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» Normxxx - What'sProppingTheEconomy

By BusinessWeek | 25 September 2006

Since 2001, the health-care industry has added 1.7 million jobs. The rest of the private sector? None

If you really want to understand what makes the U.S. economy tick these days, don't go to Silicon Valley, Wall Street, or Washington. Just take a short trip to your local hospital. Park where you don't block the ambulances, and watch the unending flow of doctors, nurses, technicians, and support personnel. You'll have a front-row seat at the health-care economy.

For years, everyone from politicians on both sides of the aisle to corporate execs to your Aunt Tilly have justifiably bemoaned American health care— the out-of-control costs, the vast inefficiencies, the lack of access, and the often inexplicable blunders.

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But the very real problems with the health-care system mask a simple fact: Without it the nation's labor market would be in a deep coma. Since 2001, 1.7 million new jobs have been added in the health-care sector, which includes related industries such as pharmaceuticals and health insurance. Meanwhile, the number of private-sector jobs outside of health care is no higher than it was five years ago.

Sure, housing has been a bonanza for homebuilders, real estate agents, and mortgage brokers. Together they have added more than 900,000 jobs since 2001. But the pressures of globalization and new technology have wreaked havoc on the rest of the labor market: Factories are still closing, retailers are shrinking, and the finance and insurance sector, outside of real estate lending and health insurers, has generated few additional jobs.

Perhaps most surprising, information technology, the great electronic promise of the 1990s, has turned into one of the biggest job-growth disappointments of all time. Despite the splashy success of companies such as Google (GOOG ) and Yahoo! (YHOO ), businesses at the core of the information economy— software, semiconductors, telecom, and the whole gamut of Web companies— have lost more than 1.1 million jobs in the past five years. Those businesses employ fewer Americans today than they did in 1998, when the Internet frenzy kicked into high gear.

Attitude Shift

Meanwhile, hospitaL administrators like Steven Altschuler, president of Children's Hospital of Philadelphia, are on a hiring spree. Altschuler has added the equivalent of 4,000 new full-time jobs since he took over six years ago, almost doubling the hospital's workforce. To put this in perspective, all the nonhealth-care businesses in the Philadelphia area combined added virtually no jobs over the same stretch.

Altschuler plans to add 3,000 more employees over the next five years as the hospital, one of the nation's leading pediatric centers, spends $1.7 billion to expand. Next up is a new 1.2 million-square-foot research facility that will be packed with well-paid scientists and support staff. "Health care is the major engine for the economy of the city of Philadelphia," says Altschuler.

The City of Brotherly Love is hardly alone. Across the country, state and local politicians, desperate for growth, are crafting their economic development strategies around biotech and health care. California will pour $3 billion into stem cell research over the next 10 years, and other areas are on the same path. "Our downtown business leaders and politicians have traditionally considered health care as a cost center, not as an economic engine," says Baiju R. Shah, a former McKinsey & Co. consultant who runs Cleveland's BioEnterprise, a nonprofit founded four years ago to stimulate the local health-care and bioscience industries. "But people are waking up."

What they're waking up to is the true underpinnings of the much vaunted American job machine. The U.S. unemployment rate is 4.7%, compared with 8.2% and 8.9%, respectively, in Germany and France. But the health-care systems of those two countries added very few jobs from 1997 to 2004, according to new data from the Organization for Economic Cooperation & Development, while U.S. hospitals and physician offices never stopped growing. Take away health-care hiring in the U.S., and quicker than you can say cardiac bypass, the U.S. unemployment rate would be 1 to 2 percentage points higher.

Almost invisibly, health care has become the main American job program for the 21st century, replacing, at least for the moment, all the other industries that are vanishing from the landscape. With more than $2 trillion in spending— half public, half private— health care is propping up local job markets in the Northeast, Midwest, and South, the regions hit hardest by globalization and the collapse of manufacturing (map).

Health care is highly labor intensive, so most of that $2 trillion ends up in the pockets of workers. And at least so far, there's little leakage abroad in terms of patient care. "Health care is all home-produced," says Princeton University economist and health-care expert Uwe Reinhardt. The good news is that if the housing market falls into a deep swoon, health care could provide enough new jobs to prevent a wider recession. In August, health-services employment rose by 35,000, double the increase in construction and far outstripping any other sector.

John Maynard Keynes would nod approvingly if he were alive. Seventy years ago, the elegant British economist proposed that in tough times the government could and should spend large sums of money to create jobs and stimulate growth. His theories are out of fashion, but substitute "health care" for "government," and that's exactly what is happening today.

