December 7, 2006
Best Buy Realigns Work Environment for Results
Best Buy is looking for better results. The company, according to the Dec. 11 BusinessWeek cover story, has gone off in a radical direction to recreate its corporate culture and achieve results beyond anything it has accomplished before.
A program called ROWE (Results Only Work Environment) allows workers at the company’s headquarters to make decisions on when they come to work, where they do their work, etc. The only thing that matters in the final analysis is results. As the magazine put it, “Work is no longer a place where you go, but something you do.”
While technology companies have allowed workers to go about doing their jobs without reporting to a physical office, it is not something that you will find in most large corporations and especially those in retailing.
Interestingly, the idea for ROWE didn’t come from the top. Best Buy’s CEO Brad Anderson, said, “ROWE was an idea born and nurtured by a handful of passionate employees. It wasn’t created as the result of some edict.”
Mr. Anderson may not have anything to do with the creation of the ROWE program, but he fully supports it. In fact, he was so impressed with the results of the program, Best Buy set up a subsidiary called CultureRx to help other companies duplicate its results.
Since ROWE was initiated, Best Buy has quantified a 35 percent increase in productivity in the departments using it. The average voluntary turnover at the company has decreased and employee engagement is up significantly.
Phyllis Moen, a University of Minnesota sociology professor is studying the ROWE program in a project sponsored by the National Institutes of Health (NIH). She said, “Our whole notion of paid work was developed within an assembly line culture. Showing up was work. Best Buy is recognizing that sitting in a chair is no longer working.”
The next big experiment in ROWE will come at store level. Next year, Best Buy will begin testing with managers and hourly workers in stores. How it will work and whether it will succeed remains to be seen. What is known, however, is that Best Buy has a 65 percent turnover rate in its stores. The company, clearly, is willing to try just about anything to fix what’s broken.
Discussion Questions: What are your thoughts on Best Buy’s ROWE program at the company’s headquarters? How do you think the company will go about testing
the concept in stores? What would be the keys to making ROWE work in a store environment? What would a successful test at store-level mean for the broad retailing industry?
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Wow! I never imagined their turnover was that high. No wonder they’ll try anything. In my experience, these ‘self-directed’ initiatives like enabling employees to decide when and where to work can work in environments where customers aren’t involved. What does your gut say about this scenario? A store with customers who want to shop when and where they want to being ‘served’ by employees who want to work when and where they want to. Doesn’t exactly feel like a match made in heaven to me. More like a perfect storm.
Employee engagement isn’t realized through policy and procedure changes – it’s realized by a having a higher purpose. Moving from work being ‘where you go’ to work being ‘what you do’ is right on the money. Now, the next step is work being ‘who you are’ – that one has found meaning in work.
Go, Best Buy! After 20+ years of being tied to a desk when it absolutely isn’t necessary, this news is a breath of fresh air in retail. But, I’m not quite sure how it will work in stores, where floor coverage is of utmost importance. Sure, it’s been done for years in those who work in internet-land. But for planning and allocation, this thought process is revolutionary! Where do I apply?! And will they let me telecommute from Dallas? Minneapolis is too cold for even one day a week.
This is the quote from the senior manager that got my attention….
“For years I had been focused on the wrong currency,” says Thompson. “I was always looking to see if people were here. I should have been looking at what they were getting done.”
The challenge with any approach of this nature is quantifying the results. You need good before and after statistics to monitor both group and individual results. You have to avoid the “superstar” or “NY Yankees” syndrome. If everyone is awarded based on their individual output and those that can finish in half the time not only get paid but also get the afternoon off you will quickly loose the team spirit.
I think a lot depends on the nature of the work. If the work is “event driven” or “self motivated.” If people are answering calls or processing transactions, then there is no reason they need to be tied to a physical location. If people are designing products or software you can argue that certain phases require interaction and should have a physical place where workers can congregate. Other phases can best be done when that “great idea” comes at 2:00 in the morning. Of course people working with resources like machinery, or part of an assembly line, or requiring special tools must be where the resources are located.
