March 13, 2009
BrainTrust Query: Do retailers know how to manage knowledge workers?
By Bill Bittner, President, BWH Consulting
I’ve followed the headlines recently as
various retail organizations announced outsourcing or layoffs of information
technology (IT) and industrial engineering (IE) workers and I’ve asked
myself whether these layoffs make sense or whether companies are being
short-sighted.
These knowledge workers (KWs) have several
unique characteristics that retail management must appreciate when they
make decisions that affect them. First, they often have unique knowledge
of company resources that cannot be replaced by another technician or knowledge
worker, for example, something as critical as the way a retailer’s critical
replenishment application works.
Second, KWs have
enormous leverage in their impact on the organization. Changing a replenishment
algorithm or improving a forecasting estimate can have a ripple effect
on all the various operating units of the company. Spending an extra hour
to design a better check stand or to simplify a sign-in procedure can impact
thousands of co-workers.
The challenge is that it is often difficult
to measure the quality of results coming from knowledge workers. Who’s
to say
“there are no better ways to do this”? Of course, that is one of
the challenges with managing KWs as “paralysis
through analysis” can lead to rejecting the good in search for the perfect.
But KWs are also the most flexible members of your
organization because they can adapt to new roles and learn the requirements
of different positions quickly.
Knowledge Workers often have different motivation
than their hourly counterparts. They tend to have a strong sense of ownership
in the solutions they design, so while salary is necessary, simple praise
or recognition for extra work are often enough of a reward. Educational
opportunities and attendance to conferences can be as important as salary
increases. Knowledge workers need to understand how their efforts impact
the rest of the organization. This sense of contribution is often a reward
in itself.
Discussion Questions: Do you
think the total impact on “corporate knowledge”
caused by outsourcing or replacing in-house knowledge workers is understood?
Do you believe retailers fully appreciate the contribution of KWs?
Do you think most KWs would accept a reduction
in salary to preserve theirs or a co-worker’s job?
[Author’s Commentary] “All
generalities are false, including this one.”
It is wrong to put all knowledge
workers into the same mold, but I believe retailers have not always thought
through the alternatives before deciding to outsource, replace, or lay
off KWs. I really think many of these workers would relish the
opportunity to help their companies address the impact of the current economy.
By clearly stating the business
objectives, business managers could both challenge and motivate KWs to find ways of surviving. Outright salary reductions
may be too much of a morale buster, but by combining reduced increases
with emphasis on training and recognition it may be possible to reduce
overall personnel cost without losing valuable knowledge. Retailers might
consider job transfers, whether temporary or permanent, which would give KWs an
opportunity to learn and help other areas of the business.
Retailers need to figure out a
way to retain their “corporate knowledge base” during these difficult
economic times so they’re ready to take advantage of the recovery.
BrainTrust
Recent Discussions
Discussion Questions
Poll
Retailers seem particularly myopic when it comes to testing and then quickly identifying what works. They are not nimble. This is because they have endemically and institutionally surrendered to and are being held hostage by the belief that they have and will always have long business cycles. They can shorten those cycles and even begin to understand their businesses better by outsourcing tasks to professionals who are trained to grasp the corporate objectives quickly and apply state-of-the-art solutions to them.
As a retailer, ad agency, and CIO veteran, I don’t buy into the idea that institutional knowledge is necessary to perform “knowledge worker” tasks. You can outsource them, test them, and adopt or reject them. All at high speed. Those of you who’ve worked in the ad agency bidness, for example, know what it’s like to pitch new accounts. You have to become an overnight expert on the potential client’s business. It’s not rocket surgery, but they comfort themselves by believing that it is.
Test the KW outsourcing waters, retailers. You might be surprised by what you find there, and you will definitely learn something. Just get ready to shorten your purchase cycles.
The simple truth is this: ALL employees are “knowledge workers.” Or at least they have knowledge that could be put to profitable work.
Retail spends huge amounts of money, time, and energy fighting product theft but they watch an infinitely more valuable ‘product’ walk right out the door hidden in the minds and hearts of their employees. Unfortunately, employers access about a measly third of the information and knowledge that their employees could make available. 95% of the problems organizations face come from self-inflicted wounds. Strangely, the very same people responsible for that have most of the solutions as well.
Where we really need to go with this discussion is right to the holy grail…wisdom! Where do we go these days for wisdom?
“All generalities are false, including this one.” And the corollary as expressed by any competent attorney; “it depends.” Knowledge workers are worth their weight in platinum IF they are engaged holistically in the business and not just functionaries. IT professionals, or even people on the buying desk are treated by some retailers as generic positions that can be outsourced or filled from within the company by someone who has a core body temperature somewhat above ambient. I still am surprised at the number of people who are “Category Managers” engaged with Consumer Centric Merchandising whom have never worked at store level in retail. On the other hand, support functions such as IT or other “Knowledge Workers” frequently have evolved from retail either as part time workers going to school or have advanced their education while working at retail. These are the ones that should be retained for their general knowledge and ability to contribute synergistically to the company. The others can be outsourced.
