Should Prime Working Hours be Used as a Retail Sales Reward?

Ann Taylor Stores, a women's clothing retailer, has implemented a new computer scheduling system that allocates the most - and the most desirable - working hours to the employees with the strongest sales, according to an article in the October 1 issue of Knowledge@Wharton.  Employees with lower sales, in turn, are assigned fewer and less desirable hours.

Prime working hours as a reward for retail sales workers?  I can appreciate the attractiveness of finding alternative ways (beyond cash) to drive performance and, according to the article, these systems can help improve sales productivity.  But I'm guessing that it might be a short-term success with some genuine pitfalls over the longer-term.

Ultimately, perhaps, this system has the desired effect of shaking out the less talented workers and leaving behind those with the most sales competency.  While this churn is happening, however (and I would imaging that it happens on an ongoing basis as the workforce turns over), you have the likelihood of serious morale issues as employees who are struggling to achieve sales targets see their schedules shift and their hours drop, presumably until either their expenses or their frustration levels drive them to quit.  Where does coaching and training come into play here?  Or does it?  As the article points out, information technology is no substitute for sound management.  Wharton marketing professor Stephen J. Hoch opines on this point:

Human capital management systems must be sold to workers as a valuable tool for all employees and should be accompanied by training sessions. It should motivate everybody, not just the best sellers. It would be nice to couple it with training to bootstrap people who are not as effective as the top performers.

And, in the longer-term, what would this do to a retailer's employment brand out in the labor market?  We may be in a buyer's labor market right now, but that hasn't always and won't always be true.  And what about the customer experience, given the system in which the store workers are operating?

I am all for pay-for-productivity and the exploration of alternative awards, but this particular situation strikes me as variable pay taken to its most extreme, for a segment of the workforce who is least able to bear it.

What do you think?

Comments

[Rachel - I Hate HR]

Talk about counterproductive. Let's give the people with the highest sales the best sales hours thus ensuring that the other people never have a chance to raise their sales numbers.

[Wally Bock]

Good post, Ann. I did a post on the Ann Taylor system a week or so back.
http://blog.threestarleadership.com/2008/09/26/tools-for-fools-iii.aspx

My understanding of the system is that its adjustment horizon if very short. Therefore it rewards those who sell more in a short term environment that favors lots of small sales and not the kind of relationship building and sales building that the best salespeople use in this industry. Therefore, even as a "more time for those who sell" system it rewards the wrong kind of selling behavior.

Then there's the point you make so well. In most retail clothing there are two kinds of salespeople. Some are full time. Others are part-time.

The part-timers have different motivations. Some are there for the discount. For some the sales job provides extra income to supplement another job or a spouse's job.

In most cases part-times seem (no science here, just experience) value being able to work when and (to a lesser extent) how much they want as a key benefit. That benefit is not addressed at all by Ann Taylor's system.

Ann Taylor does not pay commission to its sales people. At store that do pay commission, part-time sales people will also be concerned about whether they're scheduled in prime selling hours.

I think good compensation systems are one part of treating people fairly and reward individual contribution. It seems to me that systems like Ann Taylor's ATLAS assume that all sales associates are the same and that scheduling incentive can get those people to perform better.

Good managers think differently. They allow for individual differences and reward productivity.

[Chris Young]

Nice post Ann, and great analysis of the potential long term ramifications of this rewards plan. I shared your post with my readers in my weekly Rainmaker 'Fab Five' blog picks of the past week which can be found here: http://www.maximizepossibility.com/employee_retention/2008/10/the-rainmaker-f.html

Be well Ann!

-Chris Young

[Ann Bares]

Rachel:

No argument here - let us count the ways this is ultimately unproductive.

Wally:

Great post - and good points. The time horizon issue, which wasn't prominent in the K@W article, is really problematic - as you point out. Truly great salespeople will see this ... and likely flee. What you're left with those you are happy to chase the transactional sale. Nice long-term strategy.

Thanks for sharing your thoughts - and the link back to your post.

Chris:

Thanks for the recognition at the Fab Five. Readers, follow Chris's link for the best picks of the week - Chris has done the legwork for you!

[atinka Burcin]

I have been told that a part time associate can't be sent home after two work hours. If business is poor, associates should be kept on for at least three hours. Is there any truth in this or does it vary by the story?