Smashing the Clock

No schedules. No mandatory meetings. Inside Best Buy's radical reshaping
of the workplace

By Michelle Conlin
BusinessWeek Online

One afternoon last year, Chap Achen, who oversees online orders at Best
Buy Co., shut down his computer, stood up from his desk, and announced
that he was leaving for the day. It was around 2 p.m., and most of
Achen's staff were slumped over their keyboards, deep in a post-lunch,
LCD-lit trance. "See you tomorrow," said Achen. "I'm going to a matinee."

Under normal circumstances, an early-afternoon departure would have been
totally un-Achen. After all, this was a 37-year-old corporate comer
whose wife laughs in his face when he utters the words "work-life
balance." But at Best Buy's Minneapolis headquarters, similar incidents
of strangeness were breaking out all over the ultramodern campus. In
employee relations, Steve Hance had suddenly started going hunting on
workdays, a Remington 12-gauge in one hand, a Verizon LG in the other.
In the retail training department, e-learning specialist Mark Wells was
spending his days bombing around the country following rocker Dave
Matthews. Single mother Kelly McDevitt, an online promotions manager,
started leaving at 2:30 p.m. to pick up her 11-year-old son Calvin from
school. Scott Jauman, a Six Sigma black belt, began spending a third of
his time at his Northwoods cabin.

At most companies, going AWOL during daylight hours would be grounds for
a pink slip. Not at Best Buy. The nation's leading electronics retailer
has embarked on a radical--if risky--experiment to transform a culture
once known for killer hours and herd-riding bosses. The endeavor, called
ROWE, for "results-only work environment," seeks to demolish decades-old
business dogma that equates physical presence with productivity. The
goal at Best Buy is to judge performance on output instead of hours.
 
Hence workers pulling into the company's amenity-packed 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. No
impression-management hustles. Work is no longer a place where you go,
but something you do. It's O.K. 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.

Best Buy did not invent the post-geographic office. Tech companies have
been going bedouin for several years. At IBM, 40% of the workforce has
no official office; at AT&T, a third of managers are untethered. Sun
Microsystems Inc. calculates that it's saved $400 million over six years
in real estate costs by allowing nearly half of all employees to work
anywhere they want. And this trend seems to have legs. A recent Boston
Consulting Group study found that 85% of executives expect a big rise in
the number of unleashed workers over the next five years. In fact, at
many companies the most innovative new product may be the structure of
the workplace itself.

But arguably no big business has smashed the clock quite so resolutely
as Best Buy. The official policy for this post-face-time,
location-agnostic way of working is that people are free to work
wherever they want, whenever they want, as long as they get their work
done. "This is like TiVo for your work," says the program's co-founder,
Jody Thompson. By the end of 2007, all 4,000 staffers working at
corporate will be on ROWE. Starting in February, the new work
environment will become an official part of Best Buy's recruiting pitch
as well as its orientation for new hires. And the company plans to take
its clockless campaign to its stores--a high-stakes challenge that no
company has tried before in a retail environment.

Another thing about this experiment: It wasn't imposed from the top
down. It began as a covert guerrilla action that spread virally and
eventually became a revolution. So secret was the operation that Chief
Executive Brad Anderson only learned the details two years after it
began transforming his company. Such bottom-up, stealth innovation is
exactly the kind of thing Anderson encourages. The Best Buy chief aims
to keep innovating even when something is ostensibly working. "ROWE was
an idea born and nurtured by a handful of passionate employees," he
says. "It wasn't created as the result of some edict."

So bullish are Anderson and his team on the idea that they have formed a
subsidiary called CultureRx, set up to help other companies go
clockless. CultureRx expects to sign up at least one large client in the
coming months.

The CEO may have bought in, but there has been plenty of opposition
inside the company. Many execs wondered if the program was simply
flextime in a prettier bottle. Others felt that working off-site would
lead to longer hours and destroy forever the demarcation between work
and personal time. Cynics thought it was all a PR stunt dreamed up by
Machiavellian operatives in human resources. And as ROWE infected one
department after the other, its supporters ran into old-guard saboteurs,
who continue to plot an overthrow and spread warnings of a coming
paradise for slackers.