Make no mistake, though: The U.S. could eventually pay a big economic price for all these jobs. Ballooning government spending on health care is a major reason why Washington is running an enormous budget deficit, since federal outlays for health care totaled more than $600 billion in 2005, or roughly one quarter of the whole federal budget. Rising prices for medical care are making it harder for the average American to afford health insurance, leaving 47 million uninsured.

Moreover, as the high cost of health care lowers the competitiveness of U.S. corporations, it may accelerate the outflow of jobs in a self-reinforcing cycle. In fact, one explanation for the huge U.S. trade deficit is that the country is borrowing from overseas to fund creation of health-care jobs.

There's another enormous long-term problem: If current trends continue, 30% to 40% of all new jobs created over the next 25 years will be in health care. That sort of lopsided job creation is not the blueprint for a well-functioning economy. One solution would be to make health care less labor-intensive by investing a lot more in information technology. "Low productivity in health is mostly a product of low investment," says Harvard University economist Dale Jorgenson.

For now, though, health-care hiring is providing a safety net in areas where manufacturing and retailing are no longer dependable sources of jobs. Take Johnstown, Pa., a town that once hummed with activity from local steel mills, coal mines, and nearby factories. As most of these businesses closed, the town emptied out, going from a population of 63,000 in 1950 to 23,000 today.

Now, Conemaugh Health System, with about 5,000 workers, is the biggest employer in town. "Everyone has a Conemaugh parking sticker on their car," says Linda D. Suter, 48, who's in her second year at the nursing school Conemaugh operates. Suter's dad worked at a factory in a nearby town, now closed, that made backyard swing sets for kids.

Frank Kosnowsky sold appliances at the Sears (SHLD ) in Johnstown for 10 years, starting right out of high school. But he got fed up with the way the company was changing and started thinking about going to nursing school. "One day I had a disagreement with my boss, and the application went right in," says Kosnowsky, 29. "I wanted something that had a future." He worked part-time at Sears while he went to nursing school. Now, three years later, he's the first and only male nurse working at Conemaugh's neonatal intensive-care unit— a career far different than that of his coal miner dad.

Suter and Kosnowsky live smack in the middle of the "Health Belt" that stretches from New England down through New York and Pennsylvania, across the Midwest and down through most of the South. These are areas where health care has been the major source of job growth over the past five years.

Nowhere is that truer than in Cleveland. There, Cleveland Clinic, with 29,000 employees, is the biggest employer by far. Next-largest is another hospital system, University Hospitals Health System, with 21,600 staffers. Then comes insurer Progressive Corp. (PGR ) and KeyCorp., each with fewer than 10,000 workers in the area. Cleveland Clinic's performance is pretty good for an outfit that started in 1921 with four docs in a building they planned to turn into a hotel if their vision didn't pay off.

Beyond its immediate employment tallies, the Clinic has a huge multiplier effect on the local economy. CEO Dr. Delos M. Cosgrove says it supports perhaps 75,000 jobs in all in the area, ranging from Clinic staffers to workers at hotels and restaurants— which patients and their families use in more than 2.9 million patient visits per year— to 3,000 suppliers to the Clinic.

Only a few years ago manufacturers were Cleveland's job engines. Companies such as machine-tool giant Warner & Swasey Co. don't even exist anymore. Conglomerate TRW was sold in 2002, and parts of it moved away. Fittingly, the Clinic now occupies its former headquarters, which TRW donated.

Health care has been one of the few economic bright spots in the Detroit area, too. Nancy M. Schlichting heads the sprawling Henry Ford Health System, founded by the great man himself in 1915. Schlichting is overseeing the construction of a new 300-bed hospital in West Bloomfield, Mich., a suburb of Detroit, which will eventually generate the equivalent of 1,200 full-time jobs. This expansion comes at a time when Ford Motor Co. (F ) is considering big layoffs.

Then there's North Carolina. Since 2001 it has seen a total job increase of 24,000, or 0.6%. Meager enough— but take out the 60,000 jobs added by health care, and the state's jobs would have decreased by 36,000. Employment in manufacturing, retailing, trucking, utilities, and information all fell. And construction added only 5,000 jobs, a mere fraction of health care's contribution.

Oddly enough, the retirement meccas of Florida and Arizona are among the least dependent on health-care jobs for growth. Over the past five years the two states have gotten only 10% and 15%, respectively, of their new jobs from health-care services— hospitals, doctor's offices, and nursing homes. Phoenix showed a job gain of 240,000, but only 30,000 were in health care. That's partly because the influx of elderly has been balanced by a rise in younger workers, too.

