In a recent Wall Street Journal article, the author notes that various retailers in the U.S. (e.g., Meijer, Inc., Gap, Inc., Office Depot, Inc., and Toys “R” Us, Inc.) are turning to consulting firms, such as Accenture, to develop engineered labor standards for cashiers and other retail workers. Monitoring labor-hour consumption (i.e., labor efficiency) under such standards involves timing from the first scan of an item in a customer’s purchase to the production of a sales receipt for the customer. A commentator for Meijer, Inc. states that the system now in use had enabled the company to more efficiently staff stores while concomitantly increasing customer-service ratings. A representative from another client of Accenture states that the new system allows the retailer to determine how many workers to schedule at a given time, resulting in a labor-cost reduction of approximately 8 percent. Engineered standards were developed many years ago in a manufacturing environment, at places such as Westinghouse, by time-and-motion study experts. Unlike factor workers, however, most retail clerks deal directly with customers. This raises interesting questions as to whether and how the use of such monitoring (i.e., control) systems affects customer relations, including customer satisfaction. Uncertainties associated with nonstandard transactions or events are also thought to have negative motivational effects on employees whose performance is assessed using such engineered standards. (Source: Vanessa O’Connell, “Stores Count Seconds to Cut Labor Costs,” The Wall Street Journal, November 13, 2008, pp. A1, A15. For additional information regarding “workforce-management systems,” go to the Web site of Accenture, Ltd. (www.accenture.com/home.asp) and search under “Operations Workforce Optimization.”)

Required
1. The article refers to the terms engineered labor standards and time-and-motion studies. Define each of these two terms.
2. Define the terms labor rate variance and labor efficiency variance. Which of these two variances is the basis for monitoring a cashier’s performance, as described in the above-referenced article?
3. What cashier activities might invalidate cashier time measures? What recommendation(s) do you have for addressing this problem?
4. As described in the chapter, any control/monitoring system is likely to have behavioral consequences. In the present context, what employee morale and customer-service problems might arise from the system that was implemented? What steps do you think a retailer, such as those described in the article, can take to monitor this situation?
5. How can information about cashier time-management be used strategically by a retailer? For example, how can such information be used to lower labor costs for retail stores? For which types of firms would such detailed information likely be of greater value?