During this trip, I found out an interesting change in store policy. Apparently, Borders is enforcing a 55% Borders Rewards scan rate among its staff. This is a stronger way of enforcing the policy that the staff ask customers for their Borders Rewards card, then offer to sign them up for one. I do not know if this policy is codified, but it apparently comes up from somewhere in the ranks of Borders management/executives.
All of this is interesting in it of itself, and deserves a long, separate post. But I find it interesting that the company found it prudent to explicitly mandate that cashiers will be rated on whether or not they make a quota of 55% Borders Rewards scans. So, I'm going to flex my neophyte business policy muscles and analyze this policy. I'm doing this on admittedly little info, so if you have more information on the specifics, I'd be glad to hear it.
It's a tad long, so I'm going to outline my thoughts in an "executive summary" of sorts, which, knowing my luck, won't be read by any executive other than my immediate boss, who will wonder what the hell I'm doing wasting time on rather bland commentary of corporate policies.
----Summary------
Policy: Cashiers need to maintain at least a 55% Borders Rewards scan rate among customers.
Relevant characteristics of policy/other store policies:
- Percentages depend upon region - for example, Oregon has a policy of 35%.
- Failure to do so will result in being written up.
- Three write-ups, and you're out (fired).
- Customers should spend more than 5 minutes from the time they get in line to the time they are finished.
Why?
1. These tags track purchases. Better consumer demographics will help advertising/marketing divisions better design promotional campaigns targeted at the customer.
2. These data also help evaluate stores and profitability, and in particular, managers and regional directors that might be seeking advancement in the corporate hierarchy.
Potential Problems With Policy:
1. Write-up threat
Demoralizing
Punitive
2. Incentive to sign up individuals leads to longer lines
Contrary to policy of efficiency
3. Odd measure of productivity
Why it will be effective
Seattle's Best can get away from this, because many of its entry-level employees are not seeking a career - they are seeking a way to make pocket money during college.
Common enemy can, paradoxically, improve group cohesion
Innovation regarding application processing
-----End Summary------
First, let's ask the question:
Why would Borders want to implement this policy?
1. These tags track purchases. Better consumer demographics will help advertising/marketing divisions better design promotional campaigns targeted at the customer.
---details of above point, skip if lazy/rushed---
I've always been fascinated by these little membership cards. A long, long time ago, a company could only use aggregate sales, perhaps on a store basis, perhaps by depending upon regional accounting, on what consumer behavior looked like. With the advent of the UPC symbol (1974) and scanning technology, this process became incredibly efficient, but remained limited to per-store behavior melded with local demographics.
As recently as a few years ago, it would be possible to shop in major supermarkets that lacked a membership card. Today, however, nearly every retailer makes use of membership cards (and their handy miniaturized companions, keytags) to record purchases by consumer. For the first time in history, it might be possible to gather timely, specific information on the consumption of a large fraction of the customer base. Granted, I don't know whether Gmail shares my specific profile with Borders (Asian, 24 years old, United Methodist, etc.). Google in general probably has enough information on me (and most everyone in America) that they know me better than I know myself.
But even without that information, Borders can compile the number of customers per store, same-store visits, correlations between cafe use and book purchases, etc.
---END details of above point, skip if lazy/rushed---
2. These data also help evaluate stores and profitability, and in particular, managers and regional directors that might be seeking advancement in the corporate hierarchy.
This point is rather obvious - headquarters wants to promote the individuals with the best potential to extend their effectiveness to a larger number of stores at the regional or national level. The best way to do this is to measure whether they are, in fact, helping the company.
Potential Problems With Policy:
1. Write-up threat
By most measures, this is a pretty stupid way to get 1/3 fired. Whether or not a person signs up for the card depends on many factors - whether they expect to be back, whether they mind toting around a little tag with marginal benefits, whether they appreciate hauling out their existing membership out of their pocket, etc. Little, if any of this, has to do with the given cashier.
The fairly punitive nature of the penalty for not making a quota on something that, technically, does not improve the company's profits is pretty demoralizing. Never mind that "the enemy" (another SB) is already highly ranked as one of the 100 best companies to work for. If Borders wants its employees to feel like a "family" or at least a minimally Hobbesian contest of profit and power, then it needs to do a better job of not handing down policies that most employees would find mean and stupid.