Is the health-care economy a good deal for workers? It is for Patricia A. McDonald, a second-year student nurse at Conemaugh. Before going to nursing school, McDonald, 46, sold insurance door-to-door, often driving close to 1,000 miles a week in rural areas to make cold calls. Her take in sales commissions was $35,000 to $40,000 a year, but that was before deducting expenses. Registered nurses in the Johnstown area, by comparison, are paid an average of almost $43,000— with no traveling. "This will be much better," says McDonald.

Unlike many other industries, health care offers a full range of jobs, from home health aides making very low wages through technicians and nurses making middle-class salaries up to well-paid doctors. On average, annual pay in private health services is $43,700, slightly above the private-sector average of $42,600.

Ripple Effect

Even more promising, health care has taken over the role manufacturing used to play in providing opportunities for less skilled workers to move up. Jeffrey Lites started as a part-time cashier in the cafeteria at Philadelphia's Children's Hospital in 1996 after being laid off as a computer operator. "I never envisioned working in a hospital," say Lites. But now, close to finishing his degree in early childhood education from Temple University, Lites works as a child-life assistant, providing recreation and activities for young patients who may stay for weeks or even months. "I have the best job in the entire hospital," says Lites, who moonlights as a musician on weekends.

The expansion of health care is also spinning off related jobs. Cleveland Clinic Innovations, a unit that funds startups, has already created 19 companies in its five years of existence. Together they employ about 186 people, including more than 50 in the Cleveland area. One, Cleveland BioLabs Inc. (CBLI ), went public in July and trades on NASDAQ. "We like to say that the New Economy is alive and well in the 40 blocks of the Cleveland Clinic," says Christopher Coburn, executive director of Cleveland Clinic Innovations.

James A. Martin is pursuing the same pot of gold in Shawnee, Kan., a city of almost 60,000 located just outside Kansas City. Martin, executive director of the Shawnee Economic Development Council, is helping the city set up a biosciences development district, the first in the state. He's hoping to build on the jobs already there, including the animal-health division of Bayer HealthCare (BAY ). "The high growth potential of biosciences jumped out at us," says Martin. "We got the bug."

Scott Becker, CEO of Conemaugh, is leading the effort to develop a technology park in a prime location in the center of Johnstown, where a mammoth dairy used to be. Potential biotech and info tech tenants include a company dealing with electronic medical records and another that's involved with drug trials. "The goal is to bring a new, younger workforce back to town," says Becker.

Unbalanced

Shah of Cleveland's BioEnterprise cautions that biotech may not be the right economic development strategy for many places. For one, it's hard to develop a local biotech industry from scratch. "I've seen a lot of regions that take a swing at that," says Shah. Besides, he says, biotech mainly provides jobs for a small number of highly paid workers. For many communities, Shah favors a broader strategy of encouraging health-care delivery and medical equipment and supplies.

Still, using health-care spending to create the vast majority of new jobs, while beneficial in the short run, is not desirable over the long run. A well-balanced economy needs to provide a wide variety of jobs, not just positions for doctors, nurses, and medical technicians.

The biggest worry is that demand for health care will absorb too much of the workforce and squeeze out other types of jobs. If medical spending rises to 25% of gross domestic product by 2030, as many economists expect, health care's share of jobs could grow to 15% or 16% of the labor market from today's 12%, based on historical patterns.

Such a shift in employment would require health care to be the single biggest creator of jobs in the economy for the foreseeable future. And while the U.S. could in theory afford to spend 25% of GDP on health care, it's hard to imagine a world in which our children have to choose between working for the local hospital or the local health insurer.

The real question, then, is whether it is possible to restructure the health-care system to provide equally good care with fewer workers. The answer is yes, say some experts. "What we have consistently found is that the supply of physicians, except at the low end, has rather little influence on patient outcomes," says David Goodman, a professor at Dartmouth Medical School who started his career as a pediatrician in a rural county in Northern New Hampshire. Jonathan Weiner, a professor at Johns Hopkins University's Bloomberg School of Public Health, agrees: "I am absolutely certain that we can provide quality health care with fewer doctors."

