Wal-Mart (NYSE:WMT) just announced that its limited test of a new resource-scheduling system will now be implemented throughout its organization. Rather than basing employee schedules on historical store traffic data, demand data will be provided up-to-the-minute. Planning ahead might be a thing of the past for many workers, as predictable work shifts are replaced by ever-changing schedules, and even on-call availability.
Wal-Mart says that the preliminary testing showed good results, with happier customers and shorter checkout lines. The company got all of that without increasing its staff, instead using current employees more effectively. Saving operational costs while improving customer service? That sounds like a surefire way to riches untold.
But there's a downside here, and not a small one.
What happens to these employees as their steady work turns into an on-again, off-again lottery? Wal-Mart employs 1.3 million Americans, or about 1% of the nation's workforce. There's bound to be a hefty portion of this very large population that can't adjust to an unstable schedule, or to the erratic paychecks that follow.
What happens if employee turnover suddenly skyrockets? Can every store fully replenish its staff with new hires off the street? Those replacements need training and won't be up to speed for some time. That's bad for customer service. And I assume you'd have to lower the hiring standards when you weed out anyone who needs a steady schedule. Again, bad.
I haven't even talked about the public-relations fallout yet. Wal-Mart already has a bad name in many communities because of the way its stores tend to move in and quickly knock local businesses out of commission. Forcing thousands of hard-working store employees out of their seemingly secure jobs won't look good at all. Add in severance costs and job-search efforts, and there's a real dollar cost, too.
But it seems like Wal-Mart thinks the benefits will outweigh all of those costs. It's not alone, either -- other retailers like Payless Shoesource (NYSE:PSS) and RadioShack (NYSE:RSH) have already taken Wal-Mart's lead and signed up for similar workforce-management programs.
I'm all for efficiency, but there has to be a middle ground here. Maybe workers could sign up for this type of schedule on an opt-in basis, leaving those who need stability where they are today and reaping at least partial benefits from the program elsewhere. You could argue that accepting this change would be worth at least a small pay raise -- you're asking the worker to do more for the company, and just the customer benefits alone should be worth something. If this thing works as advertised, Wal-Mart could see some real same-store sales improvements going forward.
Forcing the new deal on about a million people smacks of George Orwell's 1984, to be frank. Big Brother Walton will tell you where you need to be, but not in advance. Just do what the Kronos (NASDAQ:KRON) system tells you to do after consulting its IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ) machines, and everything will be double-plus good. Maybe even gooder.
Further Foolishness:
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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always the goodest.
