North America Council, 1981: Supermarket executives were very much aware of the productivity problem in 1981. However, formal productivity improvement programs were rare. The typical approach consisted of “watching the numbers,” with sales per man hour being the key figure. The implicit and usually unwritten objective is to keep this ratio in line with their historical pattern. In practice, this meant seeking to offset wage increases with reductions in overall labor costs.
Objectives for productivity improvement were also typically informal. Even firms that attempted systematic planning recognized that it would be difficult to obtain lower ratios without hurting service levels.
State of the Art Productivity Improvement in the Supermarket Industry
Currently, the responsibility for maintaining labor-to-sales ratio lies with line management. There is typically no one person accountable for productivity improvement, though larger firms do have personnel specializing in productivity. Most firms do not have explicitly stated productivity improvement goals, and executives think in terms of improving productivity through automation and implementation of industrial engineering standards and work scheduling. Technology is generally viewed as the ultimate answer to productivity problems, but specific automation plans are rather vague, with scanning flagged as something to explore.
Although most executives look first to automation, more attention is given to lowering labor costs through industrial engineering standards and work scheduling. Focus is less on improving work methods than on assigning employees to existing tasks more efficiently. Still, problems with productivity improvement are largely attributed to employee motivation. Most executives are concerned about the general attitude of employees, who are seen as being more externally oriented than job oriented. Projects intended to give employees a better sense of direction and a more job-oriented focus are being implemented in companies.
Cost reduction and industrial engineering techniques are perceived as going hand in hand. In contrast, efforts to enhance motivation, while considered crucial, seem to stand apart. The assumption is that motivation is desirable in general and is necessary in particular to overcome employee resistance and apathy to industrial engineering techniques and managerial control. While the state of the art of productivity improvement does not differ greatly from that of many other service industries, it is not at the forefront of new developments. Specifically, there are two major shortcomings with the industry’s response. The first is that the industry does not approach productivity in terms of a planned strategy. The second, and related, problem is that the industry employs a piecemeal approach to most projects. Motivational techniques are used side-by-side with industrial engineering techniques, but there is no common rationale or even coordination between the two. In sum, the industry’s cost reduction orientation has not allowed supermarkets to develop integrated programs guided by an overall productivity improvement strategy.
The Cost Reduction Strategy
Cost reduction is so ingrained in a supermarket management’s thinking that it seems not so much a strategy for productivity improvement as the only strategy. To see this, we must turn to the basic concept of productivity. A business is a system which transforms various inputs into some output. The productivity of a system is the amount of output produced by the input. One way of raising productivity is to decrease the amount of input relative to output. This is the cost reduction strategy. Another way of raising productivity is to increase input in such a way as to increase output proportionally more. The cost reduction strategy is founded on two premises: capital equipment can be favorably substituted for labor, and employees can be treated as equipment, even if they cannot actually be replaced by equipment.
The industrial engineering methods associated with cost reduction follow directly from those twin premises. Jobs must be engineered for efficient performance. In fact, industrial engineering hinges on the idea that any job can be broken into three parts: the content of individual tasks, the method prescribed for doing each task, and the combination of tasks into a job. Industrial engineers design the “best method” for doing a job by simplifying its content. The employee is trained in the method, and the performance level (standard) resulting from the use of the method is determined. Pay and supervision are used to ensure that the employee does in fact operate according to design.
The cost reduction strategy has proved to be a valid approach to productivity improvement. It has been employed most extensively in manufacturing industries, where opportunities have been greater for automation and method improvement due to the routinary nature of work. The common perception is that the supermarket industry has lower productivity because it has not been able to emulate manufacturing’s cost reduction strategy. Yet, cost reduction efforts have been useful in the supermarket industry. In many cases, industrial engineering techniques have led to labor savings, though there is little evidence that cost reduction could ever be as successful in the supermarket industry as it has been in manufacturing. Nor has the actual substitution of equipment for employees in the supermarket been analogous to automation in manufacturing. At supermarkets, equipment does not replace the employee or change his/her role.
The Use of Non-Industrial Engineering Techniques
The first step in moving away from a simple reliance on cost reduction to improve productivity is to realize that non-industrial engineering techniques are available and useful to increase employee input rather than substituting for it. Because they are oriented toward employee contribution, the so-called behavioral science techniques are well suited to the supermarket environment. Almost all employees in this environment directly impact the customer. Subsequent sections seek to make this point of view clear by focusing on seven specific techniques at the forefront of behavioral science development.
