The Good Jobs Strategy
Zeynep Ton is a Professor of Operations Management at the MIT Sloan School of Management.
She studies the retail sector and the way that some firms have invested in paying more and doing more for their workers. She studied firms like QuikTrip, Trader Joes, Mercadona in Spain – she found that firms that treat their workers better achieve better results.
Quik Trip’s profit is double the retail average – all of her firms are more profitable and show consistent growth. And this is work that needs doing in 2012 The Independent reported that only 1 in 7 British supermarket workers earned a living wage.
We’ll talk about how they make their jobs happier but the key parts are they make some key decisions upfront (1) offer less (2) standardise and empower their teams (3) they train their workers to do all of the jobs and (4) they operate with slack – with spare capacity.
When I studied Zeynep’s work – and even more so when I chatted to her I thought there’s something in this that every single company can use.
Read more on the Good Jobs Strategy
TRANSCRIPT
Bruce
Hello, this is Eat Sleep Work Repeat, I’m Bruce Daisley. It’s a podcast about making work better.
Now, over the last few weeks, I’ve been doing some work with a couple of different organisations and they’ve been thinking about similar things. They’ve been thinking about how to create positive, rewarding culture for their workers and the work of one person sprung to mind.
One academic who’s done a lot of work into this who I think about all the time. Zeynep Ton is a professor of operations management at the MIT Sloan School of Management in in Boston.
She’s Turkish-American. She first came to the US to play college volleyball and obviously now is an icon of operations and management. Anyway, you’re to get a lot from her specific experience because anyone who’s wrestling with the themes of how to make
workplace culture better and how to make work better is going to be able to draw directly from the learnings of Zeynep Tun. She specifically found herself looking at the challenges that some businesses had with high employee turnover. They were losing a lot of people. It was causing their service to suffer. It was costing them lot of money training and recruiting new recruits. Firms basically were spending so much time and effort on catch up.
they were struggling to achieve the results they aspired to. Sound familiar? Anyway, from this, it led to another understanding. Some organizations, by thinking about and planning the employee experience of work, they ended up creating jobs that were less stressful and more rewarding. And it struck Zenipton that, quite often, companies don’t want to make decisions or create limitations for fear of upsetting customers. So, in the process of that though, The work becomes more muddled for customers and less rewarding for employees. I think all of that is directly relevant to the experience that a lot of people have been in, have been undergoing at work in the last two years. Anyway, she goes on and says that the, firstly, really interestingly, she goes on to say that the firms who think about these things set about creating good culture and good jobs. Firstly, are more profitable and have higher revenue growth. Secondly, They build more sustainable businesses so their shares, their stock does better. And so was born the good job strategy. Now the good job strategy has got four pillars to it. Number one is operational simplification. Effectively, decisions are made upfront about what the company will offer. You know, the classic example of operational simplification is Apple. It doesn’t offer 8,000 models. It’s got the consumer range and the professional range in laptops. It offers two or three in each. It offers two or three phones. Very simple simplification.
Next, Zeynep’s companies set about standardizing and empowering. So they had a smaller range that was far more standard. Largely decisions were being made upfront, but then workers were being empowered to
make decisions about how that was implemented. There’s a couple of other pillars. Workers were cross-trained to do more than one job. And finally, the companies were operating with Slack. And that’s a really important one. Slack with a small S. There was spare capacity in the system. So when demand went up, the system had the resilience, had the capacity to respond to it. Now, there’s one caveat along the way that probably is of consideration.
Zeynep’s work were studying the retail sector. And it’s highly possible that you might say, well, you know, retail is a bit different to my business. That’s what I’d ask you to do here. So here you’ve got someone who recognized that good culture leads to more profitability, recognized that good culture led to better growth, and then said, okay, what’s the process that any organization can do to take a step back and to plan the rigors that enable that good culture?
I love this discussion. you do like it, you’re to find a lot of resources in the show notes. You’re going to find a Harvard Business Review article. You’re going to find a link to her book. This is a truly brilliant discussion with someone who I think everyone needs to hear. Here’s my discussion with Zeynep Ton.