This issue is a classic illustration of companies losing focus on longer-term value creation for the sake of short-term savings. It’s especially true for public companies, who are measured based on, among other things, the ability to reduce “headcount.”
These ‘rifs’ (reductions in force) inevitably lead to some disruption and discontinuity in strategic direction and of course, knowledge, along with execution.
The retailers should learn from other disasters in other industries (automotive, aerospace, electronics) regarding when they don’t take care of their single most valuable asset: people. Face it, I can buy everything I need online including automobiles which I can take delivery of at the dealer of my choice. So I really don’t NEED a retailer to fulfill my needs unless I am doing competitive shopping for features-benefits.
My favorite retailer who gets it? Apple hands down. They are staffed properly, they have awesome products and they are true knowledge workers when you come through the door, they greet you, they ask how they can help, and they get you right to the person who can answer your question. No screwing around. Try that next time in your local discount chain, electronics chain, or grocery chain.
If businesses what to differentiate they need to invest in knowledge workers to serve ME, the consumer. Apples products are more expensive than their competitors in the Windows space but I will pay the premium because I know they will TAKE CARE of me and meet my NEEDS better.
As a long-time retail operations executive, I have seen both sides of this: outsourced and in-sourced IT groups. My own experience shows that the key individuals to keep in-house are the IT leadership and then just a few technicians. The IT leaders are among the keepers of institutional knowledge and the partners to operational management to discover opportunities, define the organizational goals, and apply technology to amplify potential and to solve business problems. The few techs on-site ensure the senior managers don’t go crazy when they can’t figure out how to access their documents. For the heavy lifting of project management, system design and maintenance, data integration, etc., outsourcing is the effective way to go.
I do not think most retail managers appreciate their IT folks–but only due to lack of knowledge. That is why it is key to have strong IT leadership sitting at the leaders’ table to match the IT tools to the real business challenges, and report back on the ROI and efficiencies enabled by the technology employed.
Whether or not a KW would accept a reduction in salary to preserve their or a co-worker’s job is irrelevant. This is always a bad idea. If a reduction in force is necessary, it is far better to make the cuts quickly, articulate a strong future vision, and move on. The remaining team will be better equipped to move forward positively than if they are constantly reminded of the RIF by a reduced salary.
Hello! Knowledge worker here 🙂
Early in my career, I used to design and code POS applications. My approach was colored by teenage experiences running a gas station single-handedly (particularly the impossibly difficult cash register). I quit that job after several months; not because of the customers–who were a terrific “small-town” bunch of characters, but because of the loathsome cash register and how awkward it made serving those customers. EOD cashing up was a nightmare. I was also studying industrial design at the time, and I vowed never to design a product as openly hostile to the end user as that one.
The years rolled by and (as chance would have it) I found myself designing POS Store Automation systems! (Fate, eh?) Mindful of my past, I would work entire weekends, unpaid, to be sure I was producing systems that wouldn’t harass the poor cashiers into quitting. Then, as now, I needed to be proud of my work. I was also acutely aware of the immense power I (an obscure junior programmer) had. At the end of every singe business day, I could send *literally* tens of thousands of cashiers–fellow humans–home angry and frustrated because I’d been a lazy designer.
It’s a personal example, I know. And at the risk of blowing my own trumpet, I don’t think a lot of the *current* generation of ‘spreadsheet leaders’ truly understand how this sort of value can be lost (or, more precisely, not *captured* in the first place). I’m sure it has plenty to do with the *risk* involved in actively developing relationships, commitment and trust than many are comfortable with. It’s a generational thing.
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Retailers seem particularly myopic when it comes to testing and then quickly identifying what works. They are not nimble. This is because they have endemically and institutionally surrendered to and are being held hostage by the belief that they have and will always have long business cycles. They can shorten those cycles and even begin to understand their businesses better by outsourcing tasks to professionals who are trained to grasp the corporate objectives quickly and apply state-of-the-art solutions to them.
As a retailer, ad agency, and CIO veteran, I don’t buy into the idea that institutional knowledge is necessary to perform “knowledge worker” tasks. You can outsource them, test them, and adopt or reject them. All at high speed. Those of you who’ve worked in the ad agency bidness, for example, know what it’s like to pitch new accounts. You have to become an overnight expert on the potential client’s business. It’s not rocket surgery, but they comfort themselves by believing that it is.
Test the KW outsourcing waters, retailers. You might be surprised by what you find there, and you will definitely learn something. Just get ready to shorten your purchase cycles.