These assertions miss the point, says Richard Cooper, a professor at the University of Pennsylvania School of Medicine. Cooper, a former dean at the Medical College of Wisconsin, argues that the health-care workforce grows along with real incomes and GDP. "When you get richer, you aren't going to triple your food expenditures," says Cooper. "But there's much more that can be done to improve health." Princeton economist Reinhardt concurs, noting that "if you did geriatric health properly, you'd need a lot more geriatricians."

But both sides can agree that more spending on information technology could reduce the need for so many health-care workers. It's a truism in economics that investment boosts productivity, and the U.S. lags behind other countries in this area. One reason: "Every other country has the payers paying for IT," says Johns Hopkins' Gerard Anderson, an expert on the economics of health care. "In the U.S. we're asking the providers to pay for IT"— and they're not the ones who benefit.

Breakthroughs in technology offer other enticing possibilities for making health care less labor-intensive over the long run. Hakon Hakonarson just moved from Iceland to start up the new Center for Applied Genomics at Children's Hospital of Philadelphia. Hakonarson's group is using cutting-edge automated technology to analyze hundreds of DNA samples from hospital patients and their parents per day, something that wasn't possible until recently. His aim is to collect enough data within a short period of time to understand the genetic causes of childhood diseases and determine which children will respond best to which drugs. "If we go at this pace," says Hakonarson, "we will have something very powerful to analyze before yearend." The eventual result could be better, cheaper treatments, with fewer expensive side effects.

Meanwhile, Hakonarson employs 10 people in his lab as well as five nurses and medical assistants in the field who do nothing but ask families to participate in the study. For now, the health-care economy marches on.

  M O R E. . .

Normxxx    
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» Normxxx - Smashing The Clock

By BusinessWeek | 16 December 2006

One afternoon last year, Chap Achen, who oversees online orders at Best Buy Co. (BBY ), shut down his computer, stood up from his desk, and announced that he was leaving for the day. It was around 2 p.m., and most of Achen's staff were slumped over their keyboards, deep in a post-lunch, LCD-lit trance. "See you tomorrow," said Achen. "I'm going to a matinee."

Under normal circumstances, an early-afternoon departure would have been totally un-Achen. After all, this was a 37-year-old corporate comer whose wife laughs in his face when he utters the words "work-life balance." But at Best Buy's Minneapolis headquarters, similar incidents of strangeness were breaking out all over the ultramodern campus. In employee relations, Steve Hance had suddenly started going hunting on workdays, a Remington 12-gauge in one hand, a Verizon LG (VZ ) in the other. In the retail training department, e-learning specialist Mark Wells was spending his days bombing around the country following rocker Dave Matthews. Single mother Kelly McDevitt, an online promotions manager, started leaving at 2:30 p.m. to pick up her 11-year-old son Calvin from school. Scott Jauman, a Six Sigma black belt, began spending a third of his time at his Northwoods cabin.

At most companies, going AWOL during daylight hours would be grounds for a pink slip. Not at Best Buy. The nation's leading electronics retailer has embarked on a radical- if risky- experiment to transform a culture once known for killer hours and herd-riding bosses. The endeavor, called ROWE, for "results-only work environment," seeks to demolish decades-old business dogma that equates physical presence with productivity. The goal at Best Buy is to judge performance on output instead of hours.

Hence workers pulling into the company's amenity-packed headquarters at 2 p.m. aren't considered late. Nor are those pulling out at 2 p.m. seen as leaving early. There are no schedules. No mandatory meetings. No impression-management hustles. Work is no longer a place where you go, but something you do. It's O.K. to take conference calls while you hunt, collaborate from your lakeside cabin, or log on after dinner so you can spend the afternoon with your kid.

Best Buy did not invent the post-geographic office. Tech companies have been going bedouin for several years. At IBM (IBM ), 40% of the workforce has no official office; at AT&T, a third of managers are untethered. Sun Microsystems Inc. (SUNW ) calculates that it's saved $400 million over six years in real estate costs by allowing nearly half of all employees to work anywhere they want. And this trend seems to have legs. A recent Boston Consulting Group study found that 85% of executives expect a big rise in the number of unleashed workers over the next five years. In fact, at many companies the most innovative new product may be the structure of the workplace itself.

But arguably no big business has smashed the clock quite so resolutely as Best Buy. The official policy for this post-face-time, location-agnostic way of working is that people are free to work wherever they want, whenever they want, as long as they get their work done. "This is like TiVo (TIVO ) for your work," says the program's co-founder, Jody Thompson. By the end of 2007, all 4,000 staffers working at corporate will be on ROWE. Starting in February, the new work environment will become an official part of Best Buy's recruiting pitch as well as its orientation for new hires. And the company plans to take its clockless campaign to its stores- a high-stakes challenge that no company has tried before in a retail environment.