Bruce Daisley (04:36.238)
Thank you so much for joining me. Look, you’ve researched retail, I guess now for 15 years, and you’ve got a really good understanding looking at the best places to work. I was fascinated that you’ve helped to understand that there’s a correlation between good places to work and profitability or health of business. I guess you’ve called it the good job strategy. Do you want to just explain the good job strategy and the thinking behind it? And it might help with explaining how I got there, if that makes sense, because I’m an operations management professor. Like I’m not an organizational psychologist. I don’t study culture. I don’t study human resources. I’m an operations management professor. And I started my career now 20 years ago, looking at retail supply chains. And early on in my career, my colleagues and I discovered that while so many retailers
were spending a ton of time and money on systems and technologies to get the right product to the right place, right store at the right time. They were dropping the ball in the last 10 yards of their supply chain. So their stores were full of problems. Like the products were not where they were supposed to be, so customers were experiencing stock-outs. They had a ton of data, but much of the data were inaccurate data. So many plans were just not carried out.
So early on in my career, I quantified how expensive these problems are and how much they were costing retailers in terms of sales and profits. And then when I looked into why are these problems happening all the time, that’s where I found the answer, partly in labor practices. So stores that had more turnover had more problems. Stores that had less training had more problems. Stores that didn’t have enough people to get all the work done had more problems and in fact, retailers were operating in what I call a vicious cycle. That started with a mentality that people are just a cost, so let’s minimize that cost, let’s under invest in people, that leads to operational problems, operational problems reduce sales and profits, then sales are lower, the labor budgets shrink, and then the vicious cycle continues. And for me, as an operations management person, this just made no sense because it was expensive for companies, they were leaving a lot of money on the table in terms of profits, sales, in terms of lost productivity. It was bad for customers. I mean, you ask customers how many of them have had bad experiences in retail stores, just because their basic needs are not met, you get a long line of answers, and it’s just brutal for workers. So that prompted me to look for companies that operated very differently. And I ended up studying a couple of retailers that were able to
create great outcomes for their investors, good jobs for their employees, and great value for their customers, and I asked what’s in common among them. And that’s what I call the good job strategy. And I wish what was common among them was just that they paid their employees well, much better than their competitors, they treated them well, and that led to higher success. I wish it was as easy as that. But what I found was that these companies had a fundamentally different operating system than their competitors had.
They made a set of operational decisions that improved the productivity of their workforce, that improves the contribution of their workforce. And those operational choices, along with investment in people, is what created those great outcomes for all stakeholders.
Because the thing I found really interesting was that I found myself, when I read through your work, I found myself empathising far more than ever before that retail is a state of organised chaos, right? And it’s the rules that you create that create an environment for staff to thrive or fail. That’s the way I interpreted it.
That is absolutely right. I’ll give you one example of that organized chaos and how retailers in our current world are so big and so siloed and so many different people at the headquarters make decisions and they have no idea how those decisions affect customers or the people on the selling floor. For example, merchants in an effort to increase sales might say, I’m going to run a promotion.
Zeynep Ton (08:52.17)
And you know what, I was supposed to run that promotion next week. I’m just going to do it this week just so I can show higher sales. Doing that in their world is an effort to increase sales, but that hurts the work schedule of hundreds, thousands of people. That just disrupts the work so much and no merchant that I have spoken to ever thinks about the impact of their decisions on the people who are doing the work and on the customers. And it’s because of the siloed nature of work and you put hundreds of thousands of decisions together and what you have at the end is a chaos.
Because it’s simple things like if someone comes to ask me as a shelf stacker, while I’m stacking shelves, where I would find the pasta. There’s a decision, there? There’s a strategic decision. Do I take the customer there? Do I point in the direction? Do I do nothing?
Yeah, and think about this Bruce, and this is what separates the good jobs companies from bad jobs companies. So if you go to here, it will be Trader Joe’s, let’s say, a supermarket chain that’s very well loved by the customers. If you ask a person, where is this pasta? They will take you to the pasta area. They would know everything about all the pastas in there, and they will tell you which one is their favorite and why. Now, the reason they can do that is first they have time.
because the good jobs companies operate with Slack. They staff their stores with more hours of labor than the expected workload. So they have the time. Second, they’re knowledgeable about the products because in a typical supermarket chain, you might have 200 types of pasta. I’m not making this up. But in Trader Joe’s, there will be maybe 20 types. So that employee can be knowledgeable about that and they can tell you about it. Now that choice of offering fewer products, is a very much operations choice. You don’t even think about it when you’re making it, but it affects both the customer service.
and the employees ability to shine in front of the customer. Because now they’re knowledgeable. Now they can tell you, look, you should buy this and what are you making? for that you should buy this because it will work so much better. So what I found in my research is that operational choices like this not only create a better experience for the customers and make employees a lot more productive, but it makes their job a lot more meaningful because now they can contribute to something bigger than themselves and they can be helpful to customers.
