The Good Jobs Solution Millions of Jobs Are Lousy, Low-Paying, Demoralizing — and Bad for the Bottom Line

THE BIG IDEA REPRINT BG1706 PUBLISHED ON HBR.ORG NOVEMBER 2017 THE GOOD JOBS SOLUTION MILLIONS OF JOBS ARE LOUSY, LOW-PAYING, DEMORALIZING — AND BAD FOR THE BOTTOM LINE. IT’S TIME TO FIX THEM, FOR THE GOOD OF WORKERS AND BUSINESSES. BY ZEYNEP TON THE GOOD JOBS SOLUTION ZEYNEP TON

03 ARTICLE THE CASE FOR GOOD JOBS 10 ARTICLE HOW TO BUILD A BUSINESS ON GOOD JOBS 14 ARTICLE IT’S TIME TO MAKE MORE JOBS GOOD JOBS 17 Q&A: SARAH KALLOCH CLOCKING IN: WHAT IT’S LIKE TO WORK A BAD JOB 21 VIDEO GETTING STARTED ON GOOD JOBS 22 Q&A: GREG FORAN “THE RIGHT THING TO DO” 26 ARTICLE CLEANING UP BAD JOBS 27 ARTICLE THE GJS CAN TAKE LESSONS FROM TPS 30 PORTFOLIO ZEYNEP’S RECOMMENDED RESOURCES

HBR.ORG THE BIG IDEA 2 THE GOOD JOBS SOLUTION ZEYNEP TON

FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG THE CASE FOR GOOD JOBS BETTER PAY AND MORE OPPORTUNITIES. YOUR WORKERS WANT THOSE THINGS. SO SHOULD YOU. BY ZEYNEP TON

Yes, there are millions of jobs at retail stores, restaurants, call centers, hotels, and day cares — but most of them are lousy and have been for decades. They offer low pay, few benefits, and no career paths. Conventional wisdom holds that bad jobs are the unavoidable price of low-cost service. They are not — and some companies are realizing that the way they run their operations, including treating their employees as replaceable commodities, is not sustainable. In the past three years large companies including Walmart, McDonald’s, GAP, and Aetna have raised wages. Walmart is investing more in training and is streamlining operations to help store workers be more productive. GAP is experimenting with more-predictable schedules. And Aetna is letting call center reps use more discretion to meet customer needs.

Together these moves may herald a radical shift. them. And companies are realizing that engaged work- Why are companies investing in and empowering ers are more productive, provide better service, and are their workers after treating them so poorly for so long? less likely to jump ship — an especially big deal in retail Largely because of a new competitive landscape. and restaurants, where turnover in 2016 averaged 65% Companies in saturated markets need more growth and 73% respectively. from their existing units. Those facing increased com- Beyond boosting companies’ competitiveness, im- petition from brick-and-mortar and online rivals need proving service workers’ jobs could have a huge impact to give customers a compelling reason to buy from on the U.S. economy. It would increase the earnings