Then again, the new work structure's proponents say it's helping Best
Buy overcome challenges. And thanks to early successes, some of the
program's harshest critics have become true believers. With gross
margins on electronics under pressure, and Wal-Mart Stores Inc. and
Target Corp. shouldering into Best Buy territory, the company has been
moving into services, including its Geek Squad and "customer centricity"
program in which salespeople act as technology counselors. But Best Buy
was afflicted by stress, burnout, and high turnover. The hope was that
ROWE, by freeing employees to make their own work-life decisions, could
boost morale and productivity and keep the service initiative on track.

It seems to be working. Since the program's implementation, average
voluntary turnover has fallen drastically, CultureRx says. Meanwhile,
Best Buy notes that productivity is up an average 35% in departments
that have switched to ROWE. Employee engagement, which measures employee
satisfaction and is often a barometer for retention, is way up too,
according to the Gallup Organization, which audits corporate cultures.

ROWE may also help the company pay for the customer centricity campaign.
The endeavor is hugely expensive because it involves tailoring stores to
local markets and training employees to turn customer feedback into new
business ideas. By letting people work off-campus, Best Buy figures it
can reduce the need for corporate office space, perhaps rent out the
empty cubicles to other companies, and plow the millions of dollars in
savings into its services initiative.

Phyllis Moen, a University of Minnesota sociology professor who
researches work-life issues, is studying the Best Buy experiment in a
project sponsored by the National Institutes of Health. She says most
companies are stuck in the 1930s when it comes to employees' and
managers' relationships to time and work. "Our whole notion of paid work
was developed within an assembly line culture," Moen says. "Showing up
was work. Best Buy is recognizing that sitting in a chair is no longer
working."

ONE GIANT WIRELESS KIBBUTZ 
Jody Thompson and Cali Ressler are two HR people you actually don't
hate. They groan over cultish corporate slogans like "Build Superior
Organizational Capability." They disdain Outlook junkies who double-book
and showboating PowerPointers. But it's flextime, or Big Business'
answer to overwork, long commutes, and lack of work-family balance, that
elicits the harshest verdict. "A con game," says Thompson. "A total
joke," adds Ressler.

Flexible work schedules, they say, heap needless bureaucracy on managers
instead of addressing the real issue: how to work more efficiently in an
era of transcontinental teams and multiple time zones. They add that
flextime also stigmatizes those who use it (the reason so few do) and
keeps companies acting like the military (fixated on schedules) when
they should behave more like MySpace (social networks where real-time
innovation can flourish). Besides, they say, if people can virtually
carry their office around in their pockets or pocketbooks, why should it
matter where and when they work if they are crushing their goals?

Thompson, 49, and Ressler, 29, met three years ago. The boomer and the
Gen Xer got each other right away. When they talk about their meeting,
it sounds like something out of Plato for HR, or two like minds making a
whole. At the time, Best Buy was still a ferociously face-time place.
Workers arriving after 8 a.m. on sub-zero mornings stashed their parkas
in their cars to foil detection as late arrivals. Early escapees crept
down back stairwells. Cube-side, the living was equally uneasy. One
manager required his MBAs to sign out for lunch, including listing their
restaurant locations and ETAs. Another insisted his team track its
work--every 15 minutes. As at many companies, the last one to turn out
the lights won.

Outside the office, Thompson and Ressler couldn't help noticing how
wireless broadband was turning the world into one giant work kibbutz.
They talked about how managers were mired in analog-age inertia, often
judging performance on how much they saw you, vs. how much you did.
Ressler and Thompson recognized the dangerous, life-wrecking cocktail in
the making: The always-on worker now also had to be always in.

The culture, not exactly Minnesota-nice, was threatening Best Buy's
massive expansion plans. But Ressler and Thompson knew their solution
was too radical to simply trot up to CEO Anderson. Nor, in the
beginning, did they feel they could lobby their executive supervisors
for official approval. Besides, they knew the usual corporate route of
imposing something from the top down would bomb. So they met in private,
stealthily strategizing about how to protect ROWE and then dribble it
out under the radar in tiny pilot trials. Ressler and Thompson waited
patiently for the right opportunity.