Because there was one thing that I was so struck by and you use a phrase you say, being nice is not enough. If a firm decides that, okay, we’re going to treat our employees well and hopefully by extrapolation, that means they treat customers well. And you said, if milk runs out every day, it doesn’t matter how nice the employees are, that you’ve delivered bad service. And it seems so critical for me that it’s not just about employee attitude, it’s about providing the infrastructure for employees to be delivering a good service.
Exactly. We think about employees’ contribution as fixed and as a function of their motivation. If they are motivated to work hard, they’re going to contribute so much more, they’re going to increase sales, et cetera. But what I found in my research is, yes, there is that part, but so much is the system in which the employees operate. And if you design that system well, then you can plug in an employee that worked at the bad jobs company, plug them in a good jobs company, they will contribute a lot more.
Zeynep Ton (12:09.856)
in that new environment because of the operational choices that you have made. And by the way, these companies are not just nice to their employees, they have very high expectations of their employees. And I found good jobs and high expectations, high standards to go hand in hand.
Bruce
Talk me through that. What would be the difference in expectation?
Zeynep Ton
So I will tell you the difference in expectations will be anywhere from the moment you are being interviewed, hired, to how you do your work. So companies like Costco, Trader Joe’s, Mercadona, QuickTrip, these are the companies that I’ve studied. First of all, they will be a lot more deliberate in their hiring to hire people who will fit their environments. If you are applying to QuickTrip convenience stores, you’ll do a math test. So you have to pass the math test to just…get into a convenience store chain. So high expectations starts all the way in the hiring process, but then there are work standards and those standards are not just nice to haves, not that they are optional. You have to meet those standards. So at QuickTrip, after you’re hired, they give you a week of training and 72 % of the people pass training, 20 % don’t pass training because they can’t do the tasks.
in the time that they’re supposed to do, can’t do their tasks and smile at the same time. So not everybody is a good fit for that environment. And then in these environments, there’s tremendous peer pressure to perform well. Because for you to be able to pay people well in these low-wage settings and offer good benefits, you have to have a very productive workforce.
Zeynep Ton (13:40.034)
There are very high standards. Employees have to meet those high standards. But at the same time, employees have high standards of the company. So they have high expectations that the company will take care of them. They will offer good benefits and they will set them up for success. So when there are high standards or high expectations on both sides, it works. But when it’s just on one side, so company has high standards, but they don’t take care of people, that’s not sustainable. The employees have high standards of the company. So you expect to be taken care of, but then you don’t perform so well. That’s not very sustainable either.
Bruce
Tell me this, I think it was Mercadona that you said that you were looking at their staff turnover, their employee attrition, the amount of people leaving, and you were convinced that you were reading the numbers wrong because I think it was 2%, which seems remarkable and you go on to describe what a coveted job it is. As a step back, it seems like a good job. Is the culture good there or is it just coincidentally just a good job that you want to stay? Do people look like they’re happy and loving the joys of their job?
Zeynep Ton
I mean, you can think about whether this is a good job or not in multiple levels. One is just by looking at the number. I when I heard about their employee turnover, I didn’t believe them. But first of all, everyone has some basic needs and higher needs, right? The basic needs are you have to make enough money to put food on the table and take care of your family. You have to have predictable schedules that allow you to have a decent life. You have to have some career advancements and security and safety. So when you look at Mercadona,
you see that people’s basic needs are met because the wages are much higher than the industry average. There’s a bonus, one or two months of salary, depending on how long you’ve been there. They use 100 % internal promotion.
Zeynep Ton
Employees are provided their schedules one month in advance, so their basic needs are met. But beyond that, all of us have these higher needs. We want to have a sense of belonging, we want to have purpose in our work, we want to have mastery, want to be able to do a good job and shine in front of the customers rather than fail in front of the customers. We want to be recognized for the good work that we do. So when I looked at
Mercadona and not just Mercadona, QuickTrip, other companies that I looked at as well. It wasn’t just those basic needs that were met, the higher needs were also met in terms of meaningfulness or purpose, mastery, sense of achievement, etc. If you go to work and you shine in front of the customers every day, that’s awesome. If you go to work and you fail in front of the customers every day, which is what I see in other companies, that’s terrible.
