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Posts Tagged ‘Human resources’

We have posted in the past on how the burrito-chain Chipotle has increased the rate at which it moves customers through its restaurants, or as an article on Quartz terms it, its burrito velocity (Chipotle continues to refine the science of burrito velocity, Apr 21). The numbers are pretty remarkable.

Over the first three months of 2014, the US Mexican-food chain saw an average increase of seven transactions per hour at both peak lunch and dinner hours—12 to 1pm and 6 to 7pm, respectively. On Fridays, one of its busiest days of the week, Chipotle fielded 11 more customers per hour at lunchtime on average across its stores, a roughly 10% increase. …

Over the first three months of 2014, the US Mexican-food chain saw an average increase of seven transactions per hour at both peak lunch and dinner hours—12 to 1pm and 6 to 7pm, respectively. On Fridays, one of its busiest days of the week, Chipotle fielded 11 more customers per hour at lunchtime on average across its stores, a roughly 10% increase.

So how do they accomplish this increase in speed? (more…)

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What’s the right mix of workers and machines in making cars? According to Bloomberg, Toyota has been re-thinking that question and moving to shift more work back to people (‘Gods’ Make Comeback at Toyota as Humans Steal Jobs From Robots, Apr 7).

Inside Toyota Motor Corp.’s oldest plant, there’s a corner where humans have taken over from robots in thwacking glowing lumps of metal into crankshafts. This is Mitsuru Kawai’s vision of the future.

“We need to become more solid and get back to basics, to sharpen our manual skills and further develop them,” said Kawai, a half century-long company veteran tapped by President Akio Toyoda to promote craftsmanship at Toyota’s plants. “When I was a novice, experienced masters used to be called gods, and they could make anything.”

These gods, or Kami-sama in Japanese, are making a comeback at Toyota, the company that long set the pace for manufacturing prowess in the auto industry and beyond. Toyota’s next step forward is counter-intuitive in an age of automation: Humans are taking the place of machines in plants across Japan so workers can develop new skills and figure out ways to improve production lines and the car-building process.

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Part of the beauty of Uber is that the payment process is all automated. Once your ride is complete, the firm bills the credit card they have on file, minimizing the time it takes to wrap up your trip; there is no fussing over payments and tips with the driver. But how should the driver be paying Uber? The driver after all is dependent on Uber to match them with riders. Currently, the drivers pay (effectively) by sharing their fares with the company. However, the Economist argues that such an arrangement is inefficient (Pricing the surge, Mar 29).

There is some evidence Uber’s surge pricing is improving taxi markets. The firm says drivers are sensitive to price, so that the temptation to earn more is getting more Uber drivers onto the roads at antisocial hours. In San Francisco the number of private cars for hire has shot up, Uber says. This suggests surge pricing has encouraged the number of taxis to vary with demand, with the market getting bigger during peak hours.

However, the inflexibility of Uber’s matchmaking fee, a fixed 20% of the fare, means that it may fail to optimise the matching of demand and supply. In quiet times, when fares are low, it may work well. Suppose it links lots of potential passengers willing to pay $20 for a journey with drivers happy to travel for $15. A 20% ($4) fee leaves both sides content. But now imagine a Friday night, with punters willing to pay $100 for a ride, and drivers happy to take $90: there should be scope for a deal, but Uber’s $20 fee means such journeys won’t happen.

Despite the revenues a matchmaking fee generates, it may not be Uber’s best strategy. A fixed membership charge is often firms’ best option in two-sided markets. By charging drivers a flat monthly fee Uber would generate revenue without creating a price wedge that gets in the way of matches. Since stumping up cash might put infrequent divers off, they could be offered a cheaper category of membership. Uber should keep its surge pricing in place. But to make the market as big as possible, and really revolutionise taxi travel, it might need to retune its fees.

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I have become increasingly taken with the question of what constitutes a good job. Various parts of operations in many industries have become automated over time and that trend will continue. But firms will still need people. Some production steps will be sufficiently nuanced or require too much dexterity that using a robot is (at least for now) impossible. Other setting like retail will favor resources who can move more or less seamlessly between restocking shelves to checking out customers. So what do these jobs look like? Unfortunately, the answer can be fairly grim.

The Atlantic has an article written by an ex-Politico reporter who lost his job and ended up (mostly out of desperation) working at sporting goods store (My Life as a Retail Worker: Nasty, Brutish, and Poor, Mar 11) and found the experience rather dehumanizing.

