Why “Good Jobs” Are Good for Retailers

Some companies are investing in their workers and reaping healthy profits.

by

Zeynep Ton

by

Zeynep Ton

From the Magazine (January–February 2012)

Summary.

Reprint: R1201L

Too many retail managers believe that they must offer bad jobs to keep prices low. As a result, almost one-fifth of American workers suffer low wages, poor benefits, constantly changing schedules, and few opportunities for advancement. The author’s research reveals, however, that the presumed trade-off between investment in employees and low prices is false.

To meet short-term performance targets, many retailers cut labor. The unmotivated and poorly trained employees who remain often cannot keep up with their tasks in a complex operating environment. The result is a vicious cycle, in which lower sales and profits tempt managers to cut even more employees.

Retailers such as QuikTrip, Mercadona, Trader Joe’s, and Costco instead create a virtuous cycle of investment in employees, stellar operational execution, higher sales and profits, and larger labor budgets. They also make work more efficient and fulfilling for employees, improve customer service, and boost sales and profits through four practices: simplify operations by offering fewer products and promotions, train employees to perform multiple tasks, eliminate waste in everything but staffing, and let employees make some decisions.

Almost one-fifth of American workers have bad jobs. They endure low wages, poor benefits, schedules that change with little—if any—notice, and few opportunities for advancement. The conventional wisdom is that many companies have no choice but to offer bad jobs—especially retailers whose business models entail competing on low prices. If retailers invest more in employees, customers will have to pay more, the assumption goes. Indeed, it is easy to conclude that employee-friendly Wegmans and the Container Store can offer great jobs only because their customers are willing to pay higher prices.

A version of this article appeared in the January–February 2012 issue of Harvard Business Review.

Zeynep Ton is a professor of the practice at MIT’s Sloan School of Management and a cofounder and the president of the nonprofit Good Jobs Institute. She is the author of The Good Jobs Strategy and The Case for Good Jobs: How Great Companies Bring Dignity, Pay and Meaning to Everyone’s Work (Harvard Business Review Press, 2023).
zeynepton

Why “Good Jobs” Are Good for Retailers

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