And the purpose thing is fascinating, isn’t it? Because I think it’s so easy, especially if you do an office job, to not always believe that every firm has access to purpose. Purpose feels like every employer won’t be able to offer it. But the real differentiation between these retail firms who are very emphatically delivering purpose, and a sense of meaning actually.
to the people who work there and those who aren’t is really stark. You use the words, you talk about dignity. I wrote this down. One thing I’ve heard over and over again is how motivating it is for staff to be able to help one person after another. It was really fascinating to hear that, that people could get a genuine deep sense of fulfillment and happiness from doing these jobs.
Absolutely. I mean, we are social animals. We are born to be helpful to other people. It’s in our human nature. But oftentimes the systems prevent us from doing what we want to do. So if you give the people the right tools, the right resources, the right training, time to be able to do a good job and be helpful to customers, of course they find more meaning in the work that they do. If you go to Mercadona, they will call their customers the bosses and everything is around the customer.
Zeynep Ton (17:14.025)
everything that they do, they say, we don’t do anything that doesn’t add value to the customer. So even for the frontline employee, what they’re thinking about is, how do I make decisions that make a positive difference in the life of somebody else? And that’s my customer.
Bruce
The thing that you return to all the time that these best companies, I mean, you give a set of criteria based on your studies, but the thing that you return to time and time again is the notion that these best practice firms, they have systems that standardize and empower, which just initially on the outside seem sort of antonyms, right? They seem like they’re almost in opposition to each other.
But you say that these firms are very clear on what they do, like you mentioned before, they might stock a very limited range or they might only do things in a certain way, but then they’ve got enough slack resource to empower their teams to play with autonomy around the edges.
Zeynep Ton
Yep. So there are four choices, big choices that these companies make that are different choices than their competitors make that enable them to create this great value. And those are, I call it focus and simplify. So being very, having strategic focus and operational simplification, the combination of standardization and empowerment, cross-training and operating with Slack. These four choices work very nicely together.
and they’re not really specific to retail. I mean, you see these choices in action in so many other operationally excellent companies.
Bruce Daisley (18:38.766)
That was going to be our next question because this just didn’t feel like it’s singular to retail. It feels like any firm could be thinking about these things.
Zeynep Ton
Absolutely. mean, focus and simplify. Think about the environments that have figured out what they stand for and how they simplified their work. mean, Apple is a great example, right? Apple doesn’t give us a million different options for our phones. They give us two, three, four options. In-N-Out Burger is a chain of burgers here, very popular. There are just a couple of things on their menu. Southwest Airlines. So you can find examples from lots of different contexts. And in fact, this one company that everybody in my field who specializes in operation studies is Toyota. If you look at Toyota production system, which some of us wish was called Toyota management system, you will see all of these four choices in action at Toyota production system. So they simplify their product line, they use common parts, they standardize the processes, but then they empower their workers to make decisions about stopping the line, about identifying problems, they cross-train their workers.
and they operate with like, these are the things that we know to be fundamentals of being operationally excellent, but just knowing is not enough for you to exercise.
Yeah, just knowing is not enough because you talked about the meeting room chairs for Toyota. Or no, it wasn’t Toyota. You talked about a firm that implemented Toyota system. But Toyota has like this insistent adherence to the process. So when you finish in a meeting room, aside from the production plant, everyone puts their chair away, cleans up the litter. And you said that another firm tried to implement it, but the chairs were left chaotically and things weren’t done the same and boxes weren’t.
Bruce Daisley (20:21.198)
Tidy the way.
Zeynep Ton
Exactly. These four choices that I talk about sound so simple, but the difficulty is in their nuances. So I think pretty much every manufacturing company would say standardization is great. But when you look at how they standardized and how much conformance they have to the standards, that’s where you see the difference between them and Toyota. So Toyota will standardize it in a way that involves the workforce and they empower people to improve those standards all the time.
That’s one of the reasons why there’s high conformance to those standards, whereas in so many other manufacturing environments, it will be imposed on the workers. And of course, if a standard is imposed on you, you won’t comply to it. I see the exact same thing in the retail stores and probably in pretty much every operating environment. If you’re not involved in creating things and if the why is not clear to you, you’re not going to comply with it.
It strikes me that the standardisation, one thing that the standardisation does, it tends to relieve pressure from the employees. So if these constant demands upon the employees to, can you do this? Can you do, especially in retail environments, a lot of requests from people, unless they’ve got a set of rules to understand how they navigate those requests, it means there’s a lot of pressure put onto them. in a profession where you’re looking to really sort of exploit the incremental effort that people might apply, giving them rules helps them navigate that to do a better job.
