OM in the News: Scheduling Zappos’ Call Center Employees
Last September, Zappos’ CEO Tony Hsieh was wandering the halls of the online retailer’s Las Vegas headquarters and noticed that the customer service center’s walls were covered—floor to ceiling—with sheets of printer paper. He had stumbled across the scheduling method for the center’s 540 employees, who respond to the 10,000 customer inquiries the online retailer receives every day. Employees choose their shifts in order of seniority, by writing their names on sheets of paper listing the shifts they want. “It was like how I signed up for college courses before I could do it on a computer,” says a senior manager at Zappos.
“The old-school, paper-and-pencil process didn’t sit well with Hsieh,” writes Fortune (Jan. 28, 2015), “who is known for his devotion to customer service.” (The Amazon-owned company aims to answer 80% of customer inquiries within 20 seconds.) The wasteful manual sign-up process is now being replaced with Zappos’ Open Market, a newly created online scheduling platform that allows workers to set discretionary hours and compensates them based on an Uber-esque surge-pricing payment model: hourly shifts with greater caller demand pay higher wages. The goal of Open Market is to create a “free-market system,” and strike a balance between the rigidness of customer service center scheduling and what the company says is its dedication to giving employees time to pursue other opportunities at Zappos. Everyone receives at least 10% flexible time, so during a 40-hour week, employees would have 4 hours to play with. They could choose to not work during those hours or they could fulfill them whenever they liked by tacking them onto the start or end of a workday or by coming into the office on a scheduled day off.
Employees decide when to work with the help of Open Market’s real-time metrics algorithm that shows customer demand, as measured by the wait time of the longest-holding customer, and the accompanying compensation rates. The longer the hold time, the higher the customer demand, the more the employees working that shift would get paid. The idea is to tie compensation for the employees—who earn an average of $14.50 per hour—into the Open Market model and pay them a range of hourly rates based on demand.
Classroom discussion questions:
1. What are the advantages of the new scheduling system?
2. How does Open Market differ from employee scheduling systems you are familiar with?