By September 17, 2008 1 Comments Read More →

Internal Competition Hurts Teamwork? Duh!

Retailers Reprogram Workers In Efficiency Push – WSJ.com

This is more of a Deming philosophy article than a “Lean article” since the retailer in question here doesn’t say they’re using Lean…. which is good, since the situation described in the above WSJ article is pretty bleak.

AnnTaylor Stores Corp. installed a system last year. When saleswoman Nyla Houser types her code number into a cash register at the Ann Taylor store here at the Oxford Valley Mall, it displays her “performance metrics”: average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.

This got me thinking about the WalMart scheduling system that I blogged about last year. Computerized scheduling systems created outputs might have made sense logically, but really antagonized and frustrated staff. More of the same here at Ann Taylor, with a “competition destroys morale” component that Dr. Deming would have predicted.

Some employees aren’t happy about the trend. They say the systems leave them with shorter shifts, make it difficult to schedule their lives, and unleash Darwinian forces on the sales floor that damage morale.

But the vendors claim a 5% reduction in labor costs. What’s a little bit of Darwinian sniping amongst the staff when you’re saving a few bucks here and there?

“There’s been a natural resistance to thinking about human beings as pieces in a puzzle rather than individuals,” says John M. Gibbons, a senior research adviser at the Conference Board and a former director of human resources at Gap.

As my wife and others like to say…. “ya think?” Maybe there’s a good reason that many managers resist treating people coldly as puzzle pieces. Dr. Deming used to teach that managers had to understand the motivations and goals of each employee as an INDIVIDUAL. These software systems are robbing managers of their ability to do this…

Deep into the article, there’s another “fun” tidbit:

AnnTaylor calls its system the Ann Taylor Labor Allocation System — Atlas for short…. “When we launched that, we messed with five of them.” Giving the system a nickname, Atlas, he said, “was important because it gave a personality to the system, so [employees] hate the system and not us.

Give the system some personality? I’m sure the employees still hate the company leaders… not the system.

So when employees are paid individual commissions AND competing for the best schedule slots based on how much they sell… and those best slots allow them to sell more…. what’s the worst that could happen? Well, it’s what Dr. Deming preached about — don’t use internal competition and measures to drive harmful competition in what should be a team.

When I worked retail in high school and college (a now-defunct/merged computer store called Babbage’s…. we sold Windows 3.0 and the original Nintendo), we weren’t paid on commission. It helped created a great team environment where we were all focused on helping customers and each other. They didn’t need a commission system to motivate us.

But at AnnTaylor:

Current and former employees of the Langhorne store say that within months of the system’s installation in May 2007, the culture shifted from collegial to highly competitive. “You could see people stealing sales from other people,” says Julie Abrams, a former cashier at the store. Salespeople were “trying to get each other out of the way to get to the client,” she says….

[from later in the article] After one salesperson greeted a shopper, she explains, another would butt in to offer an opinion, then take over the transaction.

That shouldn’t be a surprise to anyone with some common sense about people.

And there’s more… examples of the misuse of standard times. There’s a big difference between using time study and Industrial Engineering methods in an auto assembly line (where you have a predictable, repeatable 45 seconds of work content) and in areas where the work isn’t as predictable.

Before it installed the system, AnnTaylor spent a year studying labor efficiencies. It established standards for how long it should take for employees to complete certain tasks: three seconds to greet a shopper; two minutes to help someone trying on clothing; 32 seconds to fold a sweater; and most importantly, five minutes to clinch a sale. Its goal was to figure out how many employees it needed in a store at any given time, based on customer traffic.

OK, folding a sweater — that probably has a pretty consistent standard time. But “five minutes to clinch a sale”?? Seems like there would be a lot of variation around that.

AnnTaylor decided that employees were taking too long to open stores. Workers who came in two hours before opening “got a coffee and sat down and caught up with what was on TV the night before,” Mr. Knaul noted. The time was cut to one hour.

OK, that last part sounds fair too. You can probably pretty well standardize the tasks and the amount of time it should take to prep the store for opening. Time standards for other tasks are fine for rough planning purposes, but you have to be careful in allowing for normal variation. This is true in healthcare settings — if you’re planning nurse staffing, for example, you can estimate how long tasks and activity SHOULD take. But if you’re not leaving any slack time, service and quality (or patient care) will suffer.

Hounding salespeople for hourly sales quotas and standard times will change behavior, and not always for the better. As one sales person complained:

The new system, Ms. Houser says, doesn’t reward her style of selling. It no longer pays to spend time developing relationships with shoppers who might not buy anything on a particular visit, she says. “My client [contact] book is fatter than anybody else’s in the store,” she says. “Does that mean I will get a bigger raise next time? No. Not if my [average sales] numbers don’t reflect that.”

But the software vendor says it’s not their fault — it’s how the software is used (ah, blame the customer):

Pete Reilly, a senior vice president at RedPrairie, which developed the Ann Taylor system, says it’s possible for retailers to get too aggressive about slicing and dicing work schedules to match customer traffic. “The system will allow you to push it too far,” he says. “But at the end of the day, it is based on business principles and how I treat my employees. That is really up to the retailer.”

So what are my final conclusions? Is a system like RedPrairie inherently bad? I can see benefits from automating a scheduling process. I think the deeper issues in this AnnTaylor case are more from the management assumptions than the software itself…. assumptions such as “everything can have a tightly defined standard time” and “employees must be given quotas and incentives or they won’t do any work” and “internal competition is good, we’ll sell more.”

Dr. Deming preached against those assumptions… and he would have been plenty busy today.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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