Zeynep Ton (21:49.548)
You know, I think about standardization as a step for empowerment. If you standardize the routine things so people don’t even think about them, you reduce that mental overburden. And now you can really focus on the customer. Now you can really focus on improvement. Now you can focus on making things better. But if you’re always thinking about how to do what and when to do things because they’re not standardized, now you’re our limited mental capacity.
is spent on those things that should just be routine and we shouldn’t even think about them. So, so many people see standardization as a bad thing, but what we in operations management world know is that standardization, if used right, is what enables empowerment and what enables improvement and what enables meaning. Because now you don’t have to worry about those things. Now you can really worry about things that really matter. I’m a huge believer in standardization, not in just the work, but even in our lives.
Yeah, it just really strikes me that so many firms away from retail or car production, they don’t even consider standardisation as something that will help employees, will help improve their service. I don’t think they give it enough consideration. Let’s lift the bonnet on, let’s lift the hood on one business that a lot of people may have really loved but went astray and you spent four years studying Borders and Borders Bookstore.
And I just want to say they didn’t go out of business because they did research with me.
Bruce Daisley (23:20.75)
But you immerse yourself in them and so what went wrong because they might be one of the retailers that we walk into and think okay category killer got more range than anyone else they were celebrated at the time for adding leisure to like the value offering for bookstores so what went wrong at Borders what can anyone learn from them?
And apart from that, in 1980, Borders was thinking about giving their customers floppy disks so they could browse store inventory and see what’s in stock before they visit them. What happened in Borders? Well, of course, Amazon happened to Borders. But apart from that, Borders found itself in the vicious cycle.
Borders had stores that were understaffed. Borders had high employee turnover and Borders had a lot of operational problems. I studied misplaced products inside Borders stores and I found that one in six customers could not find a product that was physically available inside the store. As they found themselves in this vicious cycle, they started investing less and less in their employees. So one of the things that Borders did…
First of all, I had so much affection for the company because I studied them so deeply. But one of the things that they did was they had these community relations people inside the stores and they would organize 15, 20 events per month for their customers. Now think about a world in which the online channel is taking away sales from you.
Isn’t this just a fantastic opportunity to bring people into your stores through these community events, through these connections with customers? But as Borders found itself in the vicious cycle, one of the first people to go were these community relations managers. Little by little, they under-invested, under-invested, and then of course they had a huge stock buyback when their price was so much higher than it should have been, and that kind of killed Borders. But it was being stuck in that vicious cycle, and Borders is not the only company, right? Then we saw Circuit City.
Zeynep Ton (25:16.386)
We saw Toys R Us in an environment like this, only the excellent companies will survive. The companies who really provide a compelling reason for their customers to shop at their stores will survive. And the mediocre ones, little by little, we will say goodbye to.
It’s fascinating because when presented with some of these big decisive moments, so Borders had, think, I’m trying to remember now, but Borders had a bad earnings call. Their reaction to that was to cut staffing costs or there was something related to that. Whereas I think Mercadona had a bad run or they went into the 2008 financial collapse and they cut their prices, but they managed to navigate it by doing the right things by their employees. I’ve told that inexactly, but correct me.
You’re absolutely right. What is common among these companies that follow the good job strategy is they have very clear values and they have a prioritization that puts their customers and employees ahead of the shareholders.
Richard Banks said about Costco, it’s better to be an employee than a shareholder, right, which was untrue, but yeah, go on.
Zeynep Ton (26:24.222)
And the Costco CEO at the time, Jim Sinekul, would have said, if you believe so, sell my stock. But by putting customers and employees ahead of the shareholders, these companies in the long term do a much better job for their shareholders. You look at Costco’s performance versus competitors, you see the answer. But also making this prioritization very explicit enables people to make the right trade-offs under performance pressures. So if there’s an economic crisis,
You know you can’t hurt your customers. You know you can’t hurt your employees. What else can you do? Those constraints enable these companies to be even more innovative. So during the financial crisis, Mercadona gave their employees bonuses. They cut prices for their customers by 10%, which is a huge deal in an environment where the profit margins are single digits. And the response to that was higher market share once the crisis was fought.
But yeah, those constraints drive innovation and enable these companies to be stronger in the long term.
Bruce
You published this work and it’s been well received. One of the things you mention in the book is that organisations like Walmart, the managers of stores in Walmart historically were always under pressure to reduce staff costs. And in fact, know, understaffing is very often in all of your evidence, often a route to profits going down. You lose revenue, you lose profits if you’re understaffed. Walmart were one of the people responsible for that. But since you’ve published this,
Walmart have come out and said that they’re adopting it. So what does that look like? Do they come and talk to you or do they just try and adopt the ethos of the good job strategy?
