January 3, 2007

Labor Optimization at Walmart: The Big Squeeze, Revisited

Back in July 2005 we blogged the way Walmart squeezes its vendors to achieve the lowest possible prices. Today we read in the Wall Street Journal (paid subscription required) that the behemoth retailer is instituting a computerized scheduling system that enables it to use the same squeeze tactics on its own employees. Now that's a shocker!

The plan involves moving workers from predictable shifts to a staffing pattern that is based on the number of customers in stores through the day and week. Workers may be asked to be "on call" to meet customer surges, or sent home because of a lull, resulting, of course, in less pay. The new systems also alert managers when a worker is approaching full-time status or overtime, which would require higher wages and benefits. Such individuals are red flagged - "descheduled" - so payroll costs remain as low as possible. Oh, the marvels of computerization! (I doubt the programmers at Kronos, who devised this system, are subject to similar payroll and benefit caps.)

What does this mean for Walmart workers? They might not know when or if they will need a babysitter or whether they will work enough hours to pay that month's bills. They might have trouble scheduling doctor appointments. Senior employees, whose hourly rates are higher, might find themselves scheduled for fewer and fewer hours. Rather than working three eight-hour days, someone might now be plugged into six four-hour days, mornings one week and evenings the next. Unless they live near the store, they're going to spend a lot more time commuting.

The benefits to the company are pretty obvious: lower payroll costs; less time spent on scheduling for local managers; and more people on the floor when you need them, especially during midday and evening shopping surges. The goal of "enhancing the shopping experience" will be readily achieved. As for the problems the new system creates for workers, Walmart apparently will just take their chances. As they say, if you want make wine, you have to crush the grapes.

Compensable "To and Fro"
By instituting this extreme version of flex scheduling, Walmart has inadvertantly opened the door to new workers comp liabilities. Normally, the "to and fro" commuting time for employees is not covered by workers comp. Your workday - and your comp coverage - begin when you arrive at the workplace. However, in most states there is an exception for "on call" workers. Because they have no set schedule, but must appear when called (or leave when no longer needed), workers comp coverage begins when they receive the call and head out to work and it continues when they are sent home. Their coverage includes the commute in both directions. Walmart may have succeeded in reducing the payroll, but they have significantly increased their workers comp exposures. (Given the management style at Walmart, they cannot be comfortable with the fact that commuting itself is totally unsupervised.)

I imagine that Walmart managers will not lose much sleep over this problem. Filing a claim for a work-related injury - whether it occurs onsite or off - is probably a daunting and perhaps even intimidating process. If this new scheduling system succeeds in lowering costs, it will surely be copied by others. Wall Street will love it. It's good for consumers, eternally in search of bargain prices. It's good for shareholders: lower payroll costs means higher profitability. Sure, it's tough on the marginally skilled workers trying to raise families and balance their own budgets. If they don't like it, they can go work for Target or Radio Shack (where they will find similar systems already in place).

| 3 Comments

3 Comments

I think this is something that would interest wal marts excess comp carrier and open up an already bubbling work comp claim nightmare.

We offer similar software as Kronos and find that there is good on the employee side as well. There have been numerous reports in the media about Walmart not paying employees for all of their time. Having biometric time clocks in place that can capture this information will help protect the employees. If the employees see less on their paycheck then what they see on a report of the hours they can access, then they can pursue an audit. Walmart just lost a payroll lawsuit in Pennsylvania worth $75 million and I believe employees are taking notice.

To be upfront, I happen to be associated with Asgard Systems, who are publishers of employee scheduling software. We are not the suppliers of Wal-Mart’s employee scheduling software and are on unaware of what product they are using.

Even if Wal-Mart (0r any employer) used a pencil and paper to produce their employee schedules, they might still implement policies and procedures that could be viewed as promoting their own corporate interests. The promotional literature that we provide regarding our product, does directly address organizational scheduling needs. However, such needs include taking the employees personal life into perspective as well. An example is the priority given to personal conflicting events such as night school, taking care of sick parents, weddings etc. Such issues are promoted at our website (www.asgardsystems.com), in our free trial version and our instructional movies. I am very pleased to say that, most employers express the need of having to contend with the humanistic aspects of managing an organization. Their needs dictate our products.

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About this Entry

This page contains a single entry by Jon Coppelman published on January 3, 2007 10:21 AM.

The quiet crisis of diabetes in the workplace was the previous entry in this blog.

News Roundup: Cavalcade of Risk, safety, traffic losses, fraud, and more is the next entry in this blog.

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