The Effect of Unstable Schedules on Unit and Employee Productivity

Abstract

Unstable schedules—hours that are inadequate, unpredictable (i.e., deviate from scheduled hours), or that vary from week to week—hurt employees. We examine whether they also affect financial performance. Using 52 weeks of data from over 1,000 stores and more than 15,000 employees of a specialty retailer, we estimate the effect of unstable schedules on employee and store productivity. We use an instrumental variable approach and a natural experiment to partially address the possible endogeneity of scheduling decisions. We find evidence that increasing the adequacy and consistency of employees’ hours improves employee and store productivity and find partial support for the positive effect of predictability. Our estimates suggest that improving adequacy has the largest productivity effect; having a typical employee work 24 hours a week instead of 13, without changing overall staffing levels, can increase her productivity by 10% to 29% in different estimations. Our findings highlight the unintended consequences of a narrow focus on matching labor supply to customer demand; incorporating hour adequacy, consistency, and predictability in scheduling decisions could not only create better jobs but also improve productivity.