4. TOP DOWN

All of us have become so accustomed to the franchise model of doing business (e.g., McDonald’s), that we can be surprised when we discover a large and successful retail business that doesn’t work that way. Franchise outlets are owned by individuals under elaborate and detailed agreements with the mother company, but the headaches and the responsibility, and the profits, belong to the capitalist who stuck his neck out and bought into the deal.

Argus is different. All Argus stores are owned and controlled by Argus. Every truly significant decision about what happens in an individual store is made by executives who may never have seen that particular store. The job of those who manage a store is to carry out the directives they are issued from the head office as well as hire and fire the hourly workers. Managers have virtually no input on pricing, marketing campaigns, the mix of merchandise available, safety, wages, machines used, computer issues, or the physical plant. There are more than 1700 Argus stores, according to the Argus website. Actually, there is only one store, but it has more than 1700 locations. As far as I know, all of the big-box stores, like Wal-Mart and Home Depot, operate this way.

The biggest advantage of a hierarchical structure like this is that it provides clear lines of responsibility, and little opportunity to shift blame for failure. If a marketing campaign doesn’t work, for example, it’s not the fault of the store manager. The guy who designed that campaign is in an office somewhere in Minnesota, and he will have to answer for his mistakes. If, however, shrinkage (shoplifting and employee theft) is higher in a particular store than it should be, the store manager is probably doing something wrong. There are measurements and parameters and rules for every job, from the lowest grunt to the CIO. Also, for each of thousands of tasks, there is a training program and a certification process, and if you do something you are not certified to do, you are in trouble no matter how well you do it, or how silly and pointless the certification process. Some things can’t be measured, of course, and a personable, high-energy employee is going to get recognized eventually, but the numbers are always more important. Every single employee is constantly being measured on how he is doing the very specific things he has been trained and certified and ordered to do.

The system, which has been developed over many years, works well for Argus as indicated by the only real measure of a company’s viability---profits. Argus makes money. It has made money for years. It is even making money today (though not as much), in a deep economic recession. A hierarchical, by-the-book system like this, however, does have unintended consequences. For example, it can be impossible to get a toilet fixed.

There are two staff bathrooms, both unisex, in the store. The one closest to the break room and offices has been broken, with a leaky pipe, for over two months. Yesterday, I asked our maintenance guy, Manny, if it would ever be fixed.

“I could fix that toilet in a half hour,” he said, “but they vendored it out. I’m not allowed to touch it.”

When Manny says it would take him a half hour, it means it would require fifteen minutes. Manny is one of those guys who can fix anything, and thus amazes those of us who can fix nothing. Manny can fix shelves, floors, electric lights, hard drives, carburetors, walls, doors, air conditioners, motorized wheelchairs, trash compactors, scissor trucks, Segways, alarms, cash registers, shopping carts and pipes. Manny could fix a heart-lung machine if you gave him the manual for it. If you gave Manny the right tools and stents and scalpels and a copy of Gray’s Anatomy, I have no doubt Manny could perform a bypass operation. If Manny were in charge of Kim Jong Il’s nuclear program, Hawaii would now be a smoldering hole in the middle of the Pacific Ocean.

But Manny cannot fix the toilet in the middle of the store. He’s not allowed to. So everybody (including pregnant women) has to walk an eighth of a mile to get to the other one.

And this is one of the unintended consequences of the hierarchy. Showing any sort of initiative is irrelevant to job performance, and thus is discouraged, even where it would solve a small but real problem. There is simply no approved procedure for fixing a toilet when, for whatever reason, the outside contractor doesn’t fix it. It is literally nobody’s job to solve this problem, and if it’s nobody’s job, nobody can do it. Chuck, the store manager, has certain tasks just like the rest of us, and doing something not on his list would be a type of insubordination. No one is allowed to deal with the little things that “fall between the cracks” because, officially, there are no cracks. There’s a procedure and a training program and a certification ritual and a person responsible for everything that can possibly happen, except of course, there isn’t.

It’s tempting to view Chuck simply as a bad, or inattentive, store manager, but that’s unfair. It is true he is in one of those situations where it would be easier to obtain forgiveness than permission. If he disobeyed orders and told Manny to fix the bathroom, it is unlikely he would ever be chastised for it. But because of the culture imprinted upon him by the system, that course of action simply doesn’t occur to him, or to anyone. It never presents itself as an option.

In other words, no one who works there “owns” the store. Everyone, from the lowest grunt to the store manager, has responsibilities of various kinds and those responsibilities are generally taken quite seriously. Taking those responsibilities seriously is what gets you more money and gets you promoted. But no one feels any responsibility for the store itself, or the overall enterprise that is Argus.

I see the effects of this all the time.

Recently, the “market” section of the store was remodeled, and all the refrigerator and freezer cases were replaced. In the course of the remodeling, all sixty of the old cases sat empty for about three weeks, before they were removed. And nobody turned them off.

When I noticed the coolers were still on, I mentioned it to one of the executives. When nothing happened, I told another, and then another, and then another. It became a game for me; I was curious to see if anyone would ever take action. Over the course of two weeks, I quietly informed a dozen of my superiors, all of whom could have turned off the damn things. Nobody did. The cases remained on until the remodeling team (from Minnesota) removed them from the store. The orders to our in-store personnel were simply to empty the cases, and once that was done, our duties had been discharged.