But one thing that kind of bothers me about this whole thing is that it really creates a distinction between “information workers” and everyone else. Information workers deal with network (telephone, broadcast, and computer) based assets and services that can easily be distributed to the worker. Everyone else deals with assets and services that are delivered from a specific location. How many of the non-information workers don’t feel like getting up every morning and what should be their alternative?
In the case of Best Buy and retailers in general, you have a large number of non-network workers. I am not sure they like hearing about the people in the “Headquarters Country Club” who now don’t even need to show up at the office. Store personnel are the organization’s customer contacts in the real world and are the ones whom you want to tout the services of the company. Maybe the answer is to adjust the salary scales so that those workers who do have to get up every morning are better compensated. The challenge there probably is that the sell process for the network worker generates more revenue than the store person. So now we’re back to the question “Why do we have those stores?”
I’ve heard that it was the IT group that has been testing this program. Word out is that some folks aren’t seen for weeks at a time but productivity and the “happiness factor” is at an all time high.
Regarding store execution, they need to start with the current employees for how this could be shaped. As Jim Donald (the CEO from Starbuck’s) stated in the October Fortune magazine, “if you want to know what’s wrong with the business, ask the front line.” The managers and employees would be thrilled to brainstorm and weigh in on how they could be further motivated by a store version of ROWE.
If we look at this opportunity, it’s natural to assume that ROWE would have a very different play within the store environment. But as service and turnover continues to be one of the industry’s biggest challenges, why not start somewhere?
I heard Brad Anderson speak at a show last year and he shared that their mantra is fearless innovation…and that 60% of what they try fails miserably. But, the other 40% is golden for evolving what goes into the mothership. Seems like kicking off ROWE as an in-store experiment and evolving it’s execution based on what’s working and not working is a great way to be proactive about finding a new way to solve employee challenges.
If applied in the right circumstances it is definitely a valuable concept. But as stated above, this is not new, just not widely used currently.
The Best Buy ROWE program works for 2 critical reasons: (1) the leadership and (2) the focus on measuring productivity. Since Best Buy has many locations, it wouldn’t hurt if a few experimented with ROWE before the program gets rolled out to everyone. Some of the comments posted above suggest that store staff won’t be around to service the customers when the stores get busy. That won’t happen if store leadership implements ROWE productivity measures appropriately. It’s worth trying any reasonable tactic to reduce staff turnover. BTW, many retailers experience staff turnover much greater than 65%. Certainly a lot of fast food restaurants would be thrilled to REDUCE their turnover to 65%.
If they are even thinking about applying this to a store environment, they are not thinking about their customer first which is the quickest path to failure in retailing.
Identifying and measuring results is critical for success. The major challenge with individuals creating schedules that make sense individually is to coordinate that activity across a team or across a series of jointly coordinated tasks. Some activities, such as those requiring direct customer interface, can only be accomplished by working offsite in a limited manner. As with any initiative the devil is in the details. However, their initial results are impressive.
ROWE, ROWE, ROWE your boat, Best Buy,
Give this productivity a try,
But will great results sustain
When freedom controls the brain?
As a company in the business of selling cutting edge technology to consumers (along with more mundane products), it makes sense for Best Buy to be a leading-edge retailer when it comes to technological solutions to associate relations. If the ROWE program is measurable in terms of results, higher productivity, reduced turnover and greater job satisfaction, it’s a strong move forward.
However, Best Buy (and imitators of the ROWE concept) will want to consider how the idea works when team projects and coordination are involved…sometimes there is no substitute for face-to-face interaction. And applying the concept to store teams is a different challenge entirely: Stores do not run themselves and customers don’t expect to deal with telecommuting associates or they may as well use the Internet!
Consensus commentary seems to be that this is a great program. And in an environment where the “work” is intellectually driven it has obvious appeal. But what about environments where the “work” is physically driven. The factory line needs X number of people doing their jobs at the same time to run. Isn’t the retail environment the same? And isn’t the “work” to generate customer satisfaction — thereby necessitating that workers be in the stores when customers are?