THE AUTHOR ZEYNEP TON and spending power of the working poor and reduce “Growing up in Turkey, I weren’t implemented their frontline workers the enormous amount of public assistance they receive. thought the United States correctly, and inventory data decent wages, investing was the land of opportunity,” was highly inaccurate. While In 2016 the median hourly wage of the country’s nearly in training, and providing says Zeynep Ton. “If you investigating the causes of stable schedules and career 9 million retail workers was $10.37; it was $9.50 for the worked hard, you would these problems, Ton started opportunities — and their more than 7 million restaurant workers. Both figures do well. And that was talking with store employees. profitability was higher put employees below the poverty threshold for a family exactly the case for me. I “It was heartbreaking to hear than their competitors’. Ton of four — even those working 40 hours a week, which came to the U.S. in 1992 their stories,” she says. “I studied these companies, many employers don’t allow. on a volleyball scholarship was shocked by how their looking to understand to study engineering at jobs were not working for how they could thrive and Just treating workers better, however, will not boost Penn State. This country them.” offer good jobs. She learned a company’s competitiveness. A radically different op- has offered me wonderful Ton spent years at that they were devoted erating system — one designed to better serve custom- opportunities for success Harvard and then at the MIT to operational excellence ers’ needs and increase workers’ productivity, motiva- and growth.” Sloan School of Management, and were applying a tion, and overall contributions — is needed. Later, while conducting where she is an adjunct radically different operating That’s a hard message for many executives in retail research at Harvard Business associate professor of model, one that companies School — first as a doctoral operations management, in an array of service and services to hear. Radically revamping operations student and then as a studying a vicious circle: businesses — retailers, and investing more in labor seems counterintuitive, professor — Ton confronted a Understaffing and high restaurants, call centers, even dangerous, when profits are under pressure. Yet grim fact: The United States turnover lead to operational office cleaning — could Mercadona, a Spanish supermarket chain with 1,620 is not the land of opportunity problems, which lead to replicate. stores and 79,000 employees, proved it can be done, for millions of workers stuck low sales and profits, which In this package Ton shares and others are making the transformation. in low-wage, dead-end jobs, lead to low labor budgets, what she has learned about who often must contend with which lead to understaffing that operating model and I’ve been researching retail and other service oper- unpredictable schedules and and high turnover. Company how companies can make the ations, including Mercadona’s, for more than 15 years. chaotic conditions. executives lamented that transition from “bad jobs” In a 2012 HBR article I made a case for why good jobs — Ton and her fellow they couldn’t pay higher to “good jobs.” “My mission ones with decent wages, predictable hours, sufficient researchers initially wanted wages and invest more in is to persuade companies, training, and opportunities for growth — are good for to help retailers achieve training while maintaining especially in low-wage retailers. Since then I’ve studied and worked with a va- operational excellence. They the low prices that were service industries, to adopt found that supply chain necessary to compete in what I call the Good Jobs riety of retailers, call centers, and other service com- problems were particularly their cutthroat industry. Strategy,” says Ton, who with panies in various stages of adopting what I call the large and expensive in the Then Ton came across Roger Martin cofounded the Good Jobs Strategy (GJS). I’ve accumulated volumes final stretch: Merchandise some retailers in the United nonprofit Good Jobs Institute of evidence that this approach is not just a good idea; that should have been on States and Spain that to further the cause. “I want it works. In what follows — the first of a two-part arti- shelves was still in the suggested this conventional to help change the narrative cle — I’ll share what I have learned about the bad-jobs stockroom or on the wrong wisdom might not be about what it means to run a shelves, special promotions true. They were paying ‘good’ business.” and good-jobs systems and how to assess whether your organization could benefit from making the transition to the latter.

ALIGNMENT BETWEEN HEADQUARTERS AND STORES together. Such actions allow companies to give em- One basic difference between good-jobs and bad-jobs ployees higher pay (thanks to increased productivity) businesses is the way decisions are made vis-à-vis and more-predictable schedules (thanks to a smooth headquarters and customer-facing units. At good jobs and predictable workload) and to achieve low turn- retailers, functions at headquarters don’t make deci- over (below 10% at both retailers above). sions without considering the impact on the produc- At good jobs companies, communication is two- tivity of store employees and the level of customer way, and headquarters incorporates stores’ input into service they can provide. Costco buyers coordinate decisions affecting frontline work. Mercadona uses product introductions so that new items are brought frontline input when standardizing processes such as out at staggered times, smoothing out workloads at the handling of deliveries. If a store needs extra time stores. Mercadona works with vendors to create ship- because of its layout, the owner of the delivery process ments that can be quickly shelved (for example, olive for the chain will adapt the process for that store. When oil is displayed in its shipping boxes, which open up Mercadona developed a new decentralized-ordering in front). Its logistics department gives stores short system, it implemented employee suggestions such as delivery windows (15 to 20 minutes) so that receivers removing information that workers found irrelevant know exactly when to be ready and don’t waste time. and confusing. Logistics sends the same driver repeatedly to a given At bad jobs companies, functions at headquar- store so that the parties can learn to work efficiently ters make decisions in silos and rarely consider the

HBR.ORG THE BIG IDEA 4 THE GOOD JOBS SOLUTION ZEYNEP TON

AT GOOD JOBS COMPANIES, STORE MANAGERS FEEL LIKE OWNERS. TAKING CARE OF CUSTOMERS AND DEVELOPING EMPLOYEES ARE THEIR MOST IMPORTANT TASKS.

