ROWE Program at Best Buy

This document presents a discussion about the ROWE Program at Best Buy. Best Buy Co., Inc. is a specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada, China, Turkey and the United Kingdom. The company’s subsidiaries include Geek Squad, Magnolia Audio Video, Pacific Sales, and, in Canada operates under both the Best Buy and Future Shop label. Together these operate more than 1,150 stores in the United States, Puerto Rico, Canada, China, Mexico, and Turkey.

On March 9, 2009, Best Buy became the primary electronics retail store (online and bricks and mortar) in the eastern United States, after smaller rival Circuit City went out of business. Fry’s Electronics remains a major competitor in the western United States. Many locations feature in-store pickup, which can be arranged through the company’s website.

The Culture of Best Buy

Best Buy has embraced the use of social media to empower its employees and reaped massive productivity gains as a result. Traditionally, we associate companies like this with classic top-down management approaches. Top management points out that as their business challenge shifted from simply distributing product to ensuring customer delight under countless usage scenarios, only a method that tapped the wisdom of everybody made sense.

Three of the social media tools they use are: The ‘Loop Marketplace’ which replaces the suggestion box with a market where employees can submit and share ideas, and often get them funded. A prediction market which was apparently dead on in predicting Christmas sales, and an internal social network called Blue Shirt Nation which they use to solve corporate problems from how to increase use of the company’s pension scheme to changing IT systems.

The results: 40% more employees enrolled in the 401k pension scheme, millions of dollars saved on a new in-store IT system and employee turnover reduced by over 50%. Underpinning the success of these tools is a strong corporate culture and very visible support from the CEO. A strong culture is born from strong values that everyone can see embodied in the everyday words and actions of senior management.

The Best Buy’s values are: have fun while being the best, learn, from challenge and change, show respect, humility and integrity and unleash the power of our people.

Strong values are essential to guide employees for corporations who are serious about empowering the edge. This is also true in small companies, where having a strong positive culture is a big driver of success.  There are some differences at small companies; it is not usually necessary to have a written set of values and the culture will change more quickly as the business grows, but the same basic logic applies.

The approach to organizational change that the ROWE program illustrates

Best Buy used to be known for its killer hours, herd-riding bosses, and high turnover. Now it is home to a workplace revolution called ROWE, for “results-only work environment,” that seeks to demolish decades-old business dogma that equates physical presence with productivity. According to a recent article on ROWE in Business Week (“Smashing the Clock“), the goal of the program is to judge performance on output instead of hours spent at the office or in meetings.

In practical terms, ROWE lets Best Buy employees get up and leave in the middle of the workday to attend a matinee or Little League game. Workers pulling into the company’s headquarters at 2 p.m. aren’t considered late. Nor are those pulling out at 2 p.m. seen as leaving early. There are no schedules. No mandatory meetings. In short, work is no longer a place where you go, but something you do. As long as the work gets done and get’s done well, it’s okay to take conference calls while you hunt, collaborate from your lakeside cabin, or log on after dinner so you can spend the afternoon with your kid.

The crazy thing is that ROWE wasn’t authorized by the CEO, Brad Anderson, but began as a “guerilla” initiative nurtured by innovative employees that eventually transformed the company (to be sure, Anderson encourages such bottom-up, stealth innovation).

The results of ROWE speak for themselves: since the program’s implementation, average voluntary turnover has fallen drastically, while productivity is up an average 35% in departments that have switched to ROWE. Overall employee satisfaction is up too, according to the Gallup Organization, which audits corporate cultures.

The resistance that the ROWE program had to overcome

ROWE is not for every company (though ROWE consultants will insist it is!), but it can make a big difference in productivity and employee satisfaction in the firms that implement it. After a research, you would be surprised by resistance from some staff who appeared to be flexible and resilient. It is also amazing, how well this works in many of our areas. The goal is to have it work well everywhere and Best Buy is trying to get there.

Having migrations take place over two years is a challenge because staff are in so many different places in the change (some migrated, some not) but they have gained great skills in handling just about any issue that comes along. One surprise is the number of “converts” that we see: people who really didn’t like ROWE but have completely changed their minds.

Based on that research, we find out some “cons” of the ROWE program: for some people can be difficult to manage, besides that, employees who are not disciplined find it difficult to work in this type of environment and there is an internal push back from some employees.

Sources of stress that is apparent in the case

Although every company will respond to ROWE differently, the core tenets are unchanging and non-negotiable. Best Buy has developed and copyrighted the strategy that helps an organization overcome inertia and move forward. The strategy is based on three things: the power of time, the judgments that people make about time in the work environment, and how work needs to happen.

The approach may be radical, but it’s right on target for today’s employees, there is a real need for a flexible program such as this that eliminates stress and engages workers. On March 2010, a research took the emotional temperature of 400,000 U.S. employees annually and has found that stress is increasing. In 2006, 31% said they find it difficult to balance work and personal responsibilities, compared to 25% in 2005. Forty-three percent now think their workload is excessive, up from 39%, and 46% are bothered by excessive pressure on the job, up from 41%.