Zeynep Ton (28:09.742)
So during the last couple of years, a number of CEOs of large retail companies have reached out to me and said, I read the book and it totally resonates with me. A year and a half ago, I started a nonprofit company with Roger Martin called the Good Jobs Institute. And our mission is to help companies thrive by creating good jobs. We work with a number of retailers to improve jobs at their context. I won’t name names, but what has been so wonderful for me and what gives meaning to my work at least internally is that executives are embracing this and saying we want to go there, we want to take those steps. But what has been also challenging is how difficult it is go from a vicious cycle into a virtuous cycle and from a system that’s designed under using people as interchangeable parts into a system that redesign around capable, motivated people.
how challenging it is to make that transition and how long it takes. So if you talk to Walmart CEO, he would say, you know, we started this journey, but we are not even halfway done yet, right? And they raise wages, they’re working on cross training, they’re working on standardization and empowerment. They’re doing a bunch of things, but it takes a long time for these things to be implemented. I really hope so because if Walmart is able to do this,
Bruce
Do you think they’re going to get there?
Zeynep Ton (29:36.214)
successfully and most recently they’ve had some positive same store sales growth results. So it’s been good to watch from outside. If they are able to turn this huge ship around and it is in the United States alone, you 1.4 million people, 5,000 stores, they would redefine what it means to offer jobs in retail. They would change the landscape of retail tremendously.
When Walmart raised their prices a few years ago, other companies raised prices right away. When Walmart is working on making schedules better, other companies follow. So they have this amazing effect. So I do hope that they are successful.
Bruce
Do you think they’re getting there? Because probably the thing I’ve skirted over and not covered enough was the fact that these firms, well, you know, one retail chain has three and half times the customer engagement of the worst. But firms that have the good job strategy are more profitable and have higher turnover per square foot. I think probably the thing that I’ve not dwelled on enough, these aren’t indulgences to their employees. These are well reasoned. sensible financial decisions that coincidentally have a good social outcome to them,
Zeynep Ton
Absolutely, and the companies that are coming to me, the executives that are coming to me, I mean, they’re all nice people. I know that they all care about the moral aspect of providing good jobs, but they’re coming because they’re struggling financially. They’re struggling competitively. Their stores aren’t as productive as stores of Mercadona or Quick Trip or Costco. Their employees are not as productive. Their inventory turnover is not as fast. Their customers don’t love them.
Zeynep Ton (31:20.076)
So those are the reasons that they turned to the good job strategy. And of course, the icing on the cake is that they end up doing something great for the society. But the primary reason is financially and competitively, this makes so much sense. And I think many other executives, Bruce, are aware of this, but what is really required is, I remember having a conversation with one CEO and he said, you know, what struck me when I talked to you is about the values that you talk about, values around customer first and continuous improvement. Those are really difficult values. And I’m thinking, wow, this person was first of all honest with me, but if you don’t have conviction that being customer first, making sure that your employees are your most productive resources, like those are not nice to have, but those are how you win. If you don’t have that conviction, you won’t be able to do this. If you don’t have commitment, you don’t have courage, you don’t have credibility, by investors, by the board and by the others around you, you won’t be able to do this.
thing that I feel so thrilled about reading your stuff is it feels like these an intellectual argument for the good guys to win, right? For people who actually probably instinctively did something that they felt was right initially, like the Mercadona bonus for employees. I think it was 250 million euros when they made 500 million that year. So was like it was…
It’s almost half of their profit that year. But they were doing things that felt viscerally the right thing to do. And so it’s so pleasing when they turn out to be the right things economically to do. It’s just, know, I do hope that other firms see this through. I suspect the truth is that if other firms don’t see this through, then it’s going to be at their own expense anyway.
Zeynep Ton (33:02.886)
What you said is that internal conviction is so important. Jim Sinegal, the co-founder of Costco and my business hero, he comes to my class every year and he says from the beginning, they wanted to make sure that they did not make money off the backs of their employees or the backs of their customers. And they believed that if you have a great workforce and if you set them up right, you will have great results. They had this internal conviction. They didn’t do numbers on it. They didn’t see…
what would be the return on investment on paying people more? They just believe that this is the right way and the smart way to run a business. Yeah. And not every business leader has that conviction.
