of operators in many of these industries to operate in a certain way that did not prioritize the needs of the employees. Now, after the pandemic especially and after the labor shortage crisis, which is still going on, I think businesses are prioritizing things differently now they need help. Just realization that they have to prioritize differently doesn’t automatically change their operations.

(16:54)
So they need help, they need a toolkit, they need software like Legion, which says, “Okay, you know what, I’m always going to be labor cost conscious because that’s such a big item on my P&L.” So I always am going to be careful and I’m always going to prioritize labor efficiency for my business, but it doesn’t have to come at the expense of employee experience. And that is fundamentally allegiance message. In fact, you’ll be more labor efficient by treating employees better and giving them this toolkit. Because guess what your cost of worker replacement is going to be much lower. Even if you want to talk in terms of hard dollar savings, that’s the math cost of worker replacement is going to be lower, your labor is going to be optimized.

(17:45)
And because you have the employee staying on for longer, guess what, that happens to your customer service. It’s better you got happier employees treating your customers better. So that math and everything else is very, very solid. It took time for the industry to change its old ways, is how I can put it and start prioritizing this more so that they now start seeing solutions versus always having excuses on why they should not do this.

So I heard something the other day and I think I want to get your take on it, is that the hourly market for a long time, we’ve nibbled around the edges of this so it won’t be too revolutionary, is that the hourly workers look at companies as commodities and the companies look at hourly workers as commodities. So first of all, just let that set with you for just a second. First of all, do you agree with that historically? And do you believe that that’s what needs to be fixed?

I think there is some truth to that because there are some of these jobs are seasonal. For example, they are vocational jobs, they’re seasonal jobs, like retail hires a lot more people during holiday season only. And the nature of that hiring is for three, four months and stuff like that. So there’s part of that, but beyond that, I don’t agree. Even though that may not be conventional wisdom. I think the problem is that if you treat a job as a transactional job, then that’s what you then essentially it’s a self-fulfilling prophecy. That’s what you get.

(19:26)
But if you invest in development of the job, have a career track from these jobs so that an employee can start there and then make progress and invest in upskilling and things like that. And again, all this will pay you back in the economic sense. So this doesn’t come at the expense of, in fact, best in class businesses already do this. But there is plenty of evidence to say that, “Hey, if you treat this job differently, not as transactional jobs, then the employee mindset will follow. The employee mindset will change.” You will attract the right type of employee who look at the career path here, who look at this as career advancement, not just as a way to make extra money or a side hustle. And that will lead to very different type of outcomes.

It’s essentially because you said it earlier, and I want to get back to it, is this isn’t just throwing money at the problem, which I think has historically, when we looked at candidate driven market, employer driven market scarcity and surplus, et cetera, we just, we’ve historically looked at it and just said, we’ll just increase the hourly wage and that’ll take care of the problem. And I think one of the things you’ve articulated, what many things that you’ve articulated is like, yeah, you can do that. And that’s almost table stakes. Yes, you should probably increase your hour but what are the things that come after that? That you’ve noticed that like, “Okay, fix that.” And then fix what’s next?

Yeah, so first thing, let me just comment on the increasing hourly rate, And why that is necessary, but not sufficient. When hourly rate increases, for example, restaurant workers in San Francisco, they get paid more or less, the same hourly rates increase, but they also quickly normalize and everybody in the city or area matches that because nobody wants to be left behind. So if you are a restaurant in San Francisco, you are not necessarily going to say, “Hey, if the hourly rate is $25 an hour, I’m going to do $35.” Because that’s not likely what you will do. You’ll try to mask $25 because that’s the rate. But then if that’s the case, then how are you differentiating yourself? How are you doing a better job of attracting and retaining employees at your establishment versus having them walk right next door and having the same wage.

(22:04)
That’s the part that we constantly talk to customers about. Look, there is actually a playbook for that. And the playbook is, and this is all backed by data, our surveys and a lot of other data, God says the most, besides if you leave wage data site, 60% of the driver of the decision of should I stay or should I grow is tied to schedule flexibility. In whatever shape or form that makes sense for your business, maybe you have a business that can offer gig like flexibility, which is unprecedented. Flexibility, great is that’s good for you or maybe, but maybe you have constraints operating hours, you’re only open from 9:00 AM to 7:00 PM great, whatever within the boundaries of your business, any type of flexibility that you can incorporate in your employee schedules. And by flexibility, just to remind ourselves, letting employees to whatever extent possible, decide which days they prefer working, which days they don’t prefer working and giving them a toolkit to manage their own schedules. That is address 60%. Sorry, go ahead.

No, it’s interesting because you couple that with the forecasting when coverage needs to be there, it’s not necessarily that Tammy or Donnie needs to be there at that particular time.

Exactly.

Right. But you should know, especially if you’ve got forecasting, you should know when somebody should be there, but letting them opt into those things. Let me ask you a quick, quick, well, one Quincy’s statement. If I think a lot of the folks in the hourly market have historically thought of competition as in their category. So if you’re Taco Bell, your competitors are McDonald’s or if not McDonald’s or Burger King or whatever. And what I’ve learned about the market is that’s not true. If you’re in the hourly market and say you’re looking at a job at Taco Bell, you’re also looking at Verizon, you’re looking at a job at the mall, you’re looking at all kinds of things. So I think competition is really an interesting thing. But I wanted the last thing I wanted to get your take one is job descriptions and pay transparency more on the pay transparency side. What’s your take and what’s your advice for clients in terms of just being upfront with what the job pays?

I think for these jobs that’s a requirement. And I see most people actually do that. It’s on their website now. It could be tied to the city or state then it’s different in San Francisco versus some other places and those types of things. So that’s normal, but pay transparency is there. But I think what I’m pleased to see more of is more and more businesses adopt a different payroll cycle. So especially for shift workers, why wait two weeks to get paid for your shifts? Some employers are doing in three days, some employers are doing one week, some employers are doing instant. And that is-

I saw this at HR Tech.

… such a great thing.

I saw this at HR Tech last week is a lot of the pay on demand that used to be a more for gig workers, especially like an Uber driver. You can tab out at the end of your drive or ride, you can tab out at the end of the day or the end of the week. You can tab out whenever you want to. And that shift of now it’s moved into all of hourly and not that you’d care, but it’s also pushed its way into salary. So if you’re an account at Deloitte, you’ve accrued so much pay, you just want it to pay now, I mean it’s fascinating and it’s the behavior underneath it that’s really, I think most interesting to me.

That’s exactly right.

I want my money. I’ve earned it. I want my money now. Sanish, this has been-

And so there’s a need, right? Sorry, just last comment on that is in the hourly workforce, I mean, Legion has that feature on the platform too, and we know the data on that 70% of the workers do paycheck to paycheck in these jobs. So for them, it’s not just a nice to have. And it’s great that I have access. It’s oftentimes it’s necessity and it keeps them away from these payday loans and all these other bad options out there on the marketplace.

Jobs like walks off stage. Sanish, this has been wonderful. Thank you so much for carving out your time and wisdom.

Thank you very much for having me.

Absolutely. And thanks everyone listening to the RecruitingDaily Podcast. Until next time.

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