Best Buy clearly show concerns around stress, workload and work-life balance. This goes to the heart of what ROWE is addressing, says one of the logistics managers. But while employers need to be more flexible, they also should beware of letting employees become detached. With traditional telework, there are some risks that workers will feel less connected to the company. The goal should be to keep stress low and engagement high.

According to this, Best Buy has evidence showing companies that have taken care of their employees’ stress and engaged them in their work enjoy the biggest financial benefits. In contrast, companies that just get one of those right, for example, they engage employees, but stress them out, do not realize optimal results.

Has the organizational culture helped with the change?

Using ROWE, 80% of Best Buy’s corporate staff now come and go as they please as long as the work gets done on time. The premise of ROWE is that employees are paid for results rather than hours worked. This provides both freedom for employees and results for employers. ROWE is based on the assumption that employees will do more and better work when given the latitude to decide how and when it is done.

ROWE is employee controlled not management controlled. ROWE requires accountability and clear goals, while flextime requires policies and guidelines. ROWE has unlimited options and is fluid, while flextime has limited options and ultimately is inflexible. Most importantly, ROWE is based on the work and not the hours.

The concept of ROWE is a bit like college where you decide when and where to study and write papers. In most workplaces today, employees are treated more like grade scholars with strict policies on when to show up, where to sit, how to do the work and when to leave. No wonder recent graduates become disillusioned when entering the “real world.”

Now that aging Baby Boomers are mixing with Generations X and Y, it seems a perfect time to initiate a different approach to how work is performed. We certainly have the technology (teleconferencing, emailing, text messaging, and cell phone calling) to extend the workplace location and flexibility on when to do the tasks. Now it’s just a matter of will.

ROWE is not an entirely new concept. Piece work, where workers are paid a fixed rate for each unit produced or action performed, has been around for more than a century. And then there is performance-rated pay, where money is paid directly on how well a worker performs in the workplace. A commission-based sale is a form of this type of compensation.

Conclusions

ROWE builds upon other models to provide employees with more opportunities to do the job their own way and this can lead to greater employee engagement and higher productivity. But ROWE is not without its challenges. Measuring output for some jobs (overhead, administration) can be very difficult. Some people have a hard time working with others if they are not face-to-face. And overall management can be challenging.

Nevertheless, ROWE is proving to be effective returning an average of 35% increase in productivity while reducing voluntary turnover by as much as 90%. In addition, research by the Flexible-Work and Well Being Center at the University of Minnesota found that more ROWE employees than comparable employees:

• Have greater organizational commitment
• Report higher job satisfaction
• View the culture as family friendly
• Report increased job security

References

http://www.businessweek.com/magazine/content/06_50/b4013001.htm

http://www.jerm.com/2010/01/implementing-a-results-only-work-environment/

http://www.americanprogress.org/issues/2010/11/rowe111010.html

http://ebn.benefitnews.com/news/new-dawn-best-buys-rowe-brings-64150-1.html

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Conflict Resolution at General Hospital

This document presents a discussion about the conflict resolution at the General Hospital. Conflict happens daily, whether it happens individually or between two or more individuals. Conflict can be bad or good depending on how an individual or group respond and understand that conflict. Also, conflict depends on different perspectives.

When each person involved in the conflict needs something, all of them should make an effort to work this out. Each person becomes frustrated because he or she realized that he or she has to give up something that he or she likes or cannot obtain something that he or she desires.

Conflict and the need to manage it occur every day in organizations. But the conflict management refers to the diagnostic processes, interpersonal styles and negotiation strategies that are designed to avoid unnecessary conflict and reduce or resolve excessive conflict.

The Conflict

The General Hospital was founded in 1968. Over the last years, the rate of patient occupancy has dropped to 65 percent and the first measure that the CEO is considering regards the cost control to make some improvements in the organization. General Hospital’s CEO Mike Hammer believes that physicians are a major factor, but they are not interested in the role of the costs in determining the viability of the hospital.

In the past, Hammer tried to control physician-driven costs but all his attempts failed. Now, he hired a new chief operating officer, Marge Harding, who will make the entire job to cut some costs at this hospital. They have chosen to play the “good cop-bad cop” strategy with the doctors. However, looks like Ms. Harding has a biased vision over the physician’s role at the hospital. Her personal goal is become CEO within the next 5 years.

The first measure taken by Harding is to computerize the interpretation of EKG reading. By doing this, the hospital would save $100,000 in doctor’s salary over the next three years and provide nearly instantaneous results.

Without any prior research or practice, Harding signed a contract for one year and technicians were trained. Then, she fired the cardiologist who was doing the EKG interpretation and takes a plane to her vacation. However, on its first week, the new EKG interpretation system is incorrect in 25 percent of the reports. The Hospital might face legal liabilities from inaccurate readings, a factor that seems was not considered by Harding before she left.

Hammer and Harding keep their decision to stay with the new system but the physicians are furious not only because one of the staff was fired, but also because they were completely ignored before making any changes in the new EKG reading implementation.