Bruce
Yeah, I think the reason why I was so moved by it is because so often, certainly in the United Kingdom, in Europe, we hear about zero hours retailers, zero hours contract retailers who don’t give a guaranteed number of hours per week and they have people on call 24 hours a day. And it’s a deeply cynical approach to some of the worst paid people in the country. You talk about how the good job strategy employers try to ensure there’s a minimum amount of hours given. And sometimes they have to do that by getting people to train in other disciplines so they can stock the shelves during the day or they can do other jobs. But it’s time and time again, actually, I looked at one thing you talked about, a supremely profitable employer. And I thought, I wonder if that’s down to technology. And actually it was down to training rather than technology. It was about the way you treat and empower individuals rather than technology. and was really inspired by that.
Zeynep Ton (34:43.797)
Yep. And it’s not that these companies are anti-technology. When I visited Mercadona, they said to me, we never want to ask a man to do what a machine can do. Whenever they can replace routine things by technology, they will because they want a more productive workforce and they want their people, employees to contribute not just their hands, but also their minds and their hearts. But they see the technology as a compliment.
to people rather than a replacement of people and enabling the people to do what they do best.
often about treating people with sort of humanity, right? I saw something, it was about QuickTrip and it was talking about employee retention. And it said, and I think a member of the team there was asked why they stay. And you said, the number one reason people stay with QuickTrip is not the money, it’s because the manager will do the same jobs they do. So when loading needs to be done, there’ll help, when stock taking needs to be done. And I thought it was a brilliant example of how When we feel like we’re being treated fairly, we’ll give as much extra effort as we possibly can.
Absolutely, when you’re treated fairly and yet when you feel that you’re part of a team that’s driving towards a goal together and everybody chips in. The store managers, assistant manager, cashier, everybody does their part and are able to help each other out when needed to accomplish the same goal that gives an amount of meaning in the work that people do. And by the way, they say it’s not the money but.
Zeynep Ton (36:17.454)
they pay quick trip, if you start as a full-timer at quick trip, you make $40,000 a year in Tulsa, Oklahoma, which is double the wages in retail. they have taken care of the pay part. Pay is not a demotivator, but you have taken care of that. But now you can work on other things that create engagement and motivation. I just want to highlight, especially in these low wage positions, pay and predictable schedules, those two are so incredibly important. Because everybody can treat you with dignity, but if you can’t put food on a table at night, doesn’t go too far.
Absolutely. were a couple of things that, this is sort my final question really, there were a couple of things that really moved me in your book which is a strange thing to say, about a sort of, and they were… I haven’t read my book in a long time by the way
Bruce
Yeah, let me tell you, I was moved by it. The things that really moved me were I loved the story, and this is a simple thing, but I loved the story about the Down syndrome guy. And I think it was at Trader Joe’s. He was, he was, there was something at one of these chains where at the supermarket chain and they were asked, they were asked, all the employees were asked to go and think about how they could create good customer moments, make sure that they were making customers happy. And this Down syndrome guy, I don’t know if you want to tell the story, went home and wrote his thought for the day. And he was a bag packer. And they only noticed that he’d done this when the line for his cashier was so long and no one could work out why. And I was really moved by, it feels like the sort of thing that, like you often hear in these cases, things that don’t scale.
But it just struck me that that and an example of where firms were bringing the elderly checkout ladies to work during the day because they knew that they would interact at a more human level with customers with children. And I just thought, you know, actually the one thing that runs through it is the humanity and bringing humanity to some of the approaches.
Zeynep Ton
Absolutely. The way these companies have set up their systems enables that humanity to come across. I take my children, I make a point of not visiting the stores that offer bad jobs because I don’t want my children to see people at their worst. I want them to see them at their best. You know, when we go to Trader Joe’s and the people at the checkout give stickers to my kids or they find the frog in the store and they give snacks for finding the frog. Like these are little things, but it shows the human side of us and provides those connections. My kids always look forward to going to Trader Joe’s or to Costco just because at the exit somebody draws a smiley face. I mean, as simple as that. And I wish we had more of these interactions in the social places and fewer of those interactions where people don’t have the time or resources.
or just the energy to even smile at us because they’re wondering, my God, I wasn’t supposed to work today and I was asked to come to work in the last minute or how am I going to afford this surgery or how am I going to put food on the table? When we are in those environments, it’s just the opposite. The humanity just does not come alive. And that’s why I think Christensen says this really nicely. Management is the most noble profession.