Of course, I had no idea what a modern retail job demanded. I didn’t realize the stamina that would be necessary, the extra, unpaid duties that would be tacked on, or the required disregard for one’s own self-esteem. I had landed in an alien environment obsessed with theft, where sitting down is all but forbidden, and loyalty is a one-sided proposition. For a paycheck that barely covered my expenses, I’d relinquish my privacy, making myself subject to constant searches.

“If you go outside or leave the store on your break, me or another manager have to look in your backpack and see the bottom,” Stretch explained. “And winter’s coming—if you’re wearing a hoodie or a big jacket, we’ll just have to pat you down. It’s pretty simple.”

When he outlined that particular requirement, my civil-rights brain—the one that was outraged at New York Mayor Michael Bloomberg’s stop-and-frisk policy and wounded from being stopped by police because of my skin color—was furious. …

I’m not sure why—perhaps out of middle-class disbelief or maybe a reporter’s curiosity—I pressed the issue. Seriously: I have to get searched? Even if I’m just going across the street for a soda, with no more than lint in my pockets? Even if you don’t think I stole anything?

Stretch shrugged, unconcerned. Clearly he’d been living with this one for a while.

“Yeah, it’s pretty simple. Just get me or one of the other managers to pat you down before you leave.” (more…)

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Having an accurate forecast of store traffic is an important part of setting staff levels. This is particularly true when converting store visits into sales depends heavily on consulting with in-store personnel. But how can a store build a good forecast? According to Businessweek, satellite imaging is a possible tool (The Most Powerful Sales Tool at Lowe’s: Satellites, Feb 26).

Lowe’s said on Wednesday that it has been gauging traffic at its almost 1,900 stores from space, scanning satellite images of its parking lots to find out how many shoppers it can expect at every hour of every day. It has also started syncing its parking lot observations with actual transaction counts to see how many people drove away without making a purchase.

The space snooping is a particularly great way for Lowe’s to manage its workforce, scheduling surges in floor staff when parking spaces are about to become hard to come by.

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Uber is an interesting company. While you might argue that their business model is based solely on ignoring the existing regulatory structure of the taxi industry, they certainly have brought innovation to a staid market. They have gotten a lot of attention for the surge pricing program but it is also worth noting that they are doing something novel on the capacity management side of things. Uber does not employ it drivers. Instead, it deals with drivers as independent contractors. In particular, it does not schedule drivers the way, say, a city bus service would. The bus service can tell drivers when and where they are working. Uber can’t do that. It has to offer an incentive for drivers to be available when demand will be high. At the same time, it basically promises its customers that they won’t have to wait long for a ride. Obviously, surge pricing is part of this. Uber takes a fixed percentage of the fare. So if the fare is consistently 50% higher at rush hour, there is a clear reason to be willing to drive at rush hour.

But more generally there is a question of what is it like to drive for Uber. That gets to an interview with John Pepper (What happened when Boloco founder John Pepper became an Uber driver, boston.com, Feb 7 — with a hat tip to my sister for sending this to me). Pepper was the CEO of Boloco, a regional burrito chain, until he had falling out with his board. He then starting driving for UberX. UberX is the Uber service more or less anyone can get into. It competes with Lyft and Sidecar and is premised on people driving their own, standard vehicles. (In contrast, other Uber offerings are for black car service and require a sufficiently lux vehicle and a commercial driver’s license.) Pepper may have quit his job but he doesn’t mean he has to be doing this to put food on the table. He talks about dropping his kids off at a private school and then picking an Uber customer in his Tesla. What makes this interesting is that he brings the perspective of a person who for many years ran a business that hired lots of lower wage workers. Here are some of his interesting observations.

Q. Did you sign up because you wanted to learn about Uber?

A. Whatever business I do next, there’s a lot to learn from their model. Wherever possible, they leverage skills we already have– people already know how to drive. They set very, very clear expectations as to what constitutes success, and then they follow through with the metrics. There are no stories [from drivers] — they don’t want to hear why this customer was wrong, or that customer was crazy. There are these things that are rigid and effective, but I think they could really effect the world of restaurants and retail. …

