FLEXIBLE SCHEDULING AT WAL-MART: GOOD OR BAD FOR EMPLOYEES?

About Wal-Mart
Background

1.4 million workers domestically

Largest private employer
Nations number one retailer in sales
$379 billion sales in 2008 and $476 in 2014
Reasons for being number 1
a) Low prices
b) Low operational costs
c) Continuous inventory replenishment system

The Case
Manual Work Scheduling System

Work shift scheduling for employees by store managers

Manually done
Takes full one days effort
Marginally beneficial to company
Scheduling based on
a) Current store promotions
b) Weekly sales data

Kronos Computerized Scheduling System

High processing speed in a matter of just hours

Managers can spend time in running stores effectively
Benefits of Kronos
a) Improved productivity
b) Higher customer satisfaction
c) 12% gain in labor productivity (Jan 31, 2008)
Inputs
a) Individual store sales
b) Transactions
c) Units sold
d) Customer traffic

Process
a) Logs metrics in over 15 minutes increments for 7 weeks at a time
b) Measures against same data from previous year
c) Integrates data
Outputs (predictions)
a) Number of in store customers at certain hours
b) Average time of selling/unloading from truck
c) Number of workers needed for every hour

Controversies from Kronos

Managers avoid paying overtime or full time

Managers pressurize experienced associates to quit
Employees are tacitly forced to work at nights and weekends or risk getting fired
Associates are at the mercy of the managers as they need all the work they can get.

Question 1: What is the ethical dilemma facing Wal-Mart in this case? Do Wal- Marts
associates also face an ethical dilemma? If so, what is it?
Answer: An ethical dilemma occurs when there are two dramatically opposing courses of action both of which support worthwhile values. In the case of Wal-Mart, we see that competing values
are at work.
Ethical Dilemma faced by Wal- Mart
1. Value 1: Right to maximize profit/increase shareholder value
Save Money. Live Better Brand Promise Wal Mart achieved its lofty status through
a combination of low prices and low operational costs enabled by superb
continuous inventory replenishment system. The low prices offered to its customers
is a brand promise that Wal Mart has kept in the past and aims to continue to do so.
Installing the Kronos computerized scheduling system, is one way for Wal Mart to
keep its brand promise to its customers as it significantly reduces costs and bolsters
customer satisfaction. Hence, installing Kronos increases Wal Marts profit and
ultimately increases shareholder value.
Lowered Costs Kronos allows store managers put more time on effectively
providing services than to spend one whole day on scheduling work hours for
employees. There are 1.4 million domestic workers of Wal-Mart, and manual
scheduling is a tedious job which brings marginal benefit. Kronos, on the other hand,
is able to fix work schedules in just hours. It matches labor supply with demand, in
just the right way by combining historical data and also by making sophisticated
predictions.
Improved Productivity and Customer Satisfaction By installing Kronos, Wal Mart
has been able to gain a 12% increase in productivity. Customer service has also
improved by shortened checkout lines and by better meeting the needs of the
shoppers.

Source of Competitive Advantage Wal Mart has a trend of initiating disruptive

technology in its retail business. It has been the fore-runner in technology trends,
and this gives Wal-Mart a competitive advantage in the form of more efficient and
effective services to its customers.
2. Value 2: Responsibility of ensuring employee welfare
Workers Rights advocates Paul Blank of WakeUpWalMart.com said the computer is
trying to optimize the most number of part-time and least number of full-time workers
at lower labor costs, with no regard for the effect that it has on workers lives.
Clayton Antitrust act of 1914 says that Labor of a human being is not a commodity or
article of commerce.
Associates of Wal Mart face many problems like decreased stability, financial hardship
due to no fixed salary, unpredictable scheduling by Kronos (store may call them at any
time of the day when it predicts a rush hour). Employees are unable to organize their
lives due to the irregular hours.
Alerts from Kronos helps avoid paying overtime or full time wages to employees by
cutting back the hours of associates who are approaching the thresholds that cause
extra benefits to kick in.
Associates are usually illegal citizens who are desperate to earn a living
Personal Availability forms force employees to give high availability or risk not getting
paid at all - limiting your personal availability may restrict the number of hours you are
scheduled.
Experienced associates say Kronos enables managers to pressure them into quitting. If
they are unwilling to work nights and weekends, managers have a justification for
replacing them with new workers
Ethical dilemma faced by associates
1. Value 1: Earn a better living Although Wal Mart offers its associates part-time work
payable at an hourly basis, employees there need all the work they can get.
2. Value 2: Family responsibilities Many associates have a family along with children.
Scheduling babysitters and paying monthly bills get tough as Wal Marts computerized
system offers very unpredictable timings and no fixed salary with zero benefits for working
at odd times (like at night or on weekends). This hampers the employees work-life balance
and affects his or her family.
Stakeholders involved in the dilemmas

