SpecialReport

NO FIXED SCHEDULES.

INSIDE BEST BUY'S RADICAL RESHAPINGOFTHE WORKPLACE

SmasJiingThe Qock

BY MICHELLE CONLIN

ONE AFTERNOON LAST YEAR, CHAP ACHEN, WHO OVERSEESonline orders at Best Buy Co., sluit down his computer,stood up from his desk, and announeed that he was leavingfor the day. It was around 2 p.m., and most of Achen's staffwere slumped over their keyboards, deep in a post-lunch,LCD-lit trance. "See you tomorrow," said Achen. "I'm goingto a matinee."

Under normal circumstances, an early-afternoon depar-ture would have been totally un-Achen. After all, this wasa 37-year-old corporate comer whose wife laughs in hisface when he utters the words "work-life balance." But atBest Buy's Minneapolis headquarters, similar incidents ofstrangeness were breaking out all over the ultramoderncampus. In employee relations, Steve Hance had suddenlystarted going hunting on workdays, a Remington 12-gaugein one hand, a Verizon LG in the other. In the retail trainingdepartment, e-learning specialist Mark Wells was spend-ing his days bombing around the country following rocker

60 I BusinessWeek I December 11. 2006

Dave Matthews. Single mother Kelly McDevitt, an onlinepromotions manager, started leaving at 2:30 p.m. to pick upher 11-year-old son Calvin from school. Scott Jauman, a SixSigma black belt, began spending a third of his time at hisNorthwoods cabin.

At most companies, going AWOL during daylight hourswould be grounds for a pink slip. Not at Best Buy. Thenation's leading electronics retailer has embarked on a radi-cal—if risky—experiment to transform a culture once knownfor killer hours and herd-riding bosses. The endeavor, calledROWE, for "results-only work environment," seeks to de-molish decades-old business dogma that equates physicalpresence with productivity. The goal at Best Buy is to judgeperformance on output instead of hours.

Henee workers pulling into the company's amenity-packedheadquarters at 2 p.m. aren't considered late. Nor are thosepulling out at 2 p.m. seen as leaving early. There are no sched-ules. No mandatory^ meetings. No impression-management

LAID BACWells, an avidbicyclist, likes tosleep in late anddoesn't ownan alarm clock

pecialReport

BEST BUY'S 'RESULTS-ONLY WORK ENVIRONMENTbtUUNUUTPUT

NOT HOURS. YOU DON'T PHYSICALLY HAVE TO BE AT WORK

hustles. Work is no longer a place where you go, but somethingyou do. It's O.K. to take conference calls while you hunt, col-laborate from your lakeside cabin, or log on after dinner so youcan spend the afternoon with your kid.

Best Buy did not invent the post-geographic office. Techcompanies have been going bedouin for several years. AtIBM, 40% of the workforce has no officiai office; at AT&T, athird of managers are untethered. Sun Microsystems Inc. cal-culates that it's saving $300 million a year in real estate costsby allowing nearly half of all employees to work anywherethey want. And this trend seems to have legs. A recent BostonConsulting Group study found that 85% of executives expecta big rise in the number of unleashed workers over the nextfive years. In fact, at many companies the most innovativenew product may be the stnicture of the workplace itself.

But arguably no big business has smashed the clock quite

62 I BusinessWeek I December 11. 2006

so resolutely as Best Buy. The ofïkial policy for this post-face-time, location-agnostic way of working is that people are fieeto work wherever they want, whenever they want, as long asthey get their work done. "This is like TiVo for your work,"says the program's co-founder, Jody Thompson. By die end of2007, all 4,000 staffers working at corporate will be on ROWE.Starting in February, the new work environment will becomean official part of Best Buy's recruiting pitch as well as itsorientation for new hires. And the company plans to take itsclockless campaign to its stores—a high-stakes challenge thatno company has tried before in a retaü environment.

Another thing about this experiment: It wasn't imposedfrom the top down. It began as a covert guerrilla action thatspread virally and eventually became a revolution. So secretwas the operation that Chief Executive Brad Anderson onlylearned the details two years after it began transforming

his company. Such bottom-up,stealth innovation is exactly thekind of thing Anderson encour-ages, The Best Buy chief aimsto keep innovating even whensomething is ostensibly work-ing. "ROWE was an idea bornand nurtured by a handftil ofpassionate employees,"' he says.'"It wasn't created as the result ofsome edict."