Job Design
Job design refers to organizing the structure of work activities. As a behavioral science technique, the idea has been to use the work itself to motivate employees. Put succinctly, the core assumption of the job design technique is that what is done affects how well it is done. Job design is guided by three general assumptions about the motivational factors of meaningfulness, personal responsibility and knowledge of facts. Meaningfulness requires that job content must be seen as worthwhile by the employee. Personal responsibility requires that the employee be accountable for work outcomes. Knowledge of results requires that employees know how effectively they are performing. They must see the impact of what they do.
The procedures used in job design are as flexible as the concept itself. Still, the process should begin with a diagnostic phase, in which employees are required to assess their jobs in five dimensions: skill variety, task identity, task significance, autonomy and feedback. These dimensions relate to the motivational factors of meaningfulness, personal responsibility and knowledge of facts. Once employees’ needs and perceptions are diagnosed, the design phase begins, guided by five job enlargement and enrichment principles:
- Form a Natural Unit of Work: If employees do not feel involved with their jobs, rating them low on task identity and significance, there should be changes to the connection of the tasks performed.
- Combine Tasks into a Large Module of Work: If employees feel unchallenged, rating their job low on skill variety, task complexity should be changed.
- Establish Client Relationship: If employees feel no one “cares” about what they do, rating their job low on autonomy and feedback, efforts should be made to establish client relationships.
- Delegate Planning: If employees feel like robots and rate their job low on autonomy, skill variety and task identity, delegating planning should be considered.
- Open Channels of Communication: If employees don’t know how well they are doing their jobs and rate their jobs low on feedback, communication channels should be designed into tasks.
Job design has been discussed and researched more than any other behavioral science technique. It is one of the most logical ways of affecting employee performance. Changes must be made on the basis of careful diagnosis of what employees will respond to, tailoring job design to particular groups. In general terms, it should be noted that job design runs against the grain of the organization. Everyone thinks of jobs as inviolate. A person does the job he/she is hired to do. Breaking this mindset is at the heart of job design.
Participatory Incentive Plans
Most pay systems are based on job evaluations, while pay ranges are determined by the labor market. Adjustments within the range based on job evaluations are then made to reward good performance. Yet, most companies acknowledge that their system is weak in relating pay to performance. The objective of participatory incentive plans is to use the administration of pay to increase productivity. Several new procedures are being used to introduce participation into pay systems. There is also renewed interest in comprehensive participatory incentive plans.
Skill evaluation is one procedure used to introduce greater participation. People are paid for their abilities rather than their performance. The key to whether skill evaluation pay plans work, of course, is the connection of skill to performance. A second procedure is to give employees control over when they receive pay increases. A third procedure for injecting greater participation is cafeteria-style fringe benefits. Employees are allowed to choose among fringe benefits, including the option of taking cash instead. Comprehensive plans do more than just introduce participation into an incentive plan. They attempt to build the plan on participation, turning it into an integral part of incentive systems.
Objective Setting Programs
Objective setting involves the specification of significant but attainable goals for employee performance. Objective setting systems are designed to give employees guidance as to how their performance fits company needs. The core idea behind it is that, even if the employee is highly motivated, he must have some frame of reference for distinguishing acceptable from unacceptable performance. Objectives serve to give meaning to behavior: they enable the employee to know whether his/her performance is good or bad.
Objective setting programs are typically implemented through the notion of management by objectives (MBO) as a performance appraisal technique. There are as many MBO methods as there are organizations that use it. Overall, they are based on several core principles:
• Formulation of clear, concise statements of objectives;
• Development of realistic action plans for the attainment of goals;
• Systematic monitoring and measuring of performance and achievement, and
• Corrective actions necessary to achieve the results planned.
An intensive effort is necessary to prepare a company to follow MBO procedures, training managers before their implementation. Once MBO is implemented, objectives are derived from organizational goals so that they “cascade” down through the hierarchy from the top, with a concise statement of the company’s core purpose. Derivative objectives are then developed for each major department and, subsequently, for their subunits. Appraisal procedures should be planned for employee development, as well as assessment. Some experts suggest that an employee’s performance and salary should be discussed in separate interviews. Otherwise, employees tend to think only about their salary and not about how their performance can be improved or how their individual performance goals relate to company objectives.