It came in 2003. Two managers--one in the properties division, the other
in communications--were desperate. Top performers were complaining of
unsustainable levels of stress, threatening business continuity just
when Best Buy was rolling out its customer centricity campaign in
hundreds of stores. They also knew from employee engagement data that
workers were suffering from the classic work-life hex: jobs with high
demands (always-on, transcontinental availability) and low control
(always on-site, no personal life).

Ressler and Thompson saw their opening in these two vanguard managers.
Would they be willing to partake in a private management experiment? The
two outlined their vision. They explained how in the world of ROWE,
there would be no mandatory meetings. No times when you had to
physically be at work. Performance would be based on output, not hours.
Managers would base assessments on data and evidence, not feelings and
anecdotes. The executives liked what they heard and agreed.

The experiment quickly gained social networking heat. Waiting in line at
Best Buy's on-site Caribou Coffee, in e-mails, and during drive-by's at
friends' desks, employees in other parts of the company started hearing
about this seeming antidote to megahour agita. A curious culture of
haves and have-nots emerged on the Best Buy campus, with those in ROWE
sporting special stickers on their laptops as though they were part of
some cabal. Hance, the hunter, started taking conference calls in tree
stands and exchanging e-mails from his fishing boat. When Wells wasn't
following around Dave Matthews, chances were he was biking around
Minneapolis' network of urban lakes, and digging into work only after
night had fallen. Hourly workers were still putting in a full 40, but
began doing so wherever and whenever they wanted.

At first, participants were loath to share anything about ROWE with
higher-ups for fear the perk would be taken away or reversed. But by
2004, loftier and loftier levels of management began hearing about the
experiment at about the time opposition to it grew more intense. Critics
feared executives would lose control and co-workers would forfeit the
collaboration born of proximity. If you can work anywhere, they asked,
won't you always be working? Won't overbearing bosses start calling you
in the middle of the night? Won't coasters see ROWE as a way to shirk
work and force more dedicated colleagues to pick up the slack? And there
were generational conflicts: Some boomers felt they'd been forced to
choose between work and life during their careers. So everyone else
should, too.

Shari Ballard, Best Buy's executive vice-president for human capital and
leadership (an analog title if ever there was one), was originally
skeptical, although she eventually bought in. At first she couldn't
figure out why managers needed a new methodology to help solve the
work-life conundrum. "It wasn't hugs and smiles," she says of Ressler's
and Thompson's campaign. "Managers in the old mental model were totally
irritated." In the e-learning division, many of Wells's older co-workers
(read 40-year-olds; the average age at Best Buy is 36) expressed
resentment over the change, insisting that work relationships are better
face-to-face, not screen-to-screen. "We have people in our group who are
like, `I'm not going to do it,'" says Wells, who likes to sleep in and
doesn't own an alarm clock. "I'm like, `that's fine, but I'm outta
here.'" In enemy circles, Ressler and Thompson are known to this day as
"those two" and "the subversives."

Yet ROWE continues to spread through the company. If intrigued
nonparticipants work for progressive superiors, they usually talk up the
program and get their bosses to agree to trials. If they toil under
clock-watchers, they form underground networks and quietly lobby for
outside support until there is usually no choice but for their boss to
switch. It was only this past summer that CEO Anderson got a full
briefing, and total understanding, about what was happening. "We
purposely waited until the tipping point before we took it to him," says
Thompson. Until then he wasn't well-versed on the 13 ROWE commandments.
No.1: People at all levels stop doing any activity that is a waste of
their time, the customer's time, or the company's money. No.7: Nobody
talks about how many hours they work. No.9: It's O.K. to take a nap on a
Tuesday afternoon, grocery shop on Wednesday morning, or catch a movie
on Thursday afternoon.

That's the commandment Achen was following when he took off that day to
see Star Wars Episode III: Revenge of the Sith. Doing so felt abnormal
and uncomfortable. Achen felt guilty. But Ressler and Thompson had told
him to "model the behavior." So he did. It helped that Achen saw in ROWE
the potential to solve a couple of nagging business problems. As the
head of the unit that monitors everything that happens after someone
places an order at BestBuy.com, including manually reviewing orders and
flagging them for possible fraud, Achen wanted to expand the hours of
operation without mandating that people show up in the office at 6 a.m.
He had another issue. One of his top-performing managers lived in St.
Cloud, Minn., and commuted two and a half hours each way to work. He and
Achen had a gentleman's agreement that he could work from home on
Fridays. But the rest of the staff didn't appreciate the favoritism. "It
was creating a lot of tension on my team," says Achen.

