Boost business results? Try ROWE!

August 22, 201411:00 am668 views

A ROWE (Results Only Work Environment) is an innovative HR management strategy, wherein employees are paid for results (output), rather than their time.  Cali Ressler and Jody Thompson, who originally proposed the strategy at Best Buy, an American retail chain, went on to start CultureRx, a consulting group that certifies and trains organisations on implementing ROWE.

ROWE was subsequently implemented at the US branch of global clothing retailer Gap. J.A. Counter & Associates, a boutique insurance agency, also implemented ROWE, alongside numerous other companies. Aside from extensive case studies, whether on the CultureRx website or a simple Google search. A short list of companies that have adopted this are:

  • JL Buchanan
  • Organisation Choice Translating
  • Garabedian Group
  • WATT Global Media

ROWE aims to give management the tools to define goals which can be clearly defined and met by employees. Focusing on results allows significant organisational freedom, focusing less on employee supervision and creating environments of trust, accountability and flexibility. While challenging to implement, the organisational benefits are significant, in the cases where they were implemented correctly.

The Case of JA Counter & Associates

As of 2008 and worth US $2.5 million, J.A. Counter & Associates is an insurance and investment advisory firm based in New Richmond, Wisconsin.Owned by Linda Skoglund, her first step into ROWE was, oddly enough, having a pedicure during office hours. Initially reluctant as she was afraid of the impression it’d give her staff, she’d wanted to overhaul the work environment at J.A. Counter and decided upon ROWE.

Profits were sluggish and the firm was lagging 15 percent behind industry benchmarks, in terms of revenue per employee. Skoglund had conducted comprehensive performance reviews, increased the company’s sales goals, cut expenses and fired employees. Those adjustments boosted the bottom line slightly, but not without costs.

These changes had affected morale, with staff fearing for their jobs. Skoglund was also constantly forced to deal with management issues, preventing her from focusing on sales. This motivated her to implement a new management strategy – ROWE. J.A. Counter’s employees could leave the office whenever they pleased, without informing anyone when or why.

If an employee chose to share the fact that they were taking the afternoon off for sports,comments about their work ethic were forbidden. Surprisingly, this boosted morale and improved productivity, contrary to expectations

Companies have been touting flexible work arrangements for years. However, most businesses have a limit on freedom. Flexibility is only allowed for a couple of days a week or for specific employees. But Ressler and Thompson, who developed ROWE, say ROWE doesn’t work unless it works for everyone – even office assistants, secretaries and receptionists who have traditionally been at the mercy of their bosses.

Ressler and Thompson originated the idea for ROWE while working in the HR department at electronics giant Best Buy, which wound up offering it to 3000 employees at its corporate headquarters. In 2008, Ressler and Thompson left Best Buy and formed their own consultancy, as well as authoring the book Why Work Sucks and How to Fix It. So far, the results have been surprising.

Changing the entire work philosophy at corporate behemoth Best Buy was hard enough; at smaller companies, the two have found, it can be even harder. At small companies, employees are more likely to multitask. At J.A. Counter, for example, one person is in charge of HR, accounting and IT.

Employees who play multiple roles are more hesitant about leaving the office, with bosses more reluctant to let them go. Smaller companies often don’t have well-defined job descriptions, so evaluating employee KPIs (Key Performance Indicators) can be challenging. When an employee in Best Buy’s IT department takes the afternoon off, another one can cover for him or her. For a smaller firm with one-person departments? Not an option.

Skoglund’s staff reacted skeptically on the move to ROWE. But as it emerged, their pain point was their receptionist, Judy Wentlandt. The team could readily imagine salespeople moving to ROWE. But their receptionist? Given managements to uniformly apply ROWE, a simple plan was proposed: When Wentlandt gave advance notice of her status, volunteers would fill the receptionist’s role.

Mark Devereux, a senior investment adviser, has manned the front desk several times. He explained his change of mind, sharing that “At first I thought where is the payback doing that? But then, I began to realise the value of becoming more aware of each other and what we contribute to the overall success of the company. And when I answer the phone, it gives me the opportunity to explain ROWE to our clients. They think we’re cutting edge.”

The shift to ROWE has forced J.A. Counter’s managers to focus more on outcomes than hours. Before moving to the new system, each manager met with his or her direct reports and wrote out detailed job descriptions, with expectations and measurements. Now J.A. Counter’s employees are like “mini-entrepreneurs,” managing their own schedules and focusing on delivering results, rather than just pulling a paycheque.

Recent Developments

In 2013, Marissa Mayer killed of Yahoo USA’s telecommuting arrangements. Best Buy’s new CEO, Hubert Joly, also cancelled ROWE in the same year, due to what he saw as “…fundamental flaws in ROWE from a leadership standpoint”. This ignited much discussion and debate on the validity and benefits of flexible work, while not publicly and specifically explaining why such schemes were cancelled, despite their noted effectiveness.

While not invalidating flexible work arrangements, or indeed a results-oriented outcome, ROWE is unorthodox yet capable of producing results. Under it, corporate (non-retail) employees had enormous autonomy to operate, as long as they maintained their KPIs. Both their own case studies and independent scholarly research backs them.

ROWE is notorious amongst management thinkers and educators because it bucks established conventions. ROWE systematically implements evidence-based policies and practices which are key to motivating and engaging a workforce for maximum performance, commitment and satisfaction.

Essentially, it helps employees understand what needs to be done, grants them autonomy, trust and support to accomplish objectives via effective methods, providing feedback and recognition to reinforce good performance. Implemented effectively by well-trained leaders, this promotes work-life integration and maximises a firm’s human capital over the long term.

Joly cancelled ROWE for a simple reason; when a cost-cutting leader is appointed to reform a struggling company, a short-term “get tough” attitude favouring rapid shocks is used.

By contrast, there is the slower but more difficult — and more effective — work of developing and communicating a strategy, then harnessing the talent and creativity of committed, engaged employees to implement. While boosting stock price in the short term, it lays waste to human capital value, the most critical resource for firms like Best Buy.

Image Credit: CultureRx

Any questions? Contact Shiwen at shiwen@hrinasia.com

References & Further Reading

Joyner, A. (2013). Why Flexible Workpalces Are Good for Business. Inc. 

Koch, R. (2013). America’s highest earners work at least 60 hours a week – more than anyone else in the world.  Quartz

Valcour, M. (2013). The End of “Results Only” at Best Buy is Bad News. HBR Blog Network.

Westcott, S. (2008). Beyond Flextime – Trashing the Workweek. Inc.

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