The disadvantage of MBO lies in the bureaucratic red tape created by linking it to the appraisal process. For many companies, formalized MBO programs have become a sham. They are treated as “paperwork.” Many companies are considering separating objective setting and appraisal. It seems likely that clearly formulated objectives, which give employees a perspective to view their performance in terms of company needs, cannot help but raise productivity. Goal setting can be an important mechanism for coordinating tasks vertically through the organization.
Flexible Work Scheduling
No decision is more basic than that of scheduling employees’ time. For many years, the norm has been fixed, set scheduling, typified by the nine-to-five workday. Variable work scheduling has only been done in industries such as retailing and manufacturing, where the nature of the business demands it. Since the early 1970s, however, there has been growing interest in flexible work schedules. The hallmark of flexible scheduling is that the employee has some choice over when he spends time at work. The core idea is that allowing employees some choice over scheduling improves their attitude towards work. This choice allows them more latitude in planning their own affairs and is thus of inherent value.
Flexible labor scheduling seeks to use scheduling to attack a broad range of performance problems. Flexibility is added to the schedule determined by management – either by systematic or more informal methods – so that employees have some range of choice within the overall confines of the schedule. Given that this choice has the effect ascribed to it, scheduling can then help to improve performance and quality levels. A wide variety of procedures have been proposed for flexible work scheduling, including, initially, compressed work weeks, employee-chosen starting time, and a procedure called “flexitime.” In this option, “core times” are established for employees’ jobs. Other times are designated as flexible periods that employees can schedule at will. This concept can be implemented in any scenario. Even where there is a systematic work schedule for optimally allocating people to tasks, there is usually some flexibility with fixed tasks which do not depend on the workload. This flexibility can be transferred to employees.
Some version of flexible work scheduling can be adapted to the scheduling of any company. Most of the disadvantages, especially with flexitime, appear to be easily surmountable. Communication would seem to be a problem, but experience suggests that it actually improves: employees are forced to coordinate their activities better. Supervision worries many firms, but, again, experience shows that employees respond with a sense of responsibility. Flexible work scheduling does not hold the promise of dramatic productivity boosts; yet, it can be a useful tool to encourage productivity.
Behavioral Supervisory Training
Supervisory training has long been the mainstay of most companies’ efforts to improve
productivity. It has spawned the rise of training departments in companies and an entire industry directed at supplying training materials. For all this activity, supervisory training has had difficulty in making any impact on supervision. Most supervisors continue to supervise according to their personal style even after training. This has led to the development of training programs aimed directly at changing supervisory behavior. The core assumption of behavioral supervisory training methods is that it is difficult – if not impossible – to alter supervisors’ attitudes towards people. It is more effective to train supervisors behaviorally, promoting behaviors that reinforce good employee performance.
The basic premise of reinforcement is that the behavior that leads to positive results tends to be repeated. Another premise is that the behavior that is reinforced negatively tends not to be repeated. When individuals are negatively reinforced, they learn what not to do, but they don’t learn what they should do instead. In addition, they may begin to resent or dislike their supervisors, which would lead to poor interpersonal relationships. Behavior training creates a system in which supervisors are programmed to shape employees’ performance. By responding positively to good performance, supervisors increase their frequency. This system reduces the need for supervisors to think about the interpersonal side of their jobs. Their attention can focus on the work itself.
There are two aspects of behavioral training methods. The first is deciding what reinforcing behaviors to train supervisors in. Verbal praise and recognition are ideal reinforcing behaviors – simple for supervisors and positive for employees. The other is deciding on the training procedure itself. Two procedures have proven useful: programmed instruction and modeling. In programmed instruction, the supervisor is guided through a set of questions which proceed in step fashion, so that he/she learns as he/she responds to the questions. This procedure has several advantages:
- it involves the employee by requiring an active response;
- it is self-paced and individualized;
- it can be updated at will and
- it requires careful specification.
Modeling, on the other hand, relies on films or videotapes to portray the actual sequence of behaviors involved in supervisory reinforcement. The advantages of modeling include a clear statement and demonstration of the behaviors to be applied, practice through role playing, and planning by supervisors to transfer behaviors to their jobs.