Q. You write a lot about the ratings that customers give drivers, and how they made you pretty anxious.

A. Right now, the review process of employees is pretty broken in corporate America. Most of us have read Jack Welch’s book about how GE was so diligent about ranking people. But it’s hard to give fair and just performance appraisal. At Uber, they’re not evaluating drivers in that way. The drivers are being evaluated by someone who sees the full experience from start to finish. There’s no conversation to have, no discussion. It’s very compelling. People know moment to moment that they’re being evaluated. It becomes a norm, not a stress point. The good people surface to the top, and the people who can’t deliver consistently good service don’t make it. But they definitely expect the customers to weed out the bad drivers. …

Q. Does it feel like it would be a good job?

A. It’s very free. You can do nine hours, and stop on your own time, and not work the next day. There’s value to that flexibility. They’re guaranteeing $20 an hour at times, and I happened to make about that even when there wasn’t a guaranteed rate. I worked when I wanted to, and didn’t work when I didn’t want to. That sounds pretty good compared to working at a fast food restaurant, making $10, and not being very in control of your life.

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There has been a lot written recently about the state and future of making stuff in the US. Just in the past month, Strategy & Business has touted new technology and software as a way forward for American manufacturing (America’s Real Manufacturing Advantage, Jan 20) while Steven Rattner, the administration’s former Car Czar, took the New York Times pooh-poohing talk of a revitalized manufacturing base (The Myth of Industrial Rebound, Jan 25). As Rattner sees it, whatever boost there has been in manufacturing has been inconsequential and not beneficial for workers.

But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent on huge public subsidies. Most important, in order to compete with China and other low-wage countries, these new jobs offer less in health care, pension and benefits than industrial workers historically received. …

This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga, Tenn., in 2011, the company was hailed for bringing around 2,000 fresh auto jobs to America. Little attention was paid to the fact that the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.

With benefits added in, those workers cost Volkswagen $27 per hour. Consider, though, that in Germany, the average autoworker earns $67 per hour. In effect, even factoring in future pay increases for the Chattanooga employees, Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).

This all gets us to a different New York Times on Harley Davidson that describes changes the firm made to save itself (Building a Harley Faster, Jan 28). What is interesting is that Harley’s approach differs fundamentally from either of the approaches above. They are relying on humans over widespread automation and working with their existing, unionized workforce as opposed to hightailing it to a location with cheaper labor. (more…)

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Back in May I was at a conference and a colleague was giving me grief for having so many posts related Zeynep Ton‘s work on how retailers treat their workers. Today we are going back to that well because Ton has a new book out, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits. Here is the author giving an overview of her thesis.

The basic premise is that there is a coherent strategy that firms can execute that works well for both its investors and customers while creating desirable, good jobs for its front-line employees. Furthermore, this does not depend on charging customers a premium. Indeed, her focus is on low-cost retail and she discusses several retailers that price quite competitively despite treating their employees quite well. Said another way, the fact that, say, Wal-Mart offers crummy jobs is a choice on its part, not an absolute necessity for being a low-cost player.   (more…)

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There have been several things written over the last couple of years about working conditions in Amazon fulfillment centers. (See, for example, here, here, and here.) Now we have a BBC report complete with hidden-camera video of what it is like inside a fulfillment center.

If you prefer to read, you can also check out “Amazon workers face ‘increased risk of mental illness’” (Nov 25).

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How do you feel about tipping? Are you happy to reward a well-done job or do you have more of a Mr. Pink attitude toward gratuities?

A pair of recent Slate articles got me thinking about tipping. The first is pretty straightforward and makes the case that tipping at restaurants should just be banned (Tipping Is an Abomination, Jul 9).  The argument is that the practice is bad for customers since it leads to uneven treatment and bad for workers since it allows employers to pay absurdly low wages. But what happens when a restaurant simply eliminates tipping? That is the topic of the second article written by a former restauranteur who did just that (What Happens When You Abolish Tipping, Aug 14). In lieu of tipping, the restaurant added an 18% service charge to the check. Thus it pricing was more like an auto service station that breaks out its labor charges from the cost of parts.

The primary reason for the switch was to have greater equity between the front and the back of the house.

We made this change because we wanted to distribute the “tip” revenue to our cooks as well as our servers, making our pay more equitable. Servers and cooks typically made similar base wages—and minimum wage was the same for both jobs—but servers kept all the tips, which could often mean they were taking home three times what the cooks made, or more. In California at that time, it was illegal to distribute any tip money to cooks. (Recent court rulings in the Western U.S. have loosened that restriction somewhat). By replacing tipping with a service charge, we were legally able to redirect about a quarter of that revenue to the kitchen, which reduced the income disparity and helped foster unity on our team.

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