So bullish are Andersonand his team on the idea thatthey have formed a subsidiarycalled CultureRx, set up to helpother companies go clockless.CultureRx expects to sign up atleast one large client in the com-ing months.

The CEO may have bought in,but there has been plenty of oppo-sition inside the company. Manyexecs wondered ii' the programwas simply flextime in a pret-tier bottle. Others felt that work-ing on-site would lead to longerhours and destroy forever thedemarcation between work andpersonal time. Cynics thought itwas all a PR stunt dreamed uphy Machiavellian operatives inhuman resources. And as ROWEinfected one department alter theother, its supporters ran into old-guard saboteurs, who continueto plot an overthrow and spreadwarnings of a coming paradisefor slackers.

Then again, the new workstructure's proponents say it's

helping Best Buy overcome challenges. And thanks toearly successes, some of the program's harshest critics havebecome true believers. With gross margins on electron-ics under pressure, and Wal-Mart Stores Inc. and TargetCorp. shouldering into Best Buy territory, the company hasbeen moving into services, including its Geek Squad and"customer centHcity" program in which salespeople act astechnology counselors. But Best Buy was aiïUcted by stress,burnout, and high turnover. The hope was that ROWH, byfreeing employees to make their own work-life decisions,could boost morale and productivity and keep the serviceinitiative on track.

It seems to be working. Since the program's implemen-tation, average voluntary turnover has fallen drastically,CultureRx says. Meanwhile, Best Buy notes tliat productivityis up an average 35% in departments that have switched toROWE. Employee engagement, which measures employeesatisfaction and is often a barometer for retention, is wayup too, according to the Gallup Organization, which auditscorporate cultures.

ROWE may also help the company pay for the customercentiicity campaign. The endeavor is hugely expensive becauseit involves tailoring stores to local markets and training em-ployees to turn customer feedback into new business ideas. By

the Minneapolissculpture garden

letting people work off-campus. Best Buy %ures it can reducethe need for corporate office space, perhaps rent out the emptycubicles to other companies, and plow the millions of dollars insavings into its services initiative.

Phyllis Moen, a University of Minnesota sociology profes-sor who researches work-Hfe issues, is studying the Best Buyexperiment in a project sponsored by the National Institutesof Health. She says most companies are stuck in the 1930swhen it comes to employees' and managers' relationships totime and work. "Our whole notion of paid work was devel-oped within an assembly line culture,'" Moen says. "^Showingup was work. Best Buy is recognizing tliat sitting in a chairis no longer working."

One giant wireless kibbutzJODY THOMPSON AND CALI Ressler are two HR people youactually don't hate. They groan over cultish corporate sloganslike "Build Superior Organizational Capability." They disdainOutlook junkies who double-book and showboating Power-Pointers. But it's tlextime, or Big Business' answer to overwork,long commutes, and lack of work-family balance, that elicitsthe harshest verdict. "A con game," says Thompson. "A totaljoke," adds Ressler.

Flexible work schedules, they say, heap needless bureau-cracy on managers instead of addressing the real issue: how towork more efficiently in an era of transcontinental teams andmultiple time zones. They add that flextime also stigmatizesthose who use it (the reason so few do) and keeps companiesacting like the military (fixated on schedules) when theyshould behave more like MySpace (social networks where real-time innovation can flourish). Besides, they say, if people canvirtually carry their office around in their pockets or pocket-books, why should it mauer where and when they work if theyare crushing their goals?