Another thing about this experiment: It wasn't imposed from the top down. It began as a covert guerrilla action that spread virally and eventually became a revolution. So secret was the operation that Chief Executive Brad Anderson only learned the details two years after it began transforming his company. Such bottom-up, stealth innovation is exactly the kind of thing Anderson encourages. The Best Buy chief aims to keep innovating even when something is ostensibly working. "ROWE was an idea born and nurtured by a handful of passionate employees," he says. "It wasn't created as the result of some edict."

So bullish are Anderson and his team on the idea that they have formed a subsidiary called CultureRx, set up to help other companies go clockless. CultureRx expects to sign up at least one large client in the coming months.

The CEO may have bought in, but there has been plenty of opposition inside the company. Many execs wondered if the program was simply flextime in a prettier bottle. Others felt that working off-site would lead to longer hours and destroy forever the demarcation between work and personal time. Cynics thought it was all a PR stunt dreamed up by Machiavellian operatives in human resources. And as ROWE infected one department after the other, its supporters ran into old-guard saboteurs, who continue to plot an overthrow and spread warnings of a coming paradise for slackers.

Then again, the new work structure's proponents say it's helping Best Buy overcome challenges. And thanks to early successes, some of the program's harshest critics have become true believers. With gross margins on electronics under pressure, and Wal-Mart Stores Inc. (WMT ) and Target Corp. (TGT ) shouldering into Best Buy territory, the company has been moving into services, including its Geek Squad and "customer centricity" program in which salespeople act as technology counselors. But Best Buy was afflicted by stress, burnout, and high turnover. The hope was that ROWE, by freeing employees to make their own work-life decisions, could boost morale and productivity and keep the service initiative on track.

It seems to be working. Since the program's implementation, average voluntary turnover has fallen drastically, CultureRx says. Meanwhile, Best Buy notes that productivity is up an average 35% in departments that have switched to ROWE. Employee engagement, which measures employee satisfaction and is often a barometer for retention, is way up too, according to the Gallup Organization, which audits corporate cultures.

ROWE may also help the company pay for the customer centricity campaign. The endeavor is hugely expensive because it involves tailoring stores to local markets and training employees to turn customer feedback into new business ideas. By letting people work off-campus, Best Buy figures it can reduce the need for corporate office space, perhaps rent out the empty cubicles to other companies, and plow the millions of dollars in savings into its services initiative.

Phyllis Moen, a University of Minnesota sociology professor who researches work-life issues, is studying the Best Buy experiment in a project sponsored by the National Institutes of Health. She says most companies are stuck in the 1930s when it comes to employees' and managers' relationships to time and work. "Our whole notion of paid work was developed within an assembly line culture," Moen says. "Showing up was work. Best Buy is recognizing that sitting in a chair is no longer working."

One Giant Wireless Kibbutz

Jody Thompson and Cali Ressler are two HR people you actually don't hate. They groan over cultish corporate slogans like "Build Superior Organizational Capability." They disdain Outlook junkies who double-book and showboating PowerPointers. But it's flextime, or Big Business' answer to overwork, long commutes, and lack of work-family balance, that elicits the harshest verdict. "A con game," says Thompson. "A total joke," adds Ressler.

Flexible work schedules, they say, heap needless bureaucracy on managers instead of addressing the real issue: how to work more efficiently in an era of transcontinental teams and multiple time zones. They add that flextime also stigmatizes those who use it (the reason so few do) and keeps companies acting like the military (fixated on schedules) when they should behave more like MySpace (NWS ) (social networks where real-time innovation can flourish). Besides, they say, if people can virtually carry their office around in their pockets or pocketbooks, why should it matter where and when they work if they are crushing their goals?

Thompson, 49, and Ressler, 29, met three years ago. The boomer and the Gen Xer got each other right away. When they talk about their meeting, it sounds like something out of Plato for HR, or two like minds making a whole. At the time, Best Buy was still a ferociously face-time place. Workers arriving after 8 a.m. on sub-zero mornings stashed their parkas in their cars to foil detection as late arrivals. Early escapees crept down back stairwells. Cube-side, the living was equally uneasy. One manager required his MBAs to sign out for lunch, including listing their restaurant locations and ETAs. Another insisted his team track its work- every 15 minutes. As at many companies, the last one to turn out the lights won.