The simple truth is this: ALL employees are “knowledge workers.” Or at least they have knowledge that could be put to profitable work.
Retail spends huge amounts of money, time, and energy fighting product theft but they watch an infinitely more valuable ‘product’ walk right out the door hidden in the minds and hearts of their employees. Unfortunately, employers access about a measly third of the information and knowledge that their employees could make available. 95% of the problems organizations face come from self-inflicted wounds. Strangely, the very same people responsible for that have most of the solutions as well.
Where we really need to go with this discussion is right to the holy grail…wisdom! Where do we go these days for wisdom?
“All generalities are false, including this one.” And the corollary as expressed by any competent attorney; “it depends.” Knowledge workers are worth their weight in platinum IF they are engaged holistically in the business and not just functionaries. IT professionals, or even people on the buying desk are treated by some retailers as generic positions that can be outsourced or filled from within the company by someone who has a core body temperature somewhat above ambient. I still am surprised at the number of people who are “Category Managers” engaged with Consumer Centric Merchandising whom have never worked at store level in retail. On the other hand, support functions such as IT or other “Knowledge Workers” frequently have evolved from retail either as part time workers going to school or have advanced their education while working at retail. These are the ones that should be retained for their general knowledge and ability to contribute synergistically to the company. The others can be outsourced.
This issue is a classic illustration of companies losing focus on longer-term value creation for the sake of short-term savings. It’s especially true for public companies, who are measured based on, among other things, the ability to reduce “headcount.”
These ‘rifs’ (reductions in force) inevitably lead to some disruption and discontinuity in strategic direction and of course, knowledge, along with execution.
The retailers should learn from other disasters in other industries (automotive, aerospace, electronics) regarding when they don’t take care of their single most valuable asset: people. Face it, I can buy everything I need online including automobiles which I can take delivery of at the dealer of my choice. So I really don’t NEED a retailer to fulfill my needs unless I am doing competitive shopping for features-benefits.
My favorite retailer who gets it? Apple hands down. They are staffed properly, they have awesome products and they are true knowledge workers when you come through the door, they greet you, they ask how they can help, and they get you right to the person who can answer your question. No screwing around. Try that next time in your local discount chain, electronics chain, or grocery chain.
If businesses what to differentiate they need to invest in knowledge workers to serve ME, the consumer. Apples products are more expensive than their competitors in the Windows space but I will pay the premium because I know they will TAKE CARE of me and meet my NEEDS better.
As a long-time retail operations executive, I have seen both sides of this: outsourced and in-sourced IT groups. My own experience shows that the key individuals to keep in-house are the IT leadership and then just a few technicians. The IT leaders are among the keepers of institutional knowledge and the partners to operational management to discover opportunities, define the organizational goals, and apply technology to amplify potential and to solve business problems. The few techs on-site ensure the senior managers don’t go crazy when they can’t figure out how to access their documents. For the heavy lifting of project management, system design and maintenance, data integration, etc., outsourcing is the effective way to go.
I do not think most retail managers appreciate their IT folks–but only due to lack of knowledge. That is why it is key to have strong IT leadership sitting at the leaders’ table to match the IT tools to the real business challenges, and report back on the ROI and efficiencies enabled by the technology employed.
Whether or not a KW would accept a reduction in salary to preserve their or a co-worker’s job is irrelevant. This is always a bad idea. If a reduction in force is necessary, it is far better to make the cuts quickly, articulate a strong future vision, and move on. The remaining team will be better equipped to move forward positively than if they are constantly reminded of the RIF by a reduced salary.
Hello! Knowledge worker here 🙂
Early in my career, I used to design and code POS applications. My approach was colored by teenage experiences running a gas station single-handedly (particularly the impossibly difficult cash register). I quit that job after several months; not because of the customers–who were a terrific “small-town” bunch of characters, but because of the loathsome cash register and how awkward it made serving those customers. EOD cashing up was a nightmare. I was also studying industrial design at the time, and I vowed never to design a product as openly hostile to the end user as that one.
The years rolled by and (as chance would have it) I found myself designing POS Store Automation systems! (Fate, eh?) Mindful of my past, I would work entire weekends, unpaid, to be sure I was producing systems that wouldn’t harass the poor cashiers into quitting. Then, as now, I needed to be proud of my work. I was also acutely aware of the immense power I (an obscure junior programmer) had. At the end of every singe business day, I could send *literally* tens of thousands of cashiers–fellow humans–home angry and frustrated because I’d been a lazy designer.
It’s a personal example, I know. And at the risk of blowing my own trumpet, I don’t think a lot of the *current* generation of ‘spreadsheet leaders’ truly understand how this sort of value can be lost (or, more precisely, not *captured* in the first place). I’m sure it has plenty to do with the *risk* involved in actively developing relationships, commitment and trust than many are comfortable with. It’s a generational thing.