Organizations and Transaction Costs
All throughout college, I have worked at the campus drugstore Walgreens. The structure of Walgreens is hierarchical consisting of a general store manager, an assistant store manager (ASM), an assistant store manager trainee (ASMT), shift lead managers, and the beauty consultant (BC) and customer service associates (CSA. However, in various ways this structure is ignored to meet unique store needs. I began as a part-time customer service associate (CSA) towards the end of my freshman year. At the beginning of my junior year, I accepted a promotion to a higher paying full-time position as a beauty consultant. My responsibilities expanded greatly including dated expectations from adjustment to my position as CSA.
Over the summers that I was a CSA, I found addition hours at other stores in the district to guarantee a full 40 hours. Many stores’ organizational structure differed greatly from Green street. Typically, SMs would handle much of the office work and ASMs were in charge of monitoring CSAs and assigning tasks. Shift leads operated similar to CSAs with managerial duties - most namely handling complex customer concerns and counting drawers at the end of the shift. However, at our store, there are many structural mismatches that stem from the high customer volume in contrast to the skimpy hours. External oversight such as the district and regional management ignore uniqueness on our central campus location. For instance, even through high volume seasons we are only allowed to order inventory replenishment once a week. The standardization of in-store practices companywide makes us especially vulnerable to shocks. This hurts our survey records, which diminishes the amount of working hours granted to us by corporate which causes a host of other issues.
Management inefficiencies and our campus location make the turnover extremely high. As a campus location, Walgreens offers a fairly competitive pay at $10 an hour for low skilled work as an incentive. However, this is not attractive enough for the type of people management believes are “good fits”. Many of the people who apply to the CSA position are nearing the end of their college experience, are in search of career-related work, or are high performing students. This makes management ineffective by causing training costs to skyrocket. Many CSAs stay for as little as two months while other apply to work full time and immediately drop to part-time. We cycle between a shortage of hours during high customer counts and a surplus of hours due to absences and hiring freezes.
Throughout the chaos, I still enjoy my job and get along well with my coworkers. Having been the longest standing employee in the store, I was coded in the store computer as a manager. This override allows me to perform a few management functions during the rough patches in order to maintain my department and adequately help the newer employees.
Walgreens has shifted greatly in organizational structure since I have been there. Two years ago, Walgreens released a program called Frontier. The goal of Frontier was to employ a bottom-up type of structure designed to boost communication. The program lasted about a month before it was completely scrapped and never mentioned again. Afterwards, we began doing weekly “Pulse” meetings, which have a huge production cost because time that could be spent working is instead allocated for meeting. To fix this inefficiency, Pulse meetings are now held bi-weekly. However, there is a trade off in costs. The communication lacks thereafter. Because so many of the employees are part-time, communication dwindles.
Some of the transaction costs that are most apparent are external responses to coolers breaking down. The coolers have malfunctioned at least twice a summer for the last 3 years. This creates customer dissatisfaction which in turn decreases hour allocation. Lower budget hours results in overworked CSAs. However, the conclusion has not been to replace the coolers. Another area that is lacking is communication of work that has been done (which sometimes results in work being done twice).
Before commenting on the content of your post, please put line spaces between paragraphs in your future posts. The indenting helps here, but if I look at your post in my blog reader the indents don't survive.
ReplyDeleteRegarding content, let me observe that I frequent the Walgreens in my neighborhood. This is mainly for the pharmacy (you didn't mention that function at all in your description, is there a pharmacy in Walgreen's on campus?) and then for a variety of over the counter medications that I take regularly. From my point of view that is the core function of Walgreens, but then there is what seems like a convenience store function bundled with that. For the different functions the customer cares most about whether there are bottlenecks. Because my health insurance provider knows that Walgreens is my preferred location for getting prescriptions, I'm something of a captured customer, as are the many others in my neighborhood who are similarly situated. The pharmacy has a drive through. For the most part it works okay, but sometimes it is very slow.
I gather that the Campustown store is different in the needs of the customers, whom I assume are mainly students. You might have discussed the demand side a bit more in your post before talking about the org structure.
I believe that for some reasonable comparisons you would need to look either at (a) other stores in Campustown with a similar customer base and ask whether they too experience the type of turnover you reported, or (b) other Walgreens stores that are new major college campuses. Comparing the store performance to one where I shop is too much of an apples and oranges comparison. If senior management doesn't understand that they are not thinking creatively enough.
I got the sense that in the last couple of paragraphs you switched mode from analysis to venting. Here let's apply the main criterion our course has to offer. Is this an efficient way to run the business or not? I don't know the specifics of cooler maintenance or replace (but we had to replace the main HVAC unit in our house this summer and it cost a pretty penny), but it should be pretty straightforward to run the numbers on a replacement investment to see if it pays for itself or not. I don't know if your store manager would share those numbers with you, even if knowing that you are an econ student, but if you're curious you might ask. Now that the summer is almost over, the decision probably can be put off till next spring.
The question to wrap up your post with is whether the various perceived inefficiencies are necessary, given the location of the store and the revenue it brings in, or if it could run smoother and still stay in the black. Conjecturing on that might be a good think to write about in your response.