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.