Thompson, 49, and Ressler, 29, met three years ago. Theboomer and the Gen Xer got each other right away. Wlienthey talk about their meeting, it sounds like something out ofPlato fiv HR, or two like minds making a whole. At the time.Best Buy was still a ferociously face-tinie place. Workers ar-riving after 8 a.m. on sub-zero mornings stashed their parkas

Off The LeashWhat happened when Best Buyallowed staff to work wherever andwhenever they want

VOLUNTARYTURNOVER SINCE

2005 (DIVISION)

DOT-COM

-90%LOGISTICS

– 5 2 %SOURCING

-75%

AVERAGERISE IN

ROWE WORKERPRODUOTIVITY

SINCE 2005

+35%December U, ?006 ' BusinessWeek ! 63

SpecialReportin their cars to foil detection as late arrivals.Early escapees crept down back stairwells.Cube-side, the living was equally uneasy.One manager required bis MBAs to sign outfor lunch, including listing their restaurantlocations and ETAs. Another insisted histeam track its work—every 15 minutes. Asat many companies, the last one to turn outthe lights won.

Outside the office, Thompson and Resslercouldn't help noticing how wireless broad-biuid was turning tbe world into one giantwork kibbutz. They talked about how man-agers were mired in analog-age inerda, oftenjudging perfbmiance on how much theysaw you, vs. how much you did. Ressler andThompson recognized the dangerous, life-wrecking cocktail in the making: Tbe always-on worker now also had to be always in.

The culture, not exactly Mitinesota-nice,was tlireatening Best Buy's massive expan-sion plans. But Ressler and Thompson knewtheir solution was too radical to simply trotup to CEO Anderson. Nor, in the beginning,did they feel they could lobby their executivesupervisors for official approval. Besides,they knew the usual corporate route of im-posing something from the top down wouldbomb. So they met in private, stealthilystrategizing about how to protect ROWE andthen dribble it out under the radar in dnypilot trials. Ressler and Thompson waitedpatiendy for the right opportunity. • • • • i

It came in 2003. Two managers—one inthe properties division, the other in communications—weredesperate. Top performers were complaining of unsustainablelevels of stress, threatening business continuity just when BestBuy was rolling out its customer centricity campaign in hun-dreds of stores. They also knew from employee engagementdata that workers were suffering from the classic work-lifehex: jobs with high demands (always-on, transcontinentalavailability) and low control (always on-site, no personal life).

Rossler and Thompson saw their opening in these twovanguard managers. Would they be vtilling to partake in aprivate management experiment? The two outlined their vi-sion. They explained how in the world of ROWE, there wouldbe no mandatory meetings. No times wben you had to physi-

Flextime:Honing the Balance

oody Allen famously saidthat 80% of success isshowing up. Thaf's no jokein fhe corporafe world,Show up early. Stay late.

Look busy. Acting the part of fhe devotedemployee has earned many a middlingperformer solid reviews.

Flextime agreements, combined witha greater focus on performance metrics,were supposed to help change all that.As of last year, says human resourcesconsulting firm Hewitt Associates Inc.. 75%of companies offered some kind of flexiblework arrangement. But so far, these policieshave had mixed results. Working remotelycan leave employees feeling isolated andmanagers feeling fhey lack control. Andflexf imers often find themselves squeezedinto policies that are anything but flexible."The work-life movement has always hada heavy layer of one-size-fits-all-ism," saysStewart D. Friedman, who runs the Work/Life

Integration Project at the Wharton School.That complaint is prompting many

companies to revamp their policies, saysHewitt's Carol Sladek, who leads the firm'swork-life pracf ice. Now more and moremanagers are using a femplate of questionsto help them design the most fittingarrangement. "There's definitely a focusaway from the structure" of rigid flextimepolicies, says Sladek.

In a sense, flexibility is becomingmore flexible. At Deioitte & Touche, yearsof stagnant enrollment in formal flexibilityprograms have led managers to help teamscreate flexible schedules among fhemselves.Staffers fill out a survey that helps themset goals as a group (reducing the numberof times they interrupt co-workers off-hours, for instance) and jointly keep trackof people's schedules so they know, say,when someone has reserved f ime withtheir kids. Deioitte is also experimentingwith something called "mass career

cally be at work. Performance would be based on output,not hours. Managers would base assessments on data andevidence, not feelings and anecdotes. The executives likedwhat they heard and agreed.