Outside the office, Thompson and Ressler couldn't help noticing how wireless broadband was turning the world into one giant work kibbutz. They talked about how managers were mired in analog-age inertia, often judging performance on how much they saw you, vs. how much you did. Ressler and Thompson recognized the dangerous, life-wrecking cocktail in the making: The always-on worker now also had to be always in.

The culture, not exactly Minnesota-nice, was threatening Best Buy's massive expansion plans. But Ressler and Thompson knew their solution was too radical to simply trot up to CEO Anderson. Nor, in the beginning, did they feel they could lobby their executive supervisors for official approval. Besides, they knew the usual corporate route of imposing something from the top down would bomb. So they met in private, stealthily strategizing about how to protect ROWE and then dribble it out under the radar in tiny pilot trials. Ressler and Thompson waited patiently for the right opportunity.

It came in 2003. Two managers- one in the properties division, the other in communications- were desperate. Top performers were complaining of unsustainable levels of stress, threatening business continuity just when Best Buy was rolling out its customer centricity campaign in hundreds of stores. They also knew from employee engagement data that workers were suffering from the classic work-life hex: jobs with high demands (always-on, transcontinental availability) and low control (always on-site, no personal life).

Ressler and Thompson saw their opening in these two vanguard managers. Would they be willing to partake in a private management experiment? The two outlined their vision. They explained how in the world of ROWE, there would be no mandatory meetings. No times when you had to physically be at work. Performance would be based on output, not hours. Managers would base assessments on data and evidence, not feelings and anecdotes. The executives liked what they heard and agreed.

The experiment quickly gained social networking heat. Waiting in line at Best Buy's on-site Caribou Coffee (CBOU ), in e-mails, and during drive-by's at friends' desks, employees in other parts of the company started hearing about this seeming antidote to megahour agita. A curious culture of haves and have-nots emerged on the Best Buy campus, with those in ROWE sporting special stickers on their laptops as though they were part of some cabal. Hance, the hunter, started taking conference calls in tree stands and exchanging e-mails from his fishing boat. When Wells wasn't following around Dave Matthews, chances were he was biking around Minneapolis' network of urban lakes, and digging into work only after night had fallen. Hourly workers were still putting in a full 40, but began doing so wherever and whenever they wanted.

At first, participants were loath to share anything about ROWE with higher-ups for fear the perk would be taken away or reversed. But by 2004, loftier and loftier levels of management began hearing about the experiment at about the time opposition to it grew more intense. Critics feared executives would lose control and co-workers would forfeit the collaboration born of proximity. If you can work anywhere, they asked, won't you always be working? Won't overbearing bosses start calling you in the middle of the night? Won't coasters see ROWE as a way to shirk work and force more dedicated colleagues to pick up the slack? And there were generational conflicts: Some boomers felt they'd been forced to choose between work and life during their careers. So everyone else should, too.

Shari Ballard, Best Buy's executive vice-president for human capital and leadership (an analog title if ever there was one), was originally skeptical, although she eventually bought in. At first she couldn't figure out why managers needed a new methodology to help solve the work-life conundrum. "It wasn't hugs and smiles," she says of Ressler's and Thompson's campaign. "Managers in the old mental model were totally irritated." In the e-learning division, many of Wells's older co-workers (read 40-year-olds; the average age at Best Buy is 36) expressed resentment over the change, insisting that work relationships are better face-to-face, not screen-to-screen. "We have people in our group who are like, `I'm not going to do it,'" says Wells, who likes to sleep in and doesn't own an alarm clock. "I'm like, `that's fine, but I'm outta here.'" In enemy circles, Ressler and Thompson are known to this day as "those two" and "the subversives."

Yet ROWE continues to spread through the company. If intrigued nonparticipants work for progressive superiors, they usually talk up the program and get their bosses to agree to trials. If they toil under clock-watchers, they form underground networks and quietly lobby for outside support until there is usually no choice but for their boss to switch. It was only this past summer that CEO Anderson got a full briefing, and total understanding, about what was happening. "We purposely waited until the tipping point before we took it to him," says Thompson. Until then he wasn't well-versed on the 13 ROWE commandments. No.1: People at all levels stop doing any activity that is a waste of their time, the customer's time, or the company's money. No.7: Nobody talks about how many hours they work. No.9: It's O.K. to take a nap on a Tuesday afternoon, grocery shop on Wednesday morning, or catch a movie on Thursday afternoon.

