Best Buy’s Results Only Work Environment

Companies are always trying to improve the quality of work life for their employees while increasing productivity. Organizational researchers and managers are exploring various forms of alternative work scheduling to accomplish these goals. Flexible work schedules or “Flextime” has been one of the most popular alternatives to the nine to five, forty-hour workweek. Flextime divides the workday into two components: “core” or required hours and “flexible” non-core hours (McGuire, 1987, p47). One organization is revolutionizing flextime scheduling by throwing out the time clock altogether. Best Buy Co. Inc. (BBY) is instituting a Results Only Work Environment (ROWE) program allowing corporate employees to work wherever and whenever they want, as long as they complete projects on a timely basis (Jossi, 2007, p. 47). Results Only Work Environments are quickly becoming the future of Flextime scheduling in today’s digital age where work can be accomplished almost anywhere.

Results from ROWE have been encouraging, as productivity has increased an average of 35 percent within the first months of instituting the program. Voluntary turnover has dropped between 52 and 90 percent in three Best Buy divisions. These three divisions were otherwise unaffected by other company reorganizations or initiatives. Jody Thompson, co-creator of the ROWE program alongside Cali Ressler, has found that employee’s feelings of pressure and working too hard have changed. She states, “They feel happier about work. They feel more ownership of their work. They feel more clear about what they’re doing for the company, and they see it (ROWE) as a benefit that’s almost more important than any other (Jossi 2007, p. 48).” Thompson and Ressler were inspired to create ROWE after discovering that “flexible scheduling” was an oxymoron, requiring an even greater level of effort to keep track of people’s time than traditional scheduling. ROWE is a truly flexible scheduling system in every sense of the term, by allowing employees to work whenever and wherever they want.

Managers, on the other hand, did not easily accept the paradigm shift created by the ROWE program. They had to adapt to a new system where colleagues would not always be readily available on-site for discussion of a project. Fellow employees also had to learn to not judge their peers based on how others spent their time. This constant questioning of other’s work habits is known as “sludge” in the ROWE program. Ressler states that sludge “is engrained in corporate America, and once it is gone it really feels like a big weight has been lifted off people while allowing them to be the most productive person they can be (Jossi, 2007, p. 49).”

Effectively judging performance is another challenge presented by the ROWE program. What parameters can an HR manager use for employee reviews when hours on-site are not available? HR managers at Best Buy look for solutions suggested by employees and approved by line managers, rather than a by the book, top-down approach. ROWE has led to improved goal setting and outcome-based evaluations rather than evaluations based on less measurable criteria such as the amount of hours actively engaged in work. Additionally, ROWE inspires employees to develop a team-driven environment, where team members will pressure an underperforming colleague rather than managers. Underperforming employees are more easily distinguished based on results and productivity, instead of attendance (Jossi, 2007, p. 50).

Best Buy’s ability to successfully institute the ROWE program is only possible with the development of rich bandwidth and cell phone ubiquity, and the ROWE program is quickly gaining popularity among other companies. IBM uses a similar program where more than 42 percent of its 140,000-employee workforce operates from homes, clients’ offices or other locations. Employees are assessed on their personal contribution toward IBM’s goals rather than hours on the job. ROWE could quickly become the new standard of corporate America.

Jossi, F. (2007). Clockin Out. HR Magazine, 52(6), 46-50. Retrieved March 13, 2009, from Business Source Premier.

McGuire, J. B., & Liro, J. R. (1987). Absenteeism and Flexible Work Schedules. Public Personnel Management, 16(1), 47-60. Retrieved March 13, 2009, from Business Source Premier.

Ford’s Slumping Sales

Ford Motor Co. reported a 48% drop in U.S. light-vehicle sales during the month of February.  Declining sales are attributed to a lack of consumer confidence, resulting in declining showroom traffic at dealerships across the country.

Ford is the only member of Detroit’s Big Three automakers that has not accepted government assistance, during the current recession.  Ford also announced an intended 38% decline in output, during the second quarter, to keep pace with reduced demand.

The industry downturn has forced General Motors Corp. and Chrysler LLC to seek U.S. government assistance, and has also threatened the future of other auto industry standouts, notably Toyota Motor Corp.

“The economic and competitive environment remains challenging,” Ford sales executive Ken Czubay said today.

Sales fell to 99,050 compared to 192,178 a year earlier.

GM and Chrysler will most likely post similar numbers later today.

Data from WSJ. (Kingsbury)

AIG Company Profile

Key Facts

American International Group, Inc. (AIG) is a holding company engaged in a range of insurance-related activities in the United States and abroad.  Primary activities include both General Insurance, Life Insurance, and Retirement Services operations.  AIG is engaged in other activities including Financial Services and Asset Management.  AIG provides insurance, financial and investment products and services to both businesses and individuals in over 130 countries.

They currently have 116,000 employees and had $110 billion in net revenues with $6.2 billion in profits during 2007.  The company’s common stock has not payed a dividend since September 19, 2008.

AIG has a market capitalization of $1.13 billion with nearly 2.7 billion outstanding shares.

CEO

Edward M. Liddy is Chairman of the Board and Chief Executive Officer of AIG.  Mr. Liddy was Chairman and CEO of Allstate, another insurance company, from 1999 to 2006.  He led the initial public offering of Allstate from Sears, Roebuck and Co. in 1995.

Former AIG CEO Hank Greenberg resurrected the failing insurance giant in 1962, and expanded the business model outside of traditional Insurance Services for nearly 40 years before stepping down amid an accounting scandal in 2005.

Headlines

The federal government recently announced plans to overhaul its $150 billion bailout of AIG in a bid to save the beleagured insurer, but its plan will expose U.S. taxpayers to more financial risk.

The new deal, now the fourth bailout for AIG, is a reversal from the steep interest rates of the plan from September.  The government is eliminating interest terms, hoping to revive the company, which is expected to report a $60 billion quarterly loss on Monday.

The new bailout means that the company will most likely be forced to restructure in order to further reduce loses.

Under the latest plan, the U.S. will give AIG access to up to $30 billion in new cash from its Troubled Asset Relief Program, bringing the grand total of bailouts to approximately $200 billion, including funds given before TARP.

Officials believed they had little choice but to use the TARP money, particularly because they lack the authority to unwind a troubled firm such as AIG the way they can with failing banks.

This bailout will probably not be the last for AIG because government officials are prepared to continue assisting the ailing firm until it can shrink and dispose of  its failing businesses.

Major credit rating firms have given approval to the current deal, but stay posted for further dismal news regarding the ailing insurer.

Data quoted from Wall Street Journal. (Pleven)

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