I hesitate to make these observations and to pose these questions for fear of being exposed as hopelessly bounded in my slightly-over-fifty thinking. My kids routinely point out that foible already. So what am I missing?
Speaking as one who hasn’t commuted to an office since 1998, I wholeheartedly support the concept. Many companies have “hotelling” desks for itinerant professionals who are engaged in the field or who spend more time in a home office and only trek to HQ for certain meetings. I’ve worked in such an environment and to this day I maintain that anywhere I can plug in my laptop and get a cellular signal is my office.
This is a great structure for the professionals in the organization, but I don’t see it mapping very well to the retail environment, where by and large showing up IS the work. The Business Week article doesn’t address how its ROWE program is affecting store-level performance. To truly evaluate its worth, we must evaluate its impact on the customer experience.
If Best Buy could pull this off at the store level, it would surely be a huge win for their employee morale and would probably have a significant impact on their turnover. But I do not see how it can be done at the sales level – people need to work when the customers are there, and that cannot be changed. More power to Best Buy if they can figure this out! If they’re not already doing their best to provide their sales staff with flexible schedules, then shame on them, and maybe there IS room for improvement.
Implementing this approach at the manager level could bring benefits, as long as it is not abused and the employees start wondering where their management went!
I don’t see how this translates to the stores. Most Best Buy execs have been working like this for a long time, and it obviously pays. If your major supplier is in Japan, it makes more sense to work from Starbucks at midnight than show up at 8 a.m. at HQ, just as your counterpart in Tokyo is going home.
The use of the would ‘radical’ for describing a ‘culture’ change is not correct. Culture building is extremely positive, and viable for growth, people motivation, and dealing with change.
The store format and systems improvement are a plus, short term. Culture and the dynamics of top-down support is the key to success, long term! Hmmmmmmmm
This is not a new concept. It has been used by tech companies for many years. It was tried some years back by non-tech companies and called flex-time. If it increases productivity and does not detract from service to either the stores or the customer, it will be a very good practice.
I once worked for someone who used this example when trying to manage these situations. If you ask someone to walk across the room there is no issue but if you ask them to walk across the room and name every muscle they plan on using, they will have a hard time making the first step.
I thought of that story as I read about Best Buy. The concept of giving people objectives rather than tasks has to make their team not only more productive, but much more motivated to achieve. I expect nothing but great results from the initiative
The key at store level will be the focus on the end result, which should be customer satisfaction., As we all know from watching endless repeats lately of Miracle on 34th Street, RH Macy shares that the happier customers are with shopping at Macy’s, the more they will come back and buy from Macy’s and in the long run, the more profits for Macy’s.
In retail, it is very common to have employee turnover at store level be in the range of 90%+ for levels besides store mgmt. I have been in the store retail sector for 15 years and this has been the norm at each company in turnover. Since the jobs (minus store mgmt) do not pay significant wages, many folks will leave for another opportunity offering as little as a .50 increase. Many times school schedules play into their decision making as well. This will be a very difficult concept to pull off at the store level but can be advantageous to the corporate folks.
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Wow! I never imagined their turnover was that high. No wonder they’ll try anything. In my experience, these ‘self-directed’ initiatives like enabling employees to decide when and where to work can work in environments where customers aren’t involved. What does your gut say about this scenario? A store with customers who want to shop when and where they want to being ‘served’ by employees who want to work when and where they want to. Doesn’t exactly feel like a match made in heaven to me. More like a perfect storm.
Employee engagement isn’t realized through policy and procedure changes – it’s realized by a having a higher purpose. Moving from work being ‘where you go’ to work being ‘what you do’ is right on the money. Now, the next step is work being ‘who you are’ – that one has found meaning in work.
Go, Best Buy! After 20+ years of being tied to a desk when it absolutely isn’t necessary, this news is a breath of fresh air in retail. But, I’m not quite sure how it will work in stores, where floor coverage is of utmost importance. Sure, it’s been done for years in those who work in internet-land. But for planning and allocation, this thought process is revolutionary! Where do I apply?! And will they let me telecommute from Dallas? Minneapolis is too cold for even one day a week.