That's the commandment Achen was following when he took off that day to see Star Wars Episode III: Revenge of the Sith. Doing so felt abnormal and uncomfortable. Achen felt guilty. But Ressler and Thompson had told him to "model the behavior." So he did. It helped that Achen saw in ROWE the potential to solve a couple of nagging business problems. As the head of the unit that monitors everything that happens after someone places an order at BestBuy.com, including manually reviewing orders and flagging them for possible fraud, Achen wanted to expand the hours of operation without mandating that people show up in the office at 6 a.m. He had another issue. One of his top-performing managers lived in St. Cloud, Minn., and commuted two and a half hours each way to work. He and Achen had a gentleman's agreement that he could work from home on Fridays. But the rest of the staff didn't appreciate the favoritism. "It was creating a lot of tension on my team," says Achen.

Record Job Satisfaction

Ressler and Thompson had convinced Achen that ROWE would work. Now Achen would have to convince the general manager of BestBuy.com, senior vice-president John "J.T." Thompson. That wasn't going to be easy. Thompson, a former General Electric Co. (GE ) guy, was as old school as they come with his starched shirt, booming voice, and ramrod-straight posture. He came of age believing there were three 8-hour days in every 24 hours. He loved working in his office on weekends. At first, he pushed back hard. "I was not supportive," says Thompson, who was privately terrified about the loss of control. "He didn't want anything to do with it," says Achen. "He was all about measurement, and he kept asking me, `How are you going to measure this so you know you're getting 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 was processing no matter where they were. He told Thompson he'd reel everyone back to campus the minute he noticed a dip. Within a month, Achen could see that not only was his team's productivity up, but engagement scores, or measuring job 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. 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," says Thompson. "I was always looking to see if people were here. I should have been looking at what they were getting done."

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

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

Ressler and Thompson say all the Best Buy groups that have switched to the freer structurereport 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 wrong kinds of habits, keeping people wrapped up in a paper, prewireless mentality as opposed to pushing employees to use technology in the efficiency-enhancing way it was intended. Offices also waste space and time in an age when workers are becoming more and more place-neutral. "This also sets up Best Buy to be able to completely operate if disaster hits," says Thompson. Work groups that go cube-free will be able to redesign their spaces to better accommodate collaboration instead of working alone.

Next year Ressler and Thompson plan to pilot their boldest move yet, testing ROWE in retail stores among both managers and workers. How exactly they will do this in an environment where salespeople presumably need to put in regular hours, they won't say. And they acknowledge it won't be easy. Still, they are eager to try just about anything to help the company slash its 65% turnover rates in stores, where disgruntlement is common and workers form groups on MySpace with names like "Best Buy Losers Club!"

Best Buy has transformed its workplace culture in a remarkably short time. Isn't it also true that ROWE could unravel just as quickly? What happens if the company hits a speed bump? Competition isn't getting any less intense, after all. Best Buy sells a lot of extended warranties, an area where both Wal-Mart and Target are eager to undercut the electronics retailer on price. What's more, the current boom in flat-panel, digital TVs will peak in a few years.

If Best Buy's business goes south, human nature dictates that the people who always believed the clockless office was a flaky New Age idea will see an opportunity to try to force a hasty retreat. Some at the company complain that productivity is up only because many Best Buyers are now working longer hours. And some die-hard ROWE opponents still privately roll their eyes when they see Ressler and Thompson in the hallway.

But it's worth remembering that most big companies fail to grow at the rate of inflation. That's true in part because the bigger the company gets, the harder it is to get the best out of each and every employee. ROWE is one of Best Buy's answers to avoiding that fate. "The old way of managing and looking at work isn't going to work anymore," says Ressler. "We want to revolutionize the way work gets done."

Admit it, you're rooting for them, too.

Normxxx    
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The contents of any third-party letters/reports above do not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of any message or post by normxxx anywhere on this site is not to be construed as constituting market or investment advice. Such is intended for educational purposes only. Individuals should always consult with their own advisors for specific investment advice.

-- posted by Normxxx

» Normxxx - Job Watch Begins.

By Joe Duarte | 24 August 2007

Supbrime Labor Woes

The subprime mess may have one more bit of fallout to think about, job losses, and their repercussions on the overall economy.

The word recession is now the hot topic, as Countrywide Financial's CEO, Angelo Mozilo, let it loose on a CNBC interview. Since the interview, the markets have been buzzing over the potential for a recession.

Aside from the fact that anyone with any sort of intuition could see the fact that a major meltdown in the housing sector could lead to a recession, Mozilo will get the credit for being the first guy to get it right, if indeed there is a recession.