The experiment quickly gained social networking heat.Waiting in line at Best Buy's on-site Caribou Coffee, in e-mails,and during drive-by's at friends' desks, employees in otherpaits of the company staned hearing about this seeming anti-dote to megahour agita. A curious culture of haves and have-nots emerged on the Best Buy campus, with those in ROWEsporting special stickers on tbeir laptops as though theywere part of some cabal. Hance, the bunter, staited takingconference calls in tree stands and exchanging e-mails from

bulf's-eye

customization" that redefines flexibilityover the course of a career rather than bythe hours in a week, helping employeesadjust their pace, workioad. schedule, andwork roles during various life stages.

Another common complaint from early(iexibility adopters is that the off-siteexistence can be a real morale killer.IBM tound that out the hard way.While the company had saved millionsin real estate costs by getting 40%ot its workers to toil off-site, by 2002,many of its telecommuters felt out ofthe loop. Just over half of the folks inDaniel S. Pelino's central region reportedfavorable levels of engagement, "People feltreally disconnected." says Pelino, now genera!manager of IBM's Global Health Care & LifeSciences business.

In response. Pelino started an initiative."Making IBM Peel Small." to reconnect remoteworkers. Nomads who drop by the office nowfind a space designed with their needsin mind. Faxes and copiers are infamiliar spots from one office toanother, and conference roomwalls have been replaced withglass so colleagues will knowwhen their co-workers areon site. After Pelino brought the

lnitiativetoseniormanagement. IBM revitalizedIBM Clubs, which bring together colleaguesfor parties, picnics, sports events, and otherextracurricularactivities. Making IBM FeelSmall has since spread to more than 33locations worldwide.

Over at Sun Microsystems Inc., anotherf lextime pioneer, managers found thecompany's "Open Work" program couldbe. well, too open. About four years ago,

as better communications technologyattracted more people to the program,a growing number of employees beganelecting to work from home without checkingwith their bosses. "A lot of managers wereuncomfortable with 'out of sight, out ofmind,' " says Ann Bamesberger, the vice-president leading the program. In response,her team added an online test that helpsmanagers find good candidates for theprogram. Employees are assigned broadprofiles that reflect how they work, includingsuch nicknames as "Mobile Collaborator"or "Design Specialist." Managers and theirreports are expected to hash out a solutionthat offers flexibility and control. "There arecertain types of jobs where a free-for-alldoesn't work." says Bamesberger. Then shecatches herself, warning: 'A free-for-allnever works." -Jena McGregor

his fishing boat. When Wells wasn't following around DaveMatthews, chances were he was biking around Minneapolis'network of urban lakes, and digging into work only afternight had fallen. Hourly workers were still putting in a full40, but began doing so wherever and whenever they wanted.

At fiist, participants were loath to share anything aboutROWE with higher-ups for fear the perk would be takenaway or reversed. But hy 2004, loftier and loftier levels ofmanagement began hearing about the experiment at aboutthe time opposition to it grew more intense. Critics feared ex-ecutives would lose control and co-workers would forfeit thecollaboration bom of proximity. If you can work anywhere,they asked, won't you always be working? Won't overbear-

ing bosses start calling you in the middle of the night? Won'tcoasters see ROWE as a way to shirk work and force morededicated colleagues to pick up the slack? And there weregenerational conflicts: Some boomers felt they'd been forcedto choose between work and life during their careers. So ev-eryone else should, too.

Shari Ballard, Best Buy's executive vice-president for hu-man capital and leadership (an analog title if ever there wasone), was originally skeptical, altliough she eventually boughtin. At first she couldn't figure out why managers needed anew methodology to help solve the work-life conundrum. "Itwasn't hugs and smiles," she says of Ressler's and Thompson'scampaign. "Managers in the old mental model were totally

SHARE YOUR THOUGHTS.Sun believes sharing is the way to create better ideas. That's why we've teamed up with

BusinessWeek to offer you an opportunity to share your comments. |oin the conversation about

this week's Cover Story at businessweek.com/coverstory,

.̂ 8^ r^ ( share

mkrosystems

SpecialReport

PLAYBOOK: BEST PRACTICE IDEAS

Let ThemlioTips for creationof a post-geographicworkplace

/ • MEASURE '•Before unplugging

workers, metrics arekey to ensure that

productivity,engagement, andturnover improve.

