The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Tuesday, January 16, 2007

The Grand Experiment

A little more than a decade ago, I worked for a company that used a state-of-the-art system for staffing the store, which consisted of book, music and movie/game rental sections all in one warehouse-sized building. Great concept, and like Wal-Mart and others, they were able to offer lower prices than competitors.

Since it was a high-volume store, they figured they could track sales by computer and use the information to decide how many people were needed in each section and in front at the registers at each time of each day. The computer would then spit out a schedule for employees (with some adjustments for things like students' class schedules).

What was supposed to be an egalitarian system designed to ease managements' scheduling hassles, ensure good customer service and fast checkouts, and save money by not overstaffing was-- as we peons predicted-- a disaster. The store was chronically understaffed, and employees were outraged over the arbitrary scheduling, such as staying until after midnight and being due in at 8 am the next morning, or finding yourself working a completely unpredictable mix of days and nights, weekdays and weekends. Or finding yourself with thirty hours one week and five the next.

In no small part, that was the beginning of the end. Employees who had been thrilled to work there because the store paid over minimum wage were now unhappy because their entire lives were being dictated. The store developed a horrible reputation for bad customer service and interminable checkout lines. Cashiers weren't paid as much as those of us in the various departments, and quickly realized that they were doing a lot more work. Turnover increased, and the quality of employees dropped. Each section of the store became a chaotic mess that no-one stayed long enough to master.

Within a few years, the store closed down in spite of the fact that it was bigger, better and cheaper than the competition. Not exactly an advanced business theory, there. If you aren't a total dick to employees, they'll be happier to work for you. That makes for happy customers. And that's one of the big reasons I didn't hate Wal-Mart when it was Sam Walton's baby-- he didn't have contempt for working class Americans like his vile brood.

The morale and attitude that people come to work with each day really matters to your business -- and affects your business. People who are treated as if they were simply game pieces to be moved around won't stock merchandise with enthusiasm or deliver the kind of customer service Lee Scott would hope. More important in the long term, good people won't work at your store if they are treated the way the new schedule will result in their being treated -- in terms of managing both their lives and their incomes. No one who is serious about full-time work can tolerate having a different schedule and a different paycheck across seven days every week.

Wal-Mart's big problem is long lines at checkout. It often takes longer to check out than to fill your shopping cart in the first place. Here's a simpler solution: Schedule two more checkout clerks at every store for every shift. Will it cost money? Sure. But customers clearly walk out, or pass up shopping at Wal-Mart in the first place, because the lines are so long. I personally walked out of two Wal-Marts, leaving behind full shopping carts (that had to be restocked), during the holidays because the lines were too long. Wal-Mart could also use existing employees to open additional checkout lines -- putting aside their routine work -- when lines get particularly long. And they could use a manager to guide customers to the next open line, rather than letting people "guess" which line will move fastest (a system Whole Foods uses with great effectiveness).

One of Wal-Mart's biggest problems is its relationship with its own employees. About 50 percent of Wal-Mart employees in the U.S. quit every year -- that's 12,000 employees a week who quit and need to be replaced. What's the cost of that, both in literal terms, and in terms of lost opportunity because employees are so inexperienced?