The Conflict Management Styles in the Case

Choosing a conflict management style is important in many areas of life, especially in business and the workplace. Any manager or owner of a company will need to choose a conflict management style to handle problems between employees, as well as between an employee and the management.

From my point of view, ate the very beginning, Mike Hammer started with the collaborating style for conflict management. Using this method, he would sit down with the individuals involved in the issue, in this case the physicians and hear their concerns, as well as voice their own. Once each party has had a chance to have their say, the manager or owner would then try to find a solution that would make both parties happy if possible. If not, they would choose the solution that is best for the company.

Later on, Hammer and Harding were using the forcing style. Using this method, one would use their position as the manager or owner to make a decision regarding the conflict, no matter how the physicians feel about the situation. Without hearing everyone’s side or taking anyone’s feelings into account, the manager whose conflict management style is forcing will make his own decision in what would be best and that decision would not be up for discussion.

This style would not be best for those who are trying to work with their employees so as to be a leader who influences them and is looked up to by them because forcing will tend to alienate those who are affected by the decision and make them feel as if their thoughts and feelings are unimportant.

Finally, when the physicians complained about Harding firing Dr. Boyer to implement the new EKG system, Hammer uses the avoiding approach. Using this method, Hammer would completely ignore the conflict or issue at hand. Furthermore, Hammer would not take any steps to eliminate the conflict or issue. Like the accommodating conflict management style, avoiding can be very harmful to a business and set it on a downward slope.

This is because the employees will see this person of authority as someone who either does not care or someone who will not take action against them when they do something that is not good for the company, such as become habitually late with assignments or become sloppy and produce substandard work.

How General Hospital Can Use Teams to Address the Cost Reductions

Teamwork and cooperation are essential in an organization which aims to be effective and efficient, and not likely to be divided by conflicting factions. The best teamwork usually comes from having a shared vision or goal, so that leaders and members are all committed to the same objectives and understand their roles in achieving those objectives.

Important behaviors in achieving teamwork and minimizing potential conflict include a commitment by team members to share information by keeping people in the group up-to-date with current issues, express positive expectations about each other, empower each other publicly crediting colleagues who have performed well and encouraging each other to achieve results, building teams by promoting good morale and protecting the group’s reputation with outsiders. Finally, resolving potential conflict by bringing differences of opinion and facilitating resolution of conflicts.

How Hammer Can Use Negotiation Skills

Effective negotiation helps you to resolve situations where what you want conflicts with what someone else wants. The aim of win-win negotiation is to find a solution that is acceptable to both parties, and leaves both parties feeling that they’ve won, in some way, after the event.

There are different styles of negotiation, depending on circumstances.

Where you do not expect to deal with people ever again and you do not need their goodwill, then it may be appropriate to “play hardball”, seeking to win a negotiation while the other person loses out. Many people go through this when they buy or sell a house – this is why house-buying can be such a confrontational and unpleasant experience.

Similarly, where there is a great deal at stake in a negotiation, then it may be appropriate to prepare in detail and legitimate “gamesmanship” to gain advantage. Anyone who has been involved with large sales negotiations will be familiar with this.

Neither of these approaches is usually much good for resolving disputes with people with whom you have an ongoing relationship: If one person plays hardball, then this disadvantages the other person – this may, quite fairly, lead to reprisal later. Similarly, using tricks and manipulation during a negotiation can undermine trust and damage teamwork. While a manipulative person may not get caught out if negotiation is infrequent, this is not the case when people work together routinely. Here, honesty and openness are almost always the best policies.

The negotiation itself is a careful exploration of your position and the other person’s position, with the goal of finding a mutually acceptable compromise that gives you both as much of what you want as possible. People’s positions are rarely as fundamentally opposed as they may initially appear – the other person may have very different goals from the ones you expect.

A Strategy to Resolve the Problem

Even though renovations are in order, this should be a process which evaluates any and all cost reduction purposes for all the areas, not only addressed to physicians’ salaries. Also, the physicians who would like to stay at the General Hospital should understand the situation of this organization. With selfishness and arrogance, no one would get any benefit.

The “good cop – bad cop” strategy seems to be terrible. In a professional environment that approach is inappropriate. A manager cannot threat people as a way of negotiate about any situation. Marge Harding should change the approach. From the reading, I believe she is more focused on her long term career expectations, instead of the Hospital’s goals. That fact disqualifies her as an unbiased manager.

The EKG interpretation system should have been reviewed before being implemented. This fiasco proved the lack of knowledge of those who suggested this alternative procedure as a solution, instead of focus on the service the Hospital is supposed to provide.

Mike Hammer cannot brush off the physician’s team. Instead, he should explain the Hospital’s real situation. A manager who performs without explanation is using an authoritarian approach and he cannot be seen as a leader.

References

·         http://www.mindtools.com/CommSkll/NegotiationSkills.htm

·         http://library.findlaw.com/2001/Jan/1/130785.html

·         http://www.innovativeteambuilding.co.uk/pages/articles/conflicts.htm