This is the quote from the senior manager that got my attention….
“For years I had been focused on the wrong currency,” says Thompson. “I was always looking to see if people were here. I should have been looking at what they were getting done.”
The challenge with any approach of this nature is quantifying the results. You need good before and after statistics to monitor both group and individual results. You have to avoid the “superstar” or “NY Yankees” syndrome. If everyone is awarded based on their individual output and those that can finish in half the time not only get paid but also get the afternoon off you will quickly loose the team spirit.
I think a lot depends on the nature of the work. If the work is “event driven” or “self motivated.” If people are answering calls or processing transactions, then there is no reason they need to be tied to a physical location. If people are designing products or software you can argue that certain phases require interaction and should have a physical place where workers can congregate. Other phases can best be done when that “great idea” comes at 2:00 in the morning. Of course people working with resources like machinery, or part of an assembly line, or requiring special tools must be where the resources are located.
But one thing that kind of bothers me about this whole thing is that it really creates a distinction between “information workers” and everyone else. Information workers deal with network (telephone, broadcast, and computer) based assets and services that can easily be distributed to the worker. Everyone else deals with assets and services that are delivered from a specific location. How many of the non-information workers don’t feel like getting up every morning and what should be their alternative?
In the case of Best Buy and retailers in general, you have a large number of non-network workers. I am not sure they like hearing about the people in the “Headquarters Country Club” who now don’t even need to show up at the office. Store personnel are the organization’s customer contacts in the real world and are the ones whom you want to tout the services of the company. Maybe the answer is to adjust the salary scales so that those workers who do have to get up every morning are better compensated. The challenge there probably is that the sell process for the network worker generates more revenue than the store person. So now we’re back to the question “Why do we have those stores?”
I’ve heard that it was the IT group that has been testing this program. Word out is that some folks aren’t seen for weeks at a time but productivity and the “happiness factor” is at an all time high.
Regarding store execution, they need to start with the current employees for how this could be shaped. As Jim Donald (the CEO from Starbuck’s) stated in the October Fortune magazine, “if you want to know what’s wrong with the business, ask the front line.” The managers and employees would be thrilled to brainstorm and weigh in on how they could be further motivated by a store version of ROWE.
If we look at this opportunity, it’s natural to assume that ROWE would have a very different play within the store environment. But as service and turnover continues to be one of the industry’s biggest challenges, why not start somewhere?
I heard Brad Anderson speak at a show last year and he shared that their mantra is fearless innovation…and that 60% of what they try fails miserably. But, the other 40% is golden for evolving what goes into the mothership. Seems like kicking off ROWE as an in-store experiment and evolving it’s execution based on what’s working and not working is a great way to be proactive about finding a new way to solve employee challenges.
If applied in the right circumstances it is definitely a valuable concept. But as stated above, this is not new, just not widely used currently.
The Best Buy ROWE program works for 2 critical reasons: (1) the leadership and (2) the focus on measuring productivity. Since Best Buy has many locations, it wouldn’t hurt if a few experimented with ROWE before the program gets rolled out to everyone. Some of the comments posted above suggest that store staff won’t be around to service the customers when the stores get busy. That won’t happen if store leadership implements ROWE productivity measures appropriately. It’s worth trying any reasonable tactic to reduce staff turnover. BTW, many retailers experience staff turnover much greater than 65%. Certainly a lot of fast food restaurants would be thrilled to REDUCE their turnover to 65%.
If they are even thinking about applying this to a store environment, they are not thinking about their customer first which is the quickest path to failure in retailing.
Identifying and measuring results is critical for success. The major challenge with individuals creating schedules that make sense individually is to coordinate that activity across a team or across a series of jointly coordinated tasks. Some activities, such as those requiring direct customer interface, can only be accomplished by working offsite in a limited manner. As with any initiative the devil is in the details. However, their initial results are impressive.
ROWE, ROWE, ROWE your boat, Best Buy,
Give this productivity a try,
But will great results sustain
When freedom controls the brain?