Perhaps more troublesome, than Mozilo's call, though, is the fact that the mortgage sector has already lost 20,000 jobs, according to the Wall Street Journal, accounting for the equivalent of

"15% of the new jobs the economy has been creating each month this year, adding to an already weaking job picture for the sector as "Employment related to real-estate credit"-- a broad category used by the Labor Department-- dropped to 323,300 in June, down 31,400, or almost 9%, from a year earlier, according to the department's data. The number of loan brokers, including mortgage brokers, fell 7.4% to 135,500."

Meanwhile, according to the Seattle Times website:

"construction companies have announced nearly 20,000 job cuts this year, while the National Association of Realtors expects membership rolls to decline this year for the first time in a decade."

Indeed, according to the Times, the current situation has the potential to be

"an employment decline that threatens to rival the massive layoffs in the airline industry that followed the Sept. 11, 2001, terrorist attacks, when some 100,000 employees lost their jobs."

Yet, there may be more to come if things don't improve. According to the Journal:

"Residential construction activity has already tumbled sharply over the past year, with more room to fall. Some home builders are still wrapping up long-planned projects, and are keeping workers on payrolls. The number of jobs in residential construction was down 2% in July from a year earlier, but government data are expected to show sharper declines in construction-related employment in the months ahead."

Normxxx    
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The contents of any third-party letters/reports above do not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of any message or post by normxxx anywhere on this site is not to be construed as constituting market or investment advice. Such is intended for educational purposes only. Individuals should always consult with their own advisors for specific investment advice.

-- posted by Normxxx

» Normxxx - New Victims

By Christian Science Monitor | 25 August 2007

Bracing for a flood of layoffs: The 21,000 job cuts this month in the housing and finance industries almost equal the number for all of 2006.

Just a few years ago, mortgage salesman Terry Orlowski rode the housing boom and a six-figure income down to the car dealership and bought a new Audi A6.

Now, the soaring market and the fast car are gone. Last week he lost his job, along with 6,000 other employees of First Magnus Financial, a mortgage lender. Now driving a 1999 Dodge Grand Caravan, he plans to move back in temporarily with his ex so their two children can stay in private school.

"My first thought was this was one of the bigger companies. No one is safe," Orlowski says.

The flood of layoffs-- some 21,000 since the beginning of the month in the real-estate, construction and mortgage-lending industries-- is one way the Federal Reserve can see real impact on the economy from the turmoil in the markets.

It's not just guys in hard hats looking for work; it's also white-collar workers.

Many of these jobs in finance and real estate are relatively high-paying, which has helped car dealerships and high-end retailers. To be sure, all sorts of jobs are affected, because when a house changes hands, a small army of brokers, appraisers, pest-control inspectors, title searchers and lawyers send out invoices.

"Unlike a lot of other businesses, real estate is everywhere," says economist Bob Brusca of Fact & Opinion Economics in New York. "Even if this turns out to be small potatoes in one place, it has a fairly big impact."

A simple real estate transaction can involve up to 20 people, says Steve Walsh, president of Scout Mortgage in Scottsdale, Ariz. "An escrow officer may make $1,000, the county recorder gets a few hundred, the appraiser makes $300 to $400, the termite man $50 to $100 and there are movers and landscapers and decorators."

[ Normxxx Here:   And it spends almost like real money. ]

Walsh says his accountant told him of some real-estate agents who had been making $200,000 a year but are down to a $15,000 income. He says his firm, with business down 40%, has cut staff, too.

Normxxx    
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The contents of any third-party letters/reports above do not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of any message or post by normxxx anywhere on this site is not to be construed as constituting market or investment advice. Such is intended for educational purposes only. Individuals should always consult with their own advisors for specific investment advice.

-- posted by Normxxx

» Normxxx - Consumers Gloomy

http://normxxxruminates.blogspot.com/200...

-- posted by Normxxx

» Normxxx - Reviews Of Supercapitalism

Reviews Of Supercapitalism:
The Transformation Of Business, Democracy, And Everyday Life

http://normxxx.blogspot.com/2008/01/revi...

-- posted by Normxxx

» Normxxx - Can The Elderly Work Longer?

http://normxxx.blogspot.com/2008/02/can-...

-- posted by Normxxx

» Normxxx - Job Market 2009

http://morenoodlesplease.blogspot.com/20...

-- posted by Normxxx

» Normxxx - The Numbers Racket

http://normxxx.blogspot.com/2008/05/numb...

-- posted by Normxxx