.' TAILORImposing new work

rules rarely paysbecause managers andworkers need to tailor

schedules to theirneeds.

TRUSTInevitably, some

untethered workers/ill slack off. Managersneed to trust—then

rely on data toassess

•.. performance. ,.-*

.•• E D U C A T E ••.

•' Location-agnosticwork is a hard

concept to grasp, Sorefresher courses are a

must for managersand workers,

/ • GATHERWhen workers arenomads, regular

gatherings, in personor by Videoconference,

help retain a teamdynamic.

irritated." In the e-leaming division, many of Wells's olderco-workers {read 40-year-olds; the average age at Best Buy is36) expressed resentment over the change, insisting that workrelationships are better face-to-face, not screen-to-screen. "Wehave people in our group who are like, Tm not gohig to doit,' " says Wells, who likes to sleep in and doesn't own an alarmclock. '"I'm like, 'that's fine, but I'm outta here.'" In enemycircles, Ressler and Thompson are known to tliis day as "those

NO EDICTS CEO two" and "the subversives."Anderson praises Yet ROWE continues to spreadthe stealth rollout ^^^^.^^ ^he company. If intriguedstructure^ ^°^ nonparticipants work for progressive

superiors, they usually talk up theprogram and get their bosses to agree

to trials. If they toil under clock-watchers, they form under-ground networks and quietly lobby for outside support untilthere is usually no choice but for their boss to switch. It wasonly this past summer that CEO Anderson got a full briefing,and total understanding, about what was happening. "Wepurposely waited until the tipping point before we took it tohim," says Thompson. Until then he wasn't well-versed onthe 13 ROWE commandments. No. I; People at all levels stopdoing any activity that is a waste of their time, the customer'stime, or the company's money. No. 7: Nobody talks abouthow many hours they work. No. 9 : It's O.K. to take a nap on aTuesday afternoon, grocery shop on Wednesday morning, orcatch a movie on Thursday afternoon.

That's the commandment Achen was following when hetook oft that day to see Star Wars Episode III: Revenge of theSith. Doing so felt abnormal and uncomfortable. Achen feltguilty. But Ressler and Thompson had told him to "model thebehavior." So he did. It helped that Achen saw in ROWE thepotential to solve a couple of nagging business problems. Asthe head of the unit that monitors everything that happensafter someone places an order at BestBuy.com, includingmanually reviewing orders and flagging them for possiblefraud, Achen wanted to expand the hours of operation with-out mandating that people show up in the office at 6 a.m. Hehad another issue. One of his top-performing managers livedin St. Cloud, Minn., and commuted two and a haU hours eachway to work. He and Achen had a gentleman's agreementthat he could work from home on Fridays. But the rest of thestaff didn't appreciate the favoritism. "It was creating a lot oftension on my team," says Achen.

Record job satisfactionRESSLER AND THOMPSON had convinced Achen that ROWEwould work. Now Achen would have to convince the generalmanager of BestBuy.com, senior vice-president John "J-T."Thompson. That wasn't going to be easy. Thompson, a for-mer General Electric Co. guy, was as old school as they comewith his starched shirt, booming voice, and ramrod-straightposture. He came of age believing there were three 8-hourdays in every 24 hours. He loved working in his office onweekends. At first, he pushed back hard. "I was not support-ive," says Thompson, who was privately terrified about theloss of control. "He didn't want anything to do with it." saysAchen. "He was all about measurement, and he kept askingme, 'How are you going to measure this so you know you'regetting the same productivity out of people?' "

That's where Achen's performance metrics came in handy.He could measure how many orders per hour his team wasprocessing no matter where they were. He told Thompsonhe'd reel everyone back to campus the minute he noticed adip. Within a month, Achen could see that not only was histeam's productivity up, but engagement scores, or measuringjoh satisfaction and retention, were the highest in the dot-com division's history.

For years, engagement had been a sore spot for Thompson."I showed J.T. these scores, and his eyes lit up," says Achen.