Although behavior training has yet to prove itself fully, it seems to offer an alternative to the quagmire of traditional supervisory training. There has been a tendency, however, to confuse the modeling procedure with the reinforcement approach. Modeling is well suited for learning reinforcement behavior. However, programmed instruction can be just as effective. The real innovation is in behavioral training itself.
Autonomous Work Groups
It is generally recognized that supervision alone is not enough to control employee performance. Employees will always be controlled more by their peers than by any authority figure. This realization has led to autonomous work groups. This technique uses peer control to enhance performance. It relies on the notion that the social (peer) system of an organization must conform to its technical (task) system. This idea has been popular in Europe for some time. It is now emerging in the United States under the rubric of sociotechnical theory. This theory holds that both the social and technical aspects of the workplace must be integrated and mutually supportive of one another. Company output is a function of both systems, and discrepancies between the two systems result in lower output. The notion of norms is very helpful in sociotechnical theory understanding. Norms are the expectations that people have about how each other should behave.
The autonomous work group method is a way of forcing social norms into correspondence with technical requirements. In such groups, workers form a team that shares work planning and execution. These groups are typically small, with eight to twelve members. The only requisite is that it be large enough to cover a full set of tasks and small enough for members to interact face-to-face.
Teams decide who will do what tasks, while most members learn each other’s jobs. Direct supervision may be reduced, with supervisors playing more of a supportive, service role. Pay systems may also be group- instead of individual-geared. Skill evaluation plans seem especially suited for autonomous working groups.
Several procedures have been used to help the process or norm creation. One is to use surveys to diagnose pre-existing norms. These norms are then pointed out to the group at task trouble-shooting meetings. Another procedure is that of “team building,” a program intended to train groups to become effective problem-solving units, smoothing interactions among team members so that they can adjust to their tasks.
Autonomous work group methods are often confused with job design. The two do go together: it is hard to implement autonomous work groups without also engaging in job design. However, job design can be implemented without autonomous work groups. The latter is the broader, more comprehensive method. It should be noted, though, that autonomous work groups do not necessarily represent a major organizational change. The term “group” is not limited to employees who work on highly related tasks. All employees sharing common norms constitute a group. Autonomous work groups are essentially just a way of capitalizing on the interaction that already exists among workers. This method is much more usable than it sounds.
Selecting Behavioral Science Techniques
The supermarket environment presents a formidable challenge to any management program. Operations are relatively loosely organized; work loads are highly variable; union practices can be restrictive. Nonetheless, with one exception, all of the techniques described can be adapted to it. The one exception is flexible scheduling. There is probably not enough latitude in store operations to permit such flexibility, although it could be applied to stocking crews, for example. In addition, three of the techniques should only be undertaken if management is really committed to major change. Job design, incentive systems and autonomous group programs are all intended to have a fairly sweeping effect on the workforce.
Thus, it is wise to think about these techniques in terms of two options. Management may decide that simply fine-tuning existing workforce activities is enough, resorting to objective-setting or behavioral training programs. Alternatively, management may decide that broader, more fundamental changes in labor activities are required. In this case, job design, incentive systems and autonomous work groups can be used to get workers to do things that they are not already doing. Regardless of whether management opts for redirection or more basic change, however, behavioral science techniques should be selected on the basis of an overall strategy of productivity improvement.
Once the blinders imposed by the cost reduction view are removed, the market investment strategy appears to be a most natural way of managing employee inputs. In the past, behavioral science techniques have most often been employed for rather ill-defined purposes like reducing workers’ resistance, enhancing job satisfaction or improving communications. Yet, these techniques have evolved to the point that they can be useful to most supermarket firms if they are approached as market investments. Such a strategy is the missing link in most applications. Behavioral science techniques are not ends, but means. They need to be undertaken with a clear idea of what the business’ investment in them is expected to accomplish.
A market investment strategy calls for a specific statement of objectives, specifying kinds of new employee input and the output increase expected to result from that input. Once a market investment strategy has been formulated in terms of such objectives, it is necessary to specify a means of getting employees to perform the necessary activities. This is where behavioral science techniques come into the picture. They provide ways of getting employees to work towards business objectives, rather than to merely perform some limited tasks. Hence, the key to using behavioral science techniques lies in developing market investment objectives for utilizing employees. The usefulness of these techniques can only be seen by looking beyond cost reduction’s constrained horizon.