RECORD JOB SATISFACTION 
Ressler and Thompson had convinced Achen that ROWE would work. Now Achen
would have to convince the general manager of BestBuy.com, senior
vice-president John "J.T." Thompson. That wasn't going to be easy.
Thompson, a former General Electric Co. guy, was as old school as they
come with his starched shirt, booming voice, and ramrod-straight
posture. He came of age believing there were three 8-hour days in every
24 hours. He loved working in his office on weekends. At first, he
pushed back hard. "I was not supportive," says Thompson, who was
privately terrified about the loss of control. "He didn't want anything
to do with it," says Achen. "He was all about measurement, and he kept
asking me, `How are you going to measure this so you know you're getting
the same productivity out of people?'"

That's where Achen's performance metrics came in handy. He could measure
how many orders per hour his team was processing no matter where they
were. He told Thompson he'd reel everyone back to campus the minute he
noticed a dip. Within a month, Achen could see that not only was his
team's productivity up, but engagement scores, or measuring job
satisfaction and retention, were the highest in the dot-com division's
history.

For years, engagement had been a sore spot for Thompson. "I showed J.T.
these scores, and his eyes lit up," says Achen. Thompson rushed to roll
out ROWE to his entire department. Voluntary turnover among men dropped
from 16.11% to 0. "For years I had been focused on the wrong currency,"
says Thompson. "I was always looking to see if people were here. I
should have been looking at what they were getting done."

Today, Achen's commuting employee usually comes in once a week. Nearly
three-quarters of his staff spend most of their time out of the office.
Doesn't he worry that he loses some of the interoffice magic when they
don't gather together all day, every day? What about the value in
riffing on one another's ideas? What about teamwork and camaraderie?
"You absolutely lose some of that," he says. "But what we get back far
outweighs anything we've lost."

Achen says he would never go back. Orders processed by people who are
not working in the office are up 13% to 18% over those who are. ROWE'ers
are posting higher metrics for quality, too. Achen says he believes
that's due to the new office paradox: Given the constant distractions,
it sometimes feels impossible to get any work done at work.

Ressler and Thompson say all the Best Buy groups that have switched to
the freer structurereport similar results. Meanwhile, the two have other
big plans for the company. Last month they launched a new pilot called
Cube-Free. Ressler and Thompson believe offices encourage the wrong
kinds of habits, keeping people wrapped up in a paper, prewireless
mentality as opposed to pushing employees to use technology in the
efficiency-enhancing way it was intended. Offices also waste space and
time in an age when workers are becoming more and more place-neutral.
"This also sets up Best Buy to be able to completely operate if disaster
hits," says Thompson. Work groups that go cube-free will be able to
redesign their spaces to better accommodate collaboration instead of
working alone.

Next year Ressler and Thompson plan to pilot their boldest move yet,
testing ROWE in retail stores among both managers and workers. How
exactly they will do this in an environment where salespeople presumably
need to put in regular hours, they won't say. And they acknowledge it
won't be easy. Still, they are eager to try just about anything to help
the company slash its 65% turnover rates in stores, where disgruntlement
is common and workers form groups on MySpace with names like "Best Buy
Losers Club!"

Best Buy has transformed its workplace culture in a remarkably short
time. Isn't it also true that ROWE could unravel just as quickly? What
happens if the company hits a speed bump? Competition isn't getting any
less intense, after all. Best Buy sells a lot of extended warranties, an
area where both Wal-Mart and Target are eager to undercut the
electronics retailer on price. What's more, the current boom in
flat-panel, digital TVs will peak in a few years.

If Best Buy's business goes south, human nature dictates that the people
who always believed the clockless office was a flaky New Age idea will
see an opportunity to try to force a hasty retreat. Some at the company
complain that productivity is up only because many Best Buyers are now
working longer hours. And some die-hard ROWE opponents still privately
roll their eyes when they see Ressler and Thompson in the hallway.

But it's worth remembering that most big companies fail to grow at the
rate of inflation. That's true in part because the bigger the company
gets, the harder it is to get the best out of each and every employee.
ROWE is one of Best Buy's answers to avoiding that fate. "The old way of
managing and looking at work isn't going to work anymore," says Ressler.
"We want to revolutionize the way work gets done." Admit it, you're
rooting for them, too.