Customers Want lower waiting time and improved customer service

Managers, shareholders Want to maximize profit
Employees Want stability and rewards in the form of salary and benefits and also an
empowering work culture

Option available to solve the dilemma

1. Close Kronos - This would mean going back to the manual scheduling system which is both
costly and unnecessary.
2. Continue with Kronos Continuing with Kronos would mean dwindling employee morale
as job dissatisfaction will loom in the organization.
3. Keep Kronos but take into account employee welfare This would mean that employees
own personal availability should be taken more seriously and overtimes along with extra
benefits for working at odd hours (at night or at weekends) should be paid liberally.

Question 2: What ethical principles apply to this case? How do they apply?
Answer: The following ethical principles apply to this case
1. The Golden Rule Do unto others as you would have them do unto you.
Store managers must put themselves into the place of the associates and ask themselves,
would I like to work in a company if my manager
Called me to work at unpredictable times
Did not pay me extra for working overtime or at odd times
Did not pay a fixed and stable salary, instead only paid hourly
If the answer is no, then computerized scheduling for employees is unethical as it does
not take into account employee welfare.
2. Imanuel Kants Categorical Imperative If everyone installed a computerized scheduling
system without taking into account employee welfare, could the society survive?
Top retailers like Gap, Williams-Sonoma, Taylor Stores, Limited Brands, now use a
computerized scheduling system. However, if ALL organizations did not consider employee
welfare and made their workers work at unpredictable timings with hourly wage, the
society would not survive. Employees productivity would decrease as job satisfaction will
plummet and they will feel discouraged to continue working at all.
3. Utilitarian Principle Take the action that achieves the higher or greater value.
The greater value for any corporate is to increase shareholder value by
a. Improving productivity
b. Providing higher customer satisfaction
c. Implementing competitive advantageous tactics
However, employees are the tools to increase shareholder value. With low employee morale, the
higher value of mazimizing profit cannot be sustained in the long-run.
4. Risk Aversion Principle The action that produces the least harm or the least potential
cost, must be undertaken. Higher waiting time and failure of matching labor demand with
supply is a high-cost-potential of moderate to high probability. Hence, according to this

ethical principle, installing Kronos is ethical. However, at the same time, prolonged
employee dissatisfaction may lead to costly suits which has a low probability of occurring.
Question 3: What are the potential effects of computerized scheduling on employee morale?
What are the consequences of these effects for Wal-Mart?
Answer:
Potential effects of computerized scheduling on employee morale are
1. Lack of motivation: The system gives opportunities for the managers not to give overtime
or full-time wages to the workers. Most employees only work part time. So the employees
will be tensed because now they need more working hours to survive most
employees/associates work part time so they get paid on an hourly basis.
1. Low job satisfaction: Employees do not feel empowered as neither intrinsic nor extrinsic
motivation exists.
2. High insecurity: Experienced associates, who get a higher pay, are afraid of getting fired as
managers have the tendency to employee new workers who will make much less per hour.
Personal Availability forms tacitly forces employees to work at odd timings as it states
limiting your personal availability may restrict the number of hours you are scheduled. ,
otherwise they are at the risk of getting fired.
2. Increased grievances: United Food and Commericial Workers union and other rights
advocates, already stage grievances against Wal-Mart. Potential possibility of whistle
blowing by former employees is also increased.
3. Increased family problems: Majority of the workers find it difficult to balance their life.
The workers lives are not stable because their working schedule can fluctuate any time and
so they cannot plan their other activities like paying bills, arranging babysitters, etc.
Consequences of these effects for Wal Mart are
a) Lowered quality of service: Even though overall productivity is increased by Kronos,
employees will not take extra steps to ensure customer satisfaction. These employees are at
the ground level and their behavior will effect quality of customer service.
b) Weak organizational culture: With a computerized scheduling that has no regard for the
employees, a culture of dissatisfaction and insecurity will be created.
c) Tarnished image: This new system will give very bad publicity to Wal-Mart. Indeed, WalMart was known to be the company that gives the lowest wage rate in the US. Now this new
system has empowered it to cut the part time and even full time wages further
d) Trouble in future recruitment: Unless someone is desperate, he or she would not want to
work at Wal Mart. In this way, Wal Mart will not attract skilled employees.
e) Risk of law suits: By labor unions like United Food and Commercial Workers Union. It is
not mandatory to unionize in USA and Walmart does not allow unions. But this
technological shift will raise the workers voice further to unionize which may cause
unsustainability in Wal-Marts operation.