The Good Jobs Strategy | Zeynep Ton

Summary of: The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits
By: Zeynep Ton


Delve into the tactics and mindsets that can transform retail businesses into thriving, customer-oriented enterprises in Zeynep Ton’s ‘The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits’. Explore how model retailers such as Costco, Trader Joe’s, QuikTrip and Mercadona break the mold and invest in their workforce for high-quality operations and exceptional customer service. This book summary breaks down the crucial components of good jobs strategies, such as operational excellence, standardizing processes, empowering employees, and cross-training. Discover how retailers can maintain a robust labor budget to achieve higher sales, profits, and investment capacity, while providing excellent customer satisfaction and strong employee engagement.

Retail Workers’ Low Wages and Dropping Morale

Retail sales workers, who hold the two most common jobs in the United States, are paid below the median wage. Full-time retail workers barely scrape above the poverty line while part-timers can’t make a living thanks in part to unpredictable schedules. These jobs are among the fastest-growing in the US, with prices being paid by employees, customers, and taxpayers. Retailers who skimp on wages create wider problems like dropping morale and engagement between employees and put their profits at risk. The author also argues for the need for skilled and motivated employees for good operations.

The Cost of a Bad Jobs Strategy

Many retailers believe that keeping labor costs low is the key to profitability, but this “bad jobs strategy” can lead to a vicious cycle of declining sales and profits. Understaffed and poorly trained employees can result in phantom stock-outs, incorrect inventory data, and compromised strategic planning. Meanwhile, successful retailers like Walmart pressure managers to contain labor costs, which can lead to lawsuits over uncompensated hours. Companies that embrace a bad jobs strategy tend to struggle, while those that invest in their workforce can prosper. The good jobs strategy is possible, profitable, and worth the effort. Instead of skimping on employee training and salaries, retailers should focus on improving their operations and customer experience. By paying fair wages, offering benefits, and providing opportunities for growth, companies can build a loyal and motivated workforce that contributes to long-term success.

Poor Staff Behavior Results in Business Failure

Circuit City’s firing of their more experienced employees in exchange for lower-paid ones led to a decline in their customer service, which ultimately caused them to go out of business. This example highlights how poor staff behavior can negatively impact customer perception, resulting in a loss of customers and ultimately business failure. Take note of this when managing your workforce to ensure your customers receive top-notch service.

The Good Jobs Strategy

Some retailers invest in their employees by providing good wages, stable schedules, training, autonomy, and opportunities for growth. However, investing in the workforce is only half of the “good jobs strategy.” The other half involves investing in operational excellence. Retailers who design their operations to boost efficiency and involve employees in decisions achieve operational excellence. Retailers achieve operational excellence through limiting product assortment, standardizing processes, empowering employees, cross-training workers, and overstaffing. Four model retailers who excel at these measures are Costco, the QuikTrip convenience store chain, Trader Joe’s, and Spanish grocer Mercadona. Investments in employees and in operations must go hand in hand. Home Depot initially failed to invest in disciplined operations, causing earnings to fall and customer satisfaction to decrease. Lesson learned: offering good jobs can reduce costs and increase profits as long as it is combined with operational excellence.

Simplifying retail for loyal customers

Today, supermarkets offer a vast variety of products, which results in complexity, increased waste, and higher costs throughout the supply chain. However, successful retailers like Trader Joe’s and Costco take a different approach. They offer limited but precisely curated selections of products that reflect a clear understanding of what their target audience wants. Their loyal customer base relishes the fact that these retailers employ fewer promotions and provide less diffusion in stock and product offerings. Trader Joe’s selects its products based on the “delight” factor, sending out their buyers to investigate farmers’ markets and street vendors worldwide for better products. There are fewer choices, but the buyers know the products well and can recommend them confidently, making the shopping experience less confusing and more pleasurable for the customers. In contrast, the bulk of supermarket offerings means customers and employees alike struggle to differentiate between similar products, resulting in confusion and errors. The infrequency of promotions at retailers like Costco and Trader Joe’s means loyal customers know what’s coming and can plan purchases accordingly.

Empowering Employees with Standardization

QuikTrip, a US convenience store chain, implements standardization of procedures while empowering employees to make decisions about handling complaints and evolving processes. Cross-training is the realization that employees are capable of many different things and aspire to do great things. The best retailers standardize routine tasks related to safety and empower employees to address customer complaints themselves.

Optimal Staffing Techniques

Effective Cross-Training in Retail Staffing

Effective staffing is a top priority for most retailers, but the process can be complicated when managing fluctuating customer traffic. Traditionally, this has resulted in last-minute schedules that can demoralize part-time employees. However, model retailers have implemented a strategy that involves cross-training staff members in different roles as needed instead of hiring temporary staff. This approach helps create a flexible schedule and manage unexpected changes in traffic. Taking inspiration from Mercadona, a Spanish supermarket, where employees are cross-trained across various departments, it has produced a direct benefit on labor costs as a margin of their sales in comparison to their competitors. Another excellent example is Trader Joe’s, where employees are trained in handling cash registers, stocking shelves, and assisting customers. Such cross-training develops employee engagement and versatility, making them valuable resources for the company. In addition, with online sales picking pace, cross-training can help employees assist with digital customer service when there is slow traffic in stores. This strategy builds employee ownership and contributes to a strong workforce, making it crucial to the success of retailers.

The Good Jobs Strategy

Many retailers try to keep labor costs low, leading to understaffing and overworked employees. However, companies that follow the Good Jobs Strategy, like Mercadona and QuikTrip, prioritize abundant and attentive staffing. This approach not only boosts customer loyalty but also leads to satisfied employees and investors. By having employees take time to interact with customers and identify problems, companies benefit from innovative solutions and a positive public image. The benefits of investing in employees go beyond just cutting costs, as following the Good Jobs Strategy can lead to overall business success.

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