Friday, September 12, 2008

On Productivity and Incentives

Earlier this week, The Wall Street Journal published a story about new software that is allowing the retailing chain, Ann Taylor, to measure productivity of their retail employees. The software (called ATLAS), was developed to see which workers were most productive in securing sales. The story goes on to say that Ann Taylor has then changed work schedules to put the most productive workers on the floor during the busiest shopping times.

On the surface, this seems like a sound strategy. When you've got the most traffic, you want the best sellers on the floor. But as author of the story reports, there's a downside. (Hmm, there's a trade-off to a decision - who would have seen that coming?)

The downside is that less productive workers are being relegated to shifts where there are likely to be fewer customers. This is impacting their paychecks. From the example cited, there are clearly fewer hours, but I presume there may also be an impact on sales bonuses or commissions. And as the article points out, once moved to a time with less traffic, it becomes more difficult to ring up sales. Again, this is easy to understand. However, in an interesting twist, one of the subjects of the article talked about her sales leads, developed over years of contact. The development of leads is clearly a time-intensive process, not always resulting in an immediate sale. And the idea of long-term vs. short-term gains in efficiency may play in here.

Overall, I think this is a good article to toss to your students to lead into a discussion about productivity and how it impacts various groups. Is there a responsibility to the stockholders to put the make the best resources available at peak times? What about for the customers? When more of them can visit, shouldn't they have the best service available? Does productivity provide an opportunity for workers? Do less productive workers gain an opportunity to hone their skills during less rushed times? Does this provide an incentive for them to improve their skills?

It also provides good background for a discussion on long-term vs. short-term incentives. Is the firm trading short-term gains in sales for long-term customer development by only putting the most productive workers (i.e. the most sales) on the floor during the busiest times? Does this mean the focus is the "ka-ching" or the relationship? What about customers? Will they begin to feel rushed as workers focus on the sale? And what about the workers - what happens if you're in the prime slot and you have a bad day?

I also find myself wondering what the alternative might be. I'm reminded of the BritCom, Are You Being Served? In that program, a customer would arrive, floorwalker (manager) Captain Peacock would then direct the prospect to the most senior sales person in the department first, and then on down the seniority line. One would hope there's a happy medium someplace, where the software can provide an opportunity for increased value for the firm, the employee and the customer.

Please share your thoughts.

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