66 I BusinessWeek I December 11, 2006

SpecialReport

EMPTY CUBEBest Buy workerslike Weils are freeto work wherever,whenever theywant—as longas the work getsdone

IF BUSINESS GOES SOUTH,DOUBTE' _ANe ^ I UNITY

TO TRY TO FORCE A HASTY RETREAT

Thompson rushed to roll out ROWE to his entire department.Voluntary turnover among men dropped from 16.11% to 0."For years I had been focused on the wrong currency," saysThompson. "I was always looking to see if people were here. Ishould have been looking at what they were getting done."

Today, Achen's commuting employee usually comes in oncea week. Nearly three-quarters of his staff spend most of theirtime out of the office. Doesn't he worry that he loses some ofthe interoffice magic when they don't gather together all day,every day? What about the value in riffing on one another'sideas? What about teamwork and camaraderie? "You abso-lutely lose some ofthat," he says. "But what we get back faroutweighs anything we've lost."

Achen says he would never go back. Orders processed bypeople who are not working in the office are up 13% to 18%over those who are. ROWE'ers are posting higher metrics forquality, too. Achen says he believes that's due to die new officeparadox: Given the constant distractions, it sometimes feelsimpossible to get any work done at work.

Ressler and Thompson say all the Best Buy groups thathave switched to the freer structure report similar results.Meanwhile, the two have other big plans for the company.Last month they launched a new pilot called Cube-Free.Ressler and Thompson believe offices encourage the wrongkinds of habits, keeping people wrapped up in a paper,prewireless mentality as opposed to pushing employees touse technology in the efficiency-enhancing way it was intend-ed. Otïices also waste space and time in an age when workersare becoming more and more place-neutral. "This also setsup Best Buy to be able to completely operate if disaster hits,"says Thompson. Work groups that go cube-free will be ableto redesign their spaces to better accommodate collaborationinstead of working alone.

Next year Resslerand Tliompson planto pilot their bold-est move yet, test-ing ROWE in re-tail stores amongboth managersand workers. How

exactly they will do this in an environ-ment where salespeople presumablyneed to put in regular hours, they won't• ay. And they acknowledge it won't beasy. Still, they are eager to try just

about anything to help the companyslash its 65% turnover rates in stores,where disgruntlement is common andworkers form groups on MySpace withnames like "Best Buy Losers Club!"

Best Btiy has transformed its work-place culture in a remarkably shorttime. Isn't it also true that ROWE couldunravel just as quickly? What happensif the company hits a speed bump?Competition isn't getting any less in-tense, after all. Best Buy sells a lot ofextended warranties, an area whereboth Wal-Mart and Target are eagerto undercut the electronics retailer onprice. What's more, the current boomin flat-panel, digital TVs will peak in afew years.

If Best Buy's business goes south, human nature dictatesthat the people who always believed the clockless office wasa flaky New Age idea will see an opportunity to try to forcea hasty retreat. Some at the company complain that produc-tivity is up only because many Best Buyers are now workinglonger hours. And some die-hard ROWE opponents still pri-vately roll their eyes when they see Ressler and Thompsonin the hallway.

But it's worth remembering chat most big companies failto grow at the rate of inflation. Thaf s true in part because thebigger the company gets, the harder it is to get the best out ofeach and every employee. ROWE is one of Best Buy's answersto avoiding that fate. "The old way of managing and lookingat work isn't going to work anymore," says Ressler. "We wantto revolutionize the way work gets done." Admit it, you'rerooting for them, too. •

The Untethered WorkforceHow to kill meetini^: For tips on how to do away wtth time-wasting corporate gatherings, go to www.businessweek.com/extras.Listen in: For Executive Editor John A. Byrne's podcast withMichelle Conlin. go to www.businessweek.com/podcast.On TV To meet Best Buy employees who are thrilled withtheir "results-only work environment," watch our weekly TVshow, BusinessWeek Weekend. Check your local listings orgo to businessweekweekend.com to see videoclips, or type in your Zip Code to find when andwhere the show airs in your area.

1

www.busiiiessweek.com/extras

68 I BusinessWeek I December 11, 2006

Copyright of BusinessWeek is the property of Bloomberg, L.P. and its content may not be copied or emailed to

multiple sites or posted to a listserv without the copyright holder's express written permission. However, users

may print, download, or email articles for individual use.