All retailers want their workers to operate in an efficient manner. Question is, how should companies like Wal-Mart (NYSE: WMT), Target (NYSE: TGT), and Gap (NYSE: GPS) accomplish the goal of eliminating inefficiencies?
One way is to use productivity software to coerce employees into making sure they are putting forth their best effort. An excellent article at The Wall Street Journal shows how AnnTaylor (NYSE: ANN) is using computer monitoring to ensure that workers are aware of their strengths and weaknesses when it comes to selling. According to the article, employees are made aware of their average sales per hour and the yield per transaction. If you don't pull your weight, you won't get scheduled as much. In fact, the article implies that it isn't unheard of for an employee to go from 30 hours one week to 8 the next. Again, it's all based on your stats. If you sell more, you work more.
It's that simple, and as one might imagine, the adjective "Darwinian" came up in the discussion. That's because this philosophy of linking hours to performance has upped the competitive ante among a store's team. I think this is one of the problems that such a system creates. If employees are at each other's throats trying to score a sale, then the team dynamic disintegrates. That is never a good thing. Indeed, team unity rules in any organization, and it is paramount when it comes to good customer service.
Another problem with using metrics to foster a competitive spirit is that sales associates will now do whatever they can to get the sale, which probably will include trying to sell something that doesn't add any value for a customer. Workers will probably find themselves lying quite often. This won't help, and it could spark pressure in terms of returned goods.
And then there's employee morale. A declining morale equity will be sensed by patrons, and it will turn them off. Considering that statistics tend to cluster, a great sales week for a worker followed by a bad sales week (and thus the potential to lose hours) will only serve to frustrate. Following metrics daily or weekly might be too short-term. Another thing to consider is that a great salesperson can have bad weeks, and a bad salesperson can have good weeks. Again, this might lead to understandable exasperation and increased turnover. Plus, what about the issue of favoritism? Even if the rule is that the better you do the more hours you score, you just know that there will be some managers who will bend that rule and schedule weaker employees above what they should get. Every relationship between a manager and an associate is not equal. Human nature and productivity software will clash in this respect.
There's nothing inherently wrong with stimulating competition amongst workers, but I think it should be more on a store-to-store basis. That way, you have teams competing against teams instead of individuals acting like pit bulls with one another. And I think there's a better way to increase the quality of a salesperson. Believe me, I am not against making sure data is used to keep workers on their toes. There is nothing evil about that. However, what if a reward-based system were used to regulate the quality of a worker? I would propose that AnnTaylor use the data to, as an example, give workers the chance to win extra flexibility in their schedules. Perhaps the retailer could allow a worker that is a great salesperson to have extra personal days.
I understand management's concern. Believe me, as an investor in public companies, I don't want workers screwing around. Yet, penalizing workers based on data might end up being an ineffective paradigm that distracts the company from other important goals. For instance, many retailers oftentimes, in my opinion, don't concentrate enough on marketing campaigns to increase traffic in their locations. The number-one goal of any retailer should be increased traffic, as that is what brings in sales opportunities. Another point to bring up is the hiring process itself. Perhaps investments should be made at this point of the human-resource chain to ensure that the best possible salespeople are hired.
So, put me down as skeptical on this system until I see further reports about it. Technology is a wonderful tool for retail, but it must be used wisely. In closing, let me tell you the funniest thing to me about this topic. The system is dubbed Ann Taylor Labor Allocation System. Or, ATLAS. That made me think of Atlas Shrugged author Ayn Rand. I think Rand would have gotten a kick out of this system, for obvious reasons.
Disclosure: I don't own any company mentioned; positions can change at any time.
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Reader Comments (Page 1 of 1)
9-12-2008 @ 11:53AM
Richard said...
In my understanding of Ayn Rand & Atlas Shrugged, she would likely recognize perfect sense in your comments, since all are quite reasonable. She would also respect the store's right to experiment with the method, and to gain or lose accordingly.
Corporations are, fundamentally, individuals operating under a common umbrella. Their mutual agreements fall under corporate law, which is really about contractual arrangements between people. Within a corporation, an employment contract establishes the terms on which the corporation wishes to add to its working members (employees). No one is forcing the employees to behave against their will, nor to behave badly. If the contract should lead to negative behavior, the company suffers, as it should.
If a competitor of AnnTaylor does better using one of, or a combination of, the approaches you suggest, then they too may gain or lose accordingly. If they gain, customers gain too... after all, the customer freely votes for a business with his wallet. This is vastly superior to coercing a company to follow some procedure via some ballot &/or Rights violating legislation (as Unions strive to do) that amounts to using the force of the state at 'arm's length'.
9-12-2008 @ 5:14PM
Iridium said...
So during a shift 50 people walk through the store and 5 buy $150 worth of merchandise. Then during the next shift 5 people walk through the door but 2 people buy $1000 worth of merchandise.
Is it your employees fault if only a few people buy something. Should the person who had a customer buy $1000 worth of merchandise get rewarded just because they got lucky.
In most retail stores people buy without assistance. Those that want assistance usually seek it out. Stores where employees actively seek to give assistance are places where a lot of people do not like to shop.
Glad to know I can take Ann Taylor of my list of stores to shop at.
9-15-2008 @ 8:13PM
Dan said...
If your looking for efficient, the obvious answer is a better wage package, and benefit package. Wal-Mart like many other large mainstream corporate overlords want want want but don’t give to the people who work in the thousands of stores. increased wage, and benefit package would not only make current workers work harder, but bring in a stronger more efficient job seeker to their doors. Best way in that direction is to Organize, and create a union ship so that workers have rights and ability to negotiate wages and benefits and have a since of freedom in the workplace but to also create a environment that makes the workers feel more efficient.
9-17-2008 @ 12:05AM
egyptchick7 said...
I just want to say, being an employee of Ann Taylor, that this concept, at least in my store, that the higher performers get the most hours is exaggerated. Although our software does tend to give higher performers more hours, in the end, it is the manager's discretion who works when. Nepotism, in some stores comes over performance.
Although the author brings up a good point about competition decreasing team morale, this isn't really the case bc unless you are commissioned, some sales girls sell well and others not. The ones who don't have nothing to worry about.
Whoever said getting a $1000 sale is lucky, yes, they are lucky being paired with someone who really wants to shop, but it isn't luck that gets them to that grand.
9-18-2008 @ 1:24AM
mary said...
I am an employee of Ann Taylor, a long-time employee and the ATLAS system is a mess. The writer is correct when employees are motivated to sell through fear of hours being cut, it isn't good customer service and it turns our clients off, NOT what the company would want. I am a good salesperson when my motivation is being happy with my hours and compensation package, then I will help the customers and meet their needs (which always works for me) and put them above my job insecurity. On paper it seemed like high efficiency, in reality we are humans selling to humans and each salespersons approach may be different. I don't think customers like being pushed to buy by desperate associates, but they like a knowledgeable,helpful associate who cares about their needs. Ann Taylor wants to treat us as robots and it hasn't worked.