4 responses total.

It will be interesting to see if they stand by their culture if a real
competitor crops up.  I don't consider Target or Wal-Mart any real threat on
the electronic gadget level.

That was quite an interesting article, Jeanne. 

It is funny because I was just talking to a co-worker today about this. 
I was saying that most of our productivity can be easily measured. We 
have a goal where doing X cases per week is meeting our goal and X+5 is 
exceeding our goal and X+10 is far exceeding our goal. I was thinking 
that if they ever were to say that anyone who reaches X+10 could stop 
working for the week, they would probably find a lot more people 
getting that goal. Especially since for the past two years, the only 
reward for far exceeding goals has been an additional 1%-2% pay raise. 

It has also been a source of personal frustration at a lot of jobs I 
have had but especially so at my current job. Our managers here like a 
lot of "busy work" but it drives me nuts to watch people doing work 
that has no purpose at all but to make people look busy. And what 
cracks me up is that when I do busy work, I get all kinds of 
complements about how hard I am working but if I were to increase my 
actual work output (which btw, is VERY quantifiable as I am sure you 
know) while making it look like I am not working hard, I get in 
trouble. I know they dont do it on purpose but in a way, they punish 
people for getting too good at their jobs. But that program at Best Buy 
*rewards* people for being good at their jobs. Let's face it, people 
who know what they are doing tend to do things faster. So they get 
rewarded with more leisure time. Cool!

I am particularly interested to see how this goes at Best Buy since 
they are a retail company much like the one I work for. If this is 
something that they can make work in their stores and if it lowers 
their costs/boosts productivity then there is chance that other 
companies will copy the model. 

I also would be very interested to see if this sort of program done at 
a store level would increase customer's experiences at the stores. I 
mean, I have long believed that if a company treats its employees well, 
they generally treat their customers well. I have noticed this to be 
true to some degree in that I have noticed that shopping at the local 
Trader Joe's is a lot of fun (and I know someone who used to work there 
and the staff are treated pretty well according to him). I have noticed 
that the staff at Costco are always helpful and nice. One of the 
reasons I stopped shopping at Walmart and Sams Club was because the 
service at those places wasnt very good. 

I am also interested in just how they will work this kind of management 
style with a retail environment. I mean, it isnt just that a certain 
amount of business needs to be done in a day or week or whatever. There 
always has to be at least one staff at a register when a store is open. 
What if they find that the times their store staff want to have off is 
the same time they want to have the most store staff? I know that if I 
managed a retail store, I would do the schedule in such a way that I 
would try to give most people the schedule's they want but there are 
always shifts that no one wants. So how are they going to do this and 
still have their stores staffed well enough? I cant wait to see that!

This article was a big discussion topic at an organizational development group
meeting last week.  

I would point out that the People's Food Coop was started as a bunch of worker
collectives:  cashiers collective, drive-to-Eastern-Market collective, herb
collective, soy collective, store-stocker collective.  Even though it was
retial, and all of us could choose our hours, the business survived and grew.

There is nothing about this self-organizing model of doing business that
forces failure.

Whether or not a large organization like Best Buy can make the transition is
a different question.

The interesting question for the OD types was slightly different:  This is
the first case that we know of where whole-scale change was driven from the
bottom up, and was hidden from c-level executives.  OD wisdome has been that
these changes have to have high-level champions to succeed.  

We are all watching closely to see if Best Buy's office culture can be
successfuly ported to a retail culture.  There seems to be evidence in both
directions:  That it can succeed, and that it can't succeed.

I will not step in to Best Buy as long as their method of providing
"services" is just pointing at the highest priced gadget and telling me
its the best, or best fits my needs. Best Buy's prices are so much
higher than everyone else's too. That would be fine if their service
added that much value to the product, but it doesn't. Salesmen on the
floor don't know the difference between progressive scan and interlaced
and will always tell you the gold-plated cables are the only acceptable
cables to buy, the other ones might *whisper*"Void your warranty, but
you didn't hear that from me"*whisper*.

Those frauds can SOD OFF. My money and I will be going over to Circuit City.

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