As a company in the business of selling cutting edge technology to consumers (along with more mundane products), it makes sense for Best Buy to be a leading-edge retailer when it comes to technological solutions to associate relations. If the ROWE program is measurable in terms of results, higher productivity, reduced turnover and greater job satisfaction, it’s a strong move forward.
However, Best Buy (and imitators of the ROWE concept) will want to consider how the idea works when team projects and coordination are involved…sometimes there is no substitute for face-to-face interaction. And applying the concept to store teams is a different challenge entirely: Stores do not run themselves and customers don’t expect to deal with telecommuting associates or they may as well use the Internet!
Consensus commentary seems to be that this is a great program. And in an environment where the “work” is intellectually driven it has obvious appeal. But what about environments where the “work” is physically driven. The factory line needs X number of people doing their jobs at the same time to run. Isn’t the retail environment the same? And isn’t the “work” to generate customer satisfaction — thereby necessitating that workers be in the stores when customers are?
I hesitate to make these observations and to pose these questions for fear of being exposed as hopelessly bounded in my slightly-over-fifty thinking. My kids routinely point out that foible already. So what am I missing?
Speaking as one who hasn’t commuted to an office since 1998, I wholeheartedly support the concept. Many companies have “hotelling” desks for itinerant professionals who are engaged in the field or who spend more time in a home office and only trek to HQ for certain meetings. I’ve worked in such an environment and to this day I maintain that anywhere I can plug in my laptop and get a cellular signal is my office.
This is a great structure for the professionals in the organization, but I don’t see it mapping very well to the retail environment, where by and large showing up IS the work. The Business Week article doesn’t address how its ROWE program is affecting store-level performance. To truly evaluate its worth, we must evaluate its impact on the customer experience.
If Best Buy could pull this off at the store level, it would surely be a huge win for their employee morale and would probably have a significant impact on their turnover. But I do not see how it can be done at the sales level – people need to work when the customers are there, and that cannot be changed. More power to Best Buy if they can figure this out! If they’re not already doing their best to provide their sales staff with flexible schedules, then shame on them, and maybe there IS room for improvement.
Implementing this approach at the manager level could bring benefits, as long as it is not abused and the employees start wondering where their management went!
I don’t see how this translates to the stores. Most Best Buy execs have been working like this for a long time, and it obviously pays. If your major supplier is in Japan, it makes more sense to work from Starbucks at midnight than show up at 8 a.m. at HQ, just as your counterpart in Tokyo is going home.
The use of the would ‘radical’ for describing a ‘culture’ change is not correct. Culture building is extremely positive, and viable for growth, people motivation, and dealing with change.
The store format and systems improvement are a plus, short term. Culture and the dynamics of top-down support is the key to success, long term! Hmmmmmmmm
This is not a new concept. It has been used by tech companies for many years. It was tried some years back by non-tech companies and called flex-time. If it increases productivity and does not detract from service to either the stores or the customer, it will be a very good practice.
I once worked for someone who used this example when trying to manage these situations. If you ask someone to walk across the room there is no issue but if you ask them to walk across the room and name every muscle they plan on using, they will have a hard time making the first step.
I thought of that story as I read about Best Buy. The concept of giving people objectives rather than tasks has to make their team not only more productive, but much more motivated to achieve. I expect nothing but great results from the initiative
The key at store level will be the focus on the end result, which should be customer satisfaction., As we all know from watching endless repeats lately of Miracle on 34th Street, RH Macy shares that the happier customers are with shopping at Macy’s, the more they will come back and buy from Macy’s and in the long run, the more profits for Macy’s.
In retail, it is very common to have employee turnover at store level be in the range of 90%+ for levels besides store mgmt. I have been in the store retail sector for 15 years and this has been the norm at each company in turnover. Since the jobs (minus store mgmt) do not pay significant wages, many folks will leave for another opportunity offering as little as a .50 increase. Many times school schedules play into their decision making as well. This will be a very difficult concept to pull off at the store level but can be advantageous to the corporate folks.