effect on employee productivity and customer ser- • Problems arising from coupons. One associate vice. They see stores largely as places that execute said she had been instructed to follow the policies headquarters’ decisions. Here are some things I have printed on the store’s many coupons. But when she witnessed: would not honor an expired coupon, the angry customer might appeal to a manager, who would often • Six-hour delivery windows. Large time frames prob- grant the discount. “You feel like an idiot,” the as- ably helped logistics minimize transportation costs, sociate said. “But you can’t give it to them yourself; but they made it hard for stores to plan resources to you can get fired for that.” handle deliveries. • Last-minute changes. A typical example: Merchan- • Big swings in the number of promotions. Several dising decides to move a promotion from Friday to sales one week would be followed by none the next. Wednesday to stimulate demand. This doesn’t seem So labor needs varied, making it difficult for store like a big deal at headquarters. But the store man- managers to give staffers consistent hours from ager must shift dozens of hours of labor from Friday week to week. to Wednesday, forcing employees to rearrange their • Frequent display changes. Employees spent most lives, which in turn drives absenteeism and turn- of their time moving products around; they had no over. And employees have less time to set up the time to help customers and often didn’t know where promotion and do their other work, so mistakes are items were. Employees would set up a display only more likely. to have to change it hours later. Seeing their efforts • Inadequate staffing levels. One chain based its repeatedly go to waste made them feel there was lit- staffing on time studies conducted at headquarters, tle point to giving their all. which did not reflect realities in the field, such as • Mistakes in the prices sent to stores. Store associ- different layouts from store to store and customers’ ates had to redo ticketing, wasting time and under- asking for help from employees who were stocking mining morale. shelves or pricing items. As a result, stores were

HBR.ORG THE BIG IDEA 5 THE GOOD JOBS SOLUTION ZEYNEP TON

often understaffed and employees were brusque meant that store managers frequently altered em- with customers. ployees’ work schedules. Those are some of the reasons workers often called in sick, came in late, or left EXPECTATIONS for better jobs. Annual turnover averaged 40% to When operations are designed to allow frontline 120%. workers to be productive, empowered, and custom- With staffing so unstable, it was hard to know who er-focused, companies and workers can expect a lot should do or had done what. When a display or pricing from one another — and at good jobs companies, they error was made or when a section was dirty, it was dif- do. When operations are not designed that way — and ficult to identify the source of the problem. Equipment chaos, low morale, and high rates of turnover and ab- was often inoperative or disappeared. I saw broken senteeism are the norm — expectations all around are fitting-room and bathroom fixtures, water fountains, dismally low. and wi-fi systems at numerous chains. Sarah Kalloch, At good jobs companies, high expectations start my colleague at the Good Jobs Institute — a nonprofit with hiring — those companies are more selective. organization I cofounded — worked nine weeks at a QuikTrip, a chain with more than 700 convenience large retailer. When shelving goods, she often didn’t stores in 11 states, centralizes recruiting in each city, even have a box cutter. How can you care about a and experts use structured interviews and cognitive company that cares so little about how well you can tests. Even so, new hires must “graduate” from train- do your job? ing; about 20% of full-time trainees and 14% of part- time ones don’t make it. STORE MANAGERS Once hired, QuikTrip’s store employees are held to Good-jobs and bad-jobs companies also differ radically high standards. For instance, they must initial each in terms of store managers’ roles and attitudes. At the completed task. And peer pressure helps maintain former, store managers feel like owners. They believe standards, because part of everyone’s pay is tied to that taking care of customers and developing their the store’s customer-service score, and full-timers employees are their most important tasks, and the enjoy profit sharing. operating system is designed accordingly. The Costco But it’s not a one-way street. Employees of good store managers we interviewed repeated cofounder jobs companies expect to be rewarded for their pro- Jim Sinegal’s mantra that 90% of their time should ductivity and contributions. The annual take-home be spent teaching. They constantly walked the floor pay of a new full-time QuikTrip employee is nearly asking area managers open-ended questions such as $40,000. All store managers are promoted from “Why do we have five pallets of blankets here?” and within. “Why is this item not selling well?” The questions were Employees of good jobs companies also expect intended to improve the store’s performance and help their employers to respect their time and knowledge new managers develop. Almost all the store managers and to allow them to shine in front of customers. at good jobs companies were promoted from within, QuikTrip sells a lot of coffee; if the coffee machine and they took great satisfaction when their employees breaks, employees expect facilities management got ahead. A store manager at Costco said, “There is to fix it immediately so that they don’t have to dis- nothing more satisfying to me than to see people move appoint customers. When frontline employees at up in their careers.” Mercadona find that a product takes too long to At bad jobs companies, store managers spend shelve because it is badly packaged, they expect that most of their time handling day-to-day crises and buyers will work with suppliers to fix the problem. making sure the most immediate tasks get done. When I told the CEO of a good jobs company about Because stores are often understaffed, they end the last-minute changes I’d seen at other retailers, he up shelving merchandise, running cash registers, said, “Our stores would scream at us if we did that!” and performing other employee tasks themselves. Bad jobs companies and their employees don’t — Frequent staffing, equipment, and customer-service and can’t — have such high expectations of one an- problems leave them no time to train workers or give other; their operations and people are too unstable. feedback. Headquarters decisions that waste employee time At one retail chain, employees often found them- and increase workload variability contribute to low selves with no assignments; the store manager hadn’t wages and workforce instability. At several chains I had time to make them. One manager said he was observed, well over half the store employees worked caught in a vicious circle: High turnover meant he part-time, and last-minute changes in, say, the timing had to keep hiring new people. But all the firefighting of a sales promotion or the delivery of merchandise meant he couldn’t devote much time to hiring, so the

