Best Buy

I read an article recently about Best Buy called, "Smashing the Clock". The article states that Best Buy has totally rearranged how they work. The company used to be run by hard-nose executives that thought success only came about by hard work and long hours. Now they have reenergized the company with a so-called new experiment. They call this experiment, "ROWE". It stands for, "result-only work environment". They are not the first to come up with this idea, but they are the first to be successful at it. The whole idea is to give employees the freedom they deserve. They are not evaluated on how many hours they put in a day, but on their performance only. Some employees are able to work at home, or come in the office only for a few hours a day. The only thing that matters is that the job is done efficiently and effectively. Once the job is complete, the rest of the day is theirs to do what ever. How would it be?
Best Buy did not want to hit a plateau like most companies. The article stated that most large companies fail to grow with inflation because their employees fail to work as hard as before. They see their success and basically stop performing. This experiment has really worked for Best Buy. Since starting the experiment, the employees have become more productive and happier with their jobs. In return, Best Buy is not hitting a plateau, but are finding themselves more effecient. This is why they are the nation's leading electronic retailer. However, the question I find myself asking is "Will Best Buy's employees be able to continue to self motivate and how can Best Buy help them stay motivated?". Other companies have tried this before and failed.


joseph said...

I would say it is a matter of change. In order to keep people motivated you have to keep trying new management models like Best Buy did, but you also have to give them some time to start working. You have to let to culture evolve so that people start embracing it. On the other hand sometimes you need to revolutionize you management model so that you can overcome the natural resistance to change. So I would say it will only work well for a while until they need something new to help boost performance.

Jessica said...

I think that the business model offered at Best Buy meets the needs of many people. In our class, several students felt that the idea of a business based on such principles would be a good fit for them. If several business students like the idea, then Best Buy is doing something right. It makes it easier for them to recruit the well trained and educated. I think that the model will have continued success as long as it draws motivated business and IT students. The model is new and fresh and it fills the needs of current students.

bend said...

I think it is a great plan. The more control people have over their day and what they are doing the better they are going to like work. It is also going to attract the best workers to this environment and productivity and efficiency will continue to rise. People will be happier and success will be better.

Patrick said...

This plan and new form of work day will work for Best Buy if they recruit the right kind of people. It is a matter of job fit. There are a lot of people who would not fit because they lack self-motivation or they prefer a more structured workweek. Those who have a "get in and get it done" approach would succeed at Best Buy.

Dr. Tufte said...

-1 on Joseph for a spelling error.
This practice doesn't have a name (in economics) that I'm aware of, but it combines aspects of efficiency wages with piece-rate.

It is an efficiency wage in that you are given some resources (time and pay) to do a job, and you get to keep what you don't use. It is like piece-rate in that your compensation is proportional to your work (if you get the job done, you get more time off).

As such, in order to work well, it requires that monitoring come with a high probability of big penalties for transgressions (as in efficiency wages), and a reasonable certainty that you can measure productivity (as in piece-rate).

Matthew said...

Dr. Tufte said: “As such, in order to work well, it requires that monitoring come with a high probability of big penalties for transgressions (as in efficiency wages), and a reasonable certainty that you can measure productivity (as in piece-rate).”

I like Dr. Tufte's point that for this system to work, productivity needs to be accurately measured. I think this is very difficult to do, since productivity can be qualitative, and very difficult to measure. Reading the article, I discovered that Best Buy is measuring productivity by amount of sales. I feel this is a very inefficient way to determine productivity. Amount of sales is a great measure of sales for sales reps, but how can it measure those with jobs in advertising, management, janitorial services, etc.? I feel that this kind of system is bound to have slackers who are sliding under the radar, profiting from the hardest workers.

William said...

Dr. Tufte,
I think that this new way of working is only going to become more and more popular. People are more focused on just getting the work done no matter if that means coming in late hours or doing it at your home. As long as the work gets done and productivity is increased how you get it done is up to you. It seems that this generation is more focused on getting paid by productivity rather than the amount spent at the workplace. Managers must identify these trends and adjust to them.

Dr. Tufte said...

I like both Matthew and William's comments.

So I guess all you future students need to be spending a lot of time in Dave Berri's classes trying to figure out how to measure productivity more sharply.