2. Incentive to sign up individuals leads to longer lines
Contrary to a stated policy (and good business sense) of efficiency, signing up for a Borders Rewards card leads to an additional wait. This is absolutely deadly with long lines. (This cafe, I am told, is the second busiest in the state, making this a particularly relevant point.) As someone who spent about 15 minutes of precious Christmas break time trying (unsuccessfully) to get a Blockbuster membership in West LA, I can say that it's infuriating to be the person putting up with the application. My friends Jake and Ed can tell you that it's doubly annoying to be the person waiting for the person waiting for the form.
A customer cradling a book in line will be more likely to wait in line, in part because of the endowment effect. (See behavioral economics.) It's not clear to me that customer waiting in line for coffee or food experiences less of an endowment effect, since they don't have to physically give up an object they've had in their possession (in fact if not in deed). This may be offset by the fact that consumables might pose more immediate utility than durable objects (like books) - depending on how much the customer seeks immediate gratification, they may or may not be more likely to wait in line for a drink than a book.
In any event, filling out the form not only decreases efficiency, but also may lead to a net loss in sales if people are fed up and leave.
3. Odd measure of productivity
There is, of course, the question as to whether or not this should be a good measure of productivity. What Borders is doing is measuring the effectiveness of its employees in getting people to sign up such that Borders HQ can measure the effectiveness of their employees/stores.
What?
That's right. In the obsession for quantitative measure of progress, Borders may in fact be using a handy number as a proxy for effectiveness. Yes, there are tangible benefits for maximal participation in Borders Rewards. Yes, there is a component of effort on the part of the individual employee, and this is a way of measuring it. But seriously, some manager is going to be worrying about whether or not the change in the percentage of employee Borders Rewards numbers on the right side of the quota is positive and of sufficient magnitude. You're talking about a one-two-three-fourth order separation from the actual job of selling stuff.
In physics, the first derivative of position is velocity. The second derivative of position is acceleration. Few people know the technical name of the third derivative of position (rate of change in acceleration), because it is not relevant for most applications. The third derivative of position is known, properly, as jerk.
I'd say the analogy couldn't be more appropriate.
But all sniping aside, the point is that anything that doesn't directly contribute to profits - including employee satisfaction (reduces turnover), customer satisfaction (increases market), and efficiency (decreases per unit costs) - probably doesn't belong in a good business.
Why it will be effective
Seattle's Best can get away from this, because many of its entry-level employees are not seeking a career - they are seeking a way to make pocket money during college. Seattle's Best can get away from this, because many of its entry-level employees are not seeking a career - they are seeking a way to make pocket money during college. If people get fired or leave because of this policy, there will be plenty of other young, cheerful baristas-in-waiting who are waiting for their chance.
It's not pretty, but it works.
There are some positive benefits to this, of course. Borders Rewards numbers will go up. Hatred of dumb management policies will lead to added group cohesion - by defining the other as the amorphous and distant "headquarters", it's possible to exploit in-group/out-group dynamics and create a better, closer team. This is also true because success for any one individual depends in large part upon getting enough regulars to sign up - that is, for all cashiers to do their best.
And in the end, this policy might spur innovative ways of improving the system to make it more effective. It doesn't take brilliance to conceive of keeping a Rewards Card handy to scan customers that don't have one, and then direct them down to an empty spot on the counter to fill out the application. This uses the obligation that has been created by "doing the customer a favor" by scanning the standby card and creating a situation where, in order to be self-consistent with prior commitments, the customer should move down the counter and fill out the info while their drink is being made.
Conclusion
In the end, the reason why this policy exists has as much to do with a principle of management/governance/leadership that is as old as time...
To be a prince, one must always be able to point to something that has been done to serve the body politic, though often doing nothing is more effective and desired than any possible policy.
- ME
A mid-level manager probably came up with this policy, which was stolen by his upper-management boss and pushed as a way to prove value to the company. Yay for leadership.
Anyway, I'm still sick. But I'll drink to Borders - not the company, but the people. Even on a down day, these folks are some of my favorites in the world.
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