HBR.ORG THE BIG IDEA 6 THE GOOD JOBS SOLUTION ZEYNEP TON

new employees were often poor fits. Many would soon schedules three weeks in advance — but some stores quit, increasing the time he needed to spend firefight- were scheduling just a week in advance. ing and looking for new people. The second element of the scorecard relates to the customer experience. How well does your company JUSTIFYING THE GJS STRATEGY meet customers’ basic needs and create conditions At the Good Jobs Institute, we developed a scorecard that engender loyalty? Efficient checkouts and clean that can help you ascertain whether your organization floors may not generate an emotional connection with needs the GJS. It begins with an assessment of front- customers, but slow checkouts and dirty floors will line jobs. How well does your company meet employ- drive them away. ees’ basic needs and foster engagement? Although The scorecard’s final element involves data on such things as living wages, predictable schedules, operational problems, employee turnover and absen- and career opportunities may not in themselves teeism, productivity, sales, and costs. Once you’ve be motivators, poverty-level wages, life-disrupting collected that, the scorecard can help you identify po- schedules, and a lack of opportunities make it hard to tential gains from the GJS in the following realms: hire, motivate, and keep good people. Financial. An honest and factual discussion about I’ve been surprised by how little corporate lead- current performance and what performance could be ers know about the hourly jobs at their companies. if your company operated differently will suggest the Executives at one organization were startled to learn dollar value of adopting the GJS. At Quest Diagnostics, a that most of their hourly employees worked fewer provider of medical diagnostic services, 60% of call cen- than 15 hours a week and that the average annual take- ter reps left within a year, resulting in up to $10.5 million home pay was less than $10,000. Executives at another annually in direct turnover costs. That was a compelling company thought they were providing employee reason to implement the GJS in the call centers. GOOD JOBS COMPANIES CAN ADAPT TO THE ECONOMY’S UPS AND DOWNS OR AN INCREASE IN THE MINIMUM WAGE BETTER THAN THEIR RIVALS CAN.

