January 8, 2016 at 1:28 PM
In the world of high-end retail, salespeople have long supplemented their modest salaries with commissions for transactions they helped close. More recently, however, employers have added a twist: The most productive workers also get the busiest shifts, both as a reward for their high performance, and to boost revenues as much as possible.
Ann Taylor was among the earliest to experiment with this strategy, back in 2008. As workforce monitoring and optimization technology has grown more sophisticated and widespread, other retailers have adopted it since, even while backing off other "just-in-time" scheduling practices that have come under scrutiny.
“In that sector, they spent decades cutting labor,” says John Orr, senior vice president for retail at Ceridian, which makes a workforce management software product called Dayforce. “So now they’ve found themselves so thin on their budgets that it’s not a matter of reducing payroll, it’s better distribution of the labor." Another workforce analytics company, JDA, also advertises programs that "deploy stronger people at the right time using labor scheduling solutions that keep the right associates on the floor during the busiest traffic times."
Dayforce’s system doesn’t operate purely on Sales Per Associate Hour, or SPAH, as the metric is known. Rather, it asks employers to come up with ways to rate employee proficiency by allowing workers to complete training modules, for example, or pass tests. The most qualified people then get access to the retailer’s “power hours,” and take home more in commissions, potentially raising sales overall by between 0.5 and three percent.
But it’s easy to go too far with such manipulation, Orr says. So his software also has a setting that allows employers to factor in “fairness,” by not giving all of the best shifts to just a small group of top performers. Using the “fairness” setting might lead to a smaller increase in sales, but also mitigate employee resentment.
"How ruthless do you want to be?” Orr asks. "If you’re ruthless, you’ll have a lot of turnover, they’ll go work for someone else.”
Retail is where the practice of scheduling the most productive workers at peak periods — which doesn’t yet have a shorthand name — is most developed. But it’s also been tried in other sectors, such as call centers, where incoming calls could be routed towards top performers, so as to make sure they’re utilized all the time. In restaurants, servers that habitually have the fattest checks can be scheduled on weekend nights, in the busiest parts of the dining room.
"How ruthless do you want to be? If you’re ruthless, you’ll have a lot of turnover, they’ll go work for someone else.”
— John Orr, senior vice president for retail, Ceridian
That last strategy was pioneered by a company called Objective Logistics, which was acquired this past summer, and has wound down its old business. The technology was too far ahead of the market, said the company’s founder, who patented the scheduling method. But one of his old clients, a restaurant chain called Not Your Average Joe’s, liked the approach so much that it wrote some of its own software to keep the practice going.
“Objective Logistics’ whole idea is that you should manage your servers like you manage your sales force,” says Not Your Average Joe CEO Steve Silverstein. "The most productive servers should work the most productive shifts.”
Silverstein says his servers don’t mind the system because it allows them to pinpoint their weaknesses. They learn how to boost sales — and therefore their tips — by talking up appetizers more, for example, or focusing on desserts. “We’re able, by sharing insight and by coaching, to improve their performance,” says Silverstein. “And some people just don’t have it.”
And what happens to those people — the ones who can’t climb up in the rankings? They usually end up leaving, Silverstein says. That’s what’s troubling to worker advocates who’ve encountered these kinds of productivity-maximizing scheduling schemes: Once you get knocked out of the money hours, it can be hard to recover.
“Most of what we understand is that it’s sort of a downward spiral,” says Rachel Laforest, director of the New York City-based Retail Action Project. “If you didn’t reach your goals, or if you have a particularly temperamental manager, they could just put you in an area of the store that doesn’t allow you to meet that quota.”
Scheduling the best workers in the best time slots isn’t always done using complex algorithms like Dayforce or another market leader, Kronos (which declined to comment for this story). Rather, many managers do it the old-fashioned way, using their own discretion. Some worry that this can allow bias to creep into their decisions — especially when it’s difficult to correct for all the factors that might have impacted a staffer's results.
“Their raw sales outputs are impacted by external factors, like higher or lower sales numbers, how many people were working, who was working with them,” says Marshall Fisher, a professor at the University of Pennsylvania’s Wharton Business School who has studied workforce productivity systems. “If you’re teamed with a bunch of dodos, your sales will go up. That makes it hard for a retailer to gauge who are their most productive.”
“Nobody knows how to do this right. You have to be very careful, so in your attempt to have competition, you don’t destroy the workplace."
— Serguei Netessine, INSEAD professor
Aside from questions of fairness, it’s possible that pitting workers against each other could negatively impact team dynamics that might be important for overall performance — or incentivize workers to pressure customers to the point of irritation. “Nobody knows how to do this right,” says Serguei Netessine, a professor at INSEAD who has worked with Fisher. “You have to be very careful, so in your attempt to have competition, you don’t destroy the workplace."
Indeed, the last couple of years have seen a backlash against some of the profit-maximizing scheduling practices that have made workers’ lives most difficult. In 2015, a spate of large retailers announced an end to on-call shifts, for example, where staff are asked to remain available just in case they’re needed, and “clopenings,” where employees are scheduled to both close a store late at night and open it again hours later. Meanwhile, some cities may require employers to give workers more advance notice of their shifts, and establish penalties for making changes at the last minute.
A bill proposed in Washington D.C., along with penalizing the use of on-call schedules, would also take aim at scheduling incentives by requiring retailers to offer shifts on a non-discriminatory basis. But some experts are reluctant to prohibit retailers from using this kind of strategy, which is already becoming more prevalent as on-demand platforms allow workers to win more business through gaining higher customer ratings.
"One of the functions of a good manager is to know who’s the most productive employee,” says Joan Williams, the director of the Center for WorkLife Law at Hastings College of Law. “It depends whether it’s used as an innocuous practice to reward the most productive employees, or whether it’s used very unfairly, to starve somebody you don’t like. And yet if it’s not abused, it’s sort of the way of the world."