Zeynep Ton (39:59.916)
if it’s practiced right. Because the types of decisions that business managers make have an impact on the lives of so many people, both employees and the customers. To me, as a business school professor, it’s our obligation to teach us that noble profession that they will go into after they graduate from our schools and use that right and realize that they are in a very privileged position, but that privilege comes with responsibility and obligation.
That’s great. Next time we speak, we can talk about implementing the good jobs. That’s been the fun part. You I haven’t been talking about the good job strategy as much. Now I’ve been focused so much on if you are in the bad job system, how do you transition into the good job system? That’s so exciting. Companies are doing it. There have been some great examples. I mean, it’s one of my favorite examples is call center where the executives read my book and they were in a vicious. cycle, they had high employee turnover, bad customer service, low productivity, and they decided to implement the good job strategy. This is Quest Diagnostics and it’s at their call centers. And it’s been wonderful for me to hear about how a company outside the retail context could take this, implement it. And the outcome was not only higher wages and better career paths for their workers, their turnover reduced substantially, absenteeism dropped substantially.
But it was also much better customer service. And by the way, they saved $2 million, 1.2 million of which came from ideas from the frontline rep.
Bruce
Tell me, what did they do? What specific actions did they do?
Zeynep Ton (41:40.142)
They did so much. Whenever a company is in a vicious cycle and they want to move into the virtuous cycle, one of the first things that they need to work on is to stop the bleeding as quickly as possible. Stopping the bleeding means bringing some stability into the employee side and also on the operational side. So the very first thing they did was to go around and ask, why are people leaving? What can we do so that they stay?
And what they found out was that wages were not high enough. People didn’t have good career paths. And those were the number one, the most important reasons. So they said, okay, we have to raise pay. We have to offer better career paths, but we’re already losing money. Like how do we fund this? And the way they funded that was through implementing the first operational choice, which is let’s increase wages, but at the same time, let’s reduce the workload. Let’s find ways that we can stop.
doing things and asking people to do things that don’t add value. That way, we need fewer resources. So they implemented those two and at the same time, they said, we have to have high expectations. If we pay people more now, we also need to make sure they show up on time. So they changed their attendance policy. So those were the first three things that they did. And once they got to more stability,
they start saying, how do we cross train? How do we standardize processes? How do we empower people? And I think about a year into this implementation, they had these frontline idea cards where they would get ideas from the front lines and they ended up having more than a thousand ideas within a year framework and implemented actually more than 1500 ideas and they implemented a thousand of them.
And that’s what led to amazing cost savings. So this is one example of a company. I mean, when you look at those four choices and investment in people, they implemented maybe 20 different things. But same thing with another retailer that did this in the West Coast and had similar results. So what has been fascinating to me to watch is companies that are taking this and implementing them. And some are more successful than others.
Zeynep Ton (43:55.168)
I’m now learning more about what is a successful implementation so that I can start thinking about what the next book is going to be.
I’m so grateful for your time. you. How awesome at the end of your career if you think that several millions people’s lives have been made happier by their firms treating them with more dignity and more humanity. It just seems to be a great calling.
It is at our non-profit Good Jobs Institute, we have a goal of improving 10 million jobs in 10 years. So that’s a big goal, but we can do it. Not us alone, of course, it’s lots of others, but we think it’s doable. If we can see higher wages, more predictable schedules, and more meaning and dignity, we will be very happy.
Bruce Daisley (44:46.85)
Wonderful. I’m so grateful for your time. Thank you very much.
Zeynep Ton
Thank you. I enjoyed it.
Bruce Daisley (44:55.086)
Thank you Zeynep, that was brilliant and thoughtful and just fascinating to hear all of the components of that. Like I say, you’re going to find some good show notes for it. You’re going to find an article linked to her book. But if you’ve enjoyed that, why not share it with a colleague would be my suggestion. know, prompt a colleague to say, why aren’t we thinking about these considerations ourselves? Is there any way that any of us could maybe use this framework of the pillars?
and say, okay, let’s try and adapt our business differently in 2022. Really interesting consideration. If you liked it, please do share it. As ever, giving a review on Apple is just about the kindest thing you can do for a free podcast because it enables more people to see it. So if you’re in the Apple podcast app, it’s incredibly easy to do. You can scroll down the page, give it a five-star rating and add a couple of comments.
And that’s just about the best thing you can do for a free podcast. I’ve been Bruce Daisley. Always welcome you getting in touch. Thank you for listening. See you next time.