HBR.ORG THE BIG IDEA 7 THE GOOD JOBS SOLUTION ZEYNEP TON

Working with a large retail chain, my students and I from online rivals a significant cause. Physical retailers found that increasing a store’s average employee hours that fail to create a compelling shopping experience and from fewer than 15 a week to 30 (without increasing to- establish an emotional connection with customers risk tal hours), decreasing schedule variability, and reducing the same fate. Another competitive reason is market employee turnover by almost half could lift sales pro- saturation: Many chains can no longer profitably grow ductivity by more than 20%. We saw strong correlations by adding stores. They should focus on getting more between indicators of bad jobs, such as high turnover out of their existing stores — which requires the GJS. and frequent last-minute schedule changes, and costly Here’s another competitive advantage of good jobs operational problems, such as stockouts, inventory companies: They can adapt to changes such as the econ- shrinkage and inaccuracies, and low conversion rates omy’s ups and downs or an increase in the minimum (the percentage of customers who buy something). wage better than their rivals can. Mercadona emerged Competitive. At Quest, the high turnover among call from the 2008–2009 financial crisis with higher market center reps undermined service. Patients and staffers in share because it was able to cut prices by 10% while physicians’ offices had to wait more than two minutes maintaining profitability. Many of its cost-cutting ideas to have a phone call answered. And the inexperienced, came from employees. They knew their customers and undertrained rep who finally did pick up often couldn’t were empowered to identify products and processes field the question and transferred the call to someone that could be improved or eliminated — and they else, resulting in more waiting. Quest had already lost knew top management would take their insights seri- important customers. ously. They also knew the company wouldn’t use their Brick-and-mortar retailers also have compelling cost-cutting ideas as an excuse for layoffs. competitive reasons to adopt the GJS. Consider the chal- Moral. Many executives and managers don’t like lenge from e-commerce: As of August, more than 6,300 leading bad jobs companies; they would rather pro- U.S. store closures — one of the highest annual counts vide good jobs. Mark Bertolini, Aetna’s CEO, found it ever — had been announced in 2017, with competition unacceptable for a thriving Fortune 500 company to have employees on welfare. Costco’s Jim Sinegal told my students, “We didn’t want to build a low-cost busi- THE FOUR OPERATIONAL CHOICES IN A GOOD JOBS SYSTEM ness on the backs of employees.” Although the GJS is likely to offer financial and competitive advantages to OPERATIONAL EXAMPLE any low-cost service organization, doing right by your CHOICE employees may be justification enough. Focus and Identify what problems you help solve for your customers and streamline products, promotions, and services to maximize customer satisfaction A DIFFERENT SYSTEM simplify and employee productivity. Minimize last-minute changes to deliveries If company leaders conclude that the good jobs op- and promotions. Focusing and simplifying enables higher wages, more- portunity is worth pursuing, they will need to rede- predictable schedules, and higher motivation for employees; better service for customers; and higher sales and lower costs for companies. sign their operations. The most important lesson I’ve learned is that the GJS is a system and all the parts must Standardize routine processes (the unloading of trucks, shelving, and Standardize cleaning, for example) with input from frontline employees, and empower work together. The system consists of (1) investment and empower those employees to improve their work, provide input into merchandising in people in terms of hiring, training, compensation, (how much inventory to hold, which products to stock, how to display high performance standards, and meaningful career them, and so on), and solve customer problems. Standardization drives paths, and (2) four operational choices you must make: efficiency, while empowerment increases motivation and helps employees focus and simplify, standardize and empower, cross- contribute to higher sales. Greater employee contributions make possible higher pay. train, and operate with slack. These operational choices require employee invest- Train employees to perform both customer-facing and non-customer- Cross-train facing tasks so that they can vary what they do depending on ment, but they also make that investment possible, by customer traffic — and train them in a way that ensures ownership and increasing employees’ productivity and contributions. specialization. Cross-training means more-predictable schedules, higher To illustrate some of the dependencies that are cru- motivation, better teamwork, employees who are more responsive to cial to the GJS, let’s examine how Mercadona can offer customer needs, and higher productivity (because there’s less employee employees stable schedules and supply them a month downtime when traffic is slow). in advance even though customer traffic varies greatly Operate with Staff your units with more labor hours than the expected workload so that throughout the day and week. (Daily transactions in you can meet demand at peak times. Operating with slack lets employees slack do their work without making mistakes, deliver great service, and have one store ranged from 1,700 on weekdays to 3,000 on time to identify and communicate ideas for improvement. It enables Saturdays.) companies to cut costs and continuously improve. Understanding that stable schedules require stable workloads, Mercadona looks for ways to smooth