On several occasions, when I brought up the subject to an executive or Team Leader, a surprised look would appear on his face. “Wow, you’re right,” he would respond. “We’re wasting a lot of money, aren’t we?” And that would be the end of it.

One day last summer, a patio-chair appeared in the back room with a paper sign on it: “DO NOT MOVE. BEING SAVED FOR GUEST INCIDENT. ---Leah.” When I asked Leah, an executive, about it, she told me that a customer (a large woman), had sat down in the chair to try it out, and had fallen over backwards. We were saving the chair in case of a lawsuit.

“You know,” I said, “a lawyer would tell you to give the chair to one person and have them store it in a locked room. If this turns out to be the main piece of evidence in a lawsuit, you want to have one person who can testify it wasn’t tampered with. It’s called a ‘chain of custody’ issue.”

She looked at me with that amazed look you sometimes see on the face of a manager or executive when one of the grunts says something worth thinking about that does not involve Beyonce. “You’re absolutely right,” she said. “That’s a good idea.”

Three months later, the chair was still sitting in the same place in the back room, with the same paper sign on it. Though my advice had been sound, and though Leah had recognized what should be done with the chair, she had never been ordered to segregate the chair, so she never thought about the issue again. There were bathmats to be shelved, and cans of beans, and packages of toilet paper (there always are), and it was her duty to get those things on the floor. Custody of the chair was interesting in a theoretical way, but had nothing to do with her job.

Yet another example is the way PDAs, the hand-held computing devices, are allocated to employees.

Not everyone uses them. Food service workers, cashiers, security personnel, the pharmacy staff and administrators have little or no need for them. But for everyone else, everyone who deals with product in the backroom or on the sale floor, they are essential. By scanning a UPC barcode, or a label on the shelf, you can learn the price of an item, its proper location on the shelves, its proper location in the backroom, whether the store has the item (and how many it has and where they are), whether it can be found in other Argus stores or on-line, and whether it has recently been reduced in price. When an item is moved from one place in the store to another, it must be registered via the PDA. When a damaged item goes in the trash, a PDA must be informed. In conjunction with a printer, a PDA makes labels and signs, and changes prices, and makes lists of products that must be moved from one place to another. With a PDA, you can order more product from a warehouse. You can check on whether a particular employee is in the store, or has next Thursday off. There are many things you can do with a PDA, and there are very few things you can do without one.

With all the hardware and software in these things, each one is worth hundreds of dollars, and considering how important they are, you would think Argus would make a serious effort to keep track of them. You would think an employee would have to sign one out at the beginning of a shift and turn it in at the end. It wouldn’t be difficult to set up a system to do that, and put somebody in charge of the things, and hold employees responsible for them in some way. But no, that doesn’t happen. If there is one in the equipment room when you start your shift, you get one. If there isn’t (and you don’t have a manager who has tucked one away for you), you don’t.

Since there are never quite enough to go around (they break, get lost, and need to be recharged), an allocation system would also ensure that those with jobs for which a PDA is essential would have one. Others, perhaps those working on a team project, could share.

The failure to allocate a scarce resource like PDAs, or even keep track of them, has predictable results. Some people always have them but don’t really need them much. Other PDA-dependant employees who can’t get one will need twice as much time to perform their required tasks. If you leave your PDA unguarded, it may get stolen. Also, at the end of a shift, you don’t necessarily return it to the equipment room. Instead, you shove it in a hidey-hole (behind some towels, maybe, in aisle D35) and hope it’s still there when you start your shift tomorrow. This means, of course, that there is one fewer PDA available for the people who work while you are home sleeping.

It is obvious to everyone that the failure to track PDAs reduces the overall productivity of the staff, but there is no way to measure the overall amount of the loss or translate it into lost profits. The effects are intermittent, and scattered across the workforce. On the other hand, instituting a solution would mean devoting some (small) quantity of time and effort to administer it. Solving the problem would cost measurable time and money, and there would be no way to justify that expense because no one knows what the problem itself costs. There is thus no incentive for anyone at my Argus to do anything. A solution could only be implemented if there were orders to do so from Minnesota, and there haven’t been.

* * * * * * * * * *

I see that this article can be read as critical about the way Argus runs its business, but that is not my intention. I am surprised by the way the place works simply because I have never been part of an organization like this. I’ve been ignorant, in other words, but now that I have looked behind the curtain, I’m more amazed by what it does right than by what it does wrong.

Argus employs tens of thousands of people, many of whom are 18 years old, barely literate, and have never held a job before. You need a system of some kind, and rules, and a sense of priorities, in order to make this kind of business work. And Argus does. Argus pleases its customers, consistently feeds the gaping maw of the American consumer, and makes money. Of course, there are things that don’t work quite right or don’t make much sense, but this is true in any organization. The difference is that the things Argus deems important, its priorities, are actually done well. The system is designed, obsessively and compulsively, to accomplish them. In order to keep ten thousand products on the shelf, there are certain things you have to ignore.

Copyright2009MichaelKubacki