HBR.ORG THE BIG IDEA 8 THE GOOD JOBS SOLUTION ZEYNEP TON

the latter out. It schedules activities such as deliver- with slack). Toyota is known to have worker-friendly ies, display changes, equipment maintenance, and policies, such as no layoffs, and to share the values of product introductions when traffic is likely to be low. GJS companies: Customers come first, employees are Operational simplification (fewer products, no promo- the most important resource, and the focus is on con- tions, predictable deliveries, and so on) and the stan- tinuous improvement. dardization of routine processes (such as unloading Adopting the GJS requires a system change, but trucks, shelving, and cleaning) further reduce vari- that’s worth it, and it’s doable! In part two of this arti- ability and make it possible to more accurately fore- cle, “How to Build a Business on Good Jobs,” I’ll explore cast workloads. Mercadona knows where to simplify how to get from here to there. because there’s clarity about what value it offers its customers: the best quality-to-price ratio, the highest level of service, and the ability to complete purchases quickly. Everyone is aligned on delivering that value. Stable schedules require cross-training so that employees can shift between customer-facing tasks (such as helping people find products and manning the cash register) and non-customer-facing ones (cleaning, restocking, and so forth) according to traffic. Specialists in areas such as produce, bakery, and cosmetics are empowered to order products, talk to customers to understand their needs, and improve their work. They have time for all this because Mercadona operates with slack. The specialists feel ownership of and are accountable for their area’s performance. A caveat: I’ve observed that when some elements of the system are missing, performance falls short of its potential. One big-box retailer I studied paid at least 50% more than the industry average and invested more than two weeks of training in each new employee. That sounds like the Good Jobs Strategy, but it fell short. The company had no mechanism for hearing employee ideas, so the disconnect between headquarters and the front lines persisted. All decisions related to merchandising were made at headquarters. Product variety in some categories was so high that employees spent a lot of time on tedious shelving tasks. The result was not only mediocre performance but also a low Glassdoor score as a place to work, despite the high investment in the workforce. As a human-centered system that yields operational excellence, the GJS resembles the Toyota Production System (TPS) in many ways. At a car factory employing TPS, using common parts and specifications and level- ing the volume and sequence of production simplifies and stabilizes work. Developing standardized work with operator input and involving operators in identifying problems and improving standardized work drives operator engagement, quality, and productivity. Cross- trained assembly-line operators can respond to changes in demand by rebalancing the line. Staffing one offline team leader for every four to six assembly-line operators creates buffer capacity for training and for responding to problems, higher demand, and operator emergencies (a form of operating

HBR.ORG THE BIG IDEA 9 THE GOODJOBSSOLUTION Major companiesare adoptingtheGoodJobsStrategy. Here’s your playbook forgetting started. by Zeynep Ton ARTICLE HOW TO ONGOODJOBS BUILDABUSINESS A will mostlikely take years, even ifyour Moving to agoodpatient. jobssystem you First, mustbe things attheoutset. explore howto get from here to there. but achievable. Inwhatfollows Iwill Making thetransition to itisdaunting this theGoodJobsStrategy, orGJS. products andoutstandingservice.Icall highly productive anddeliver great works to helpthoseemployees be one inwhicheveryone inthecompany andcareerschedules, opportunities; wage, adequate training, predictable that gives frontline employees aliving to seekanalternative approach —one and moral reasons are prompting them for GoodJobs,” competitive, financial, Case in partoneofthisarticle, “The Asdiscussed questioning theirmodel. end careers are abandoningoratleast unpredictable anddead- schedules, Leaders should recognize several pay, fewbenefits, frontline workers low that have long offered service companies growing numberof but thenfellbelow previous levels.) centers, turnover increased forawhile performance expectations atitscall absenteeism policyandsethigher diagnostic services,adopted astricter Diagnostics, aprovider ofmedical and needto bedismissed.(WhenQuest incapable ofmeetingthenewstandards while othersand quit, mightprove might notlike thehigherstandards devalued. Somefrontline employees staff, orthinktheir expertise hasbeen uncomfortable learning from frontline don’t like theloss ofcontrol, are employees mightleave because they might increase. Someheadquarters as promotions are reduced. Turnover investments intraining. Sales mightfall up, owingto higherwages andbigger temporarily decline.Costsmightgo performance to improve significantly. took aboutthree years foritsfinancial when ithadroughly 150stores, andit began to make thetransition in1993, Spain’s largest supermarket chain, organization Mercadona, issmall. HBR.ORG THE BIGIDEA10 Some types of performance might Some typesofperformancemight

GETTY IMAGES most importantsteps: System Here (TPS). are someofthe systems, suchastheToyota Production learning from transformations to similar managers elected by theirpeers, six then charged ateam ofsixstore Bay could benefitfrom Thecompany it. they discussedtheGJSandhowMud headquarters during which staffers, discussions for67store managers and launched eightweeks ofsmallgroup implement Lars theGJS,co-CEO Wulff northwestern United States, decidedto Bay, achainof44petstores inthe when theexecutive team atMud short videos,memos,andsoon. transformation, through town halls, honest communicationaboutthe maintainconstantand and (3) to create animplementation strategy; expertise, credibility, andleadership frontline work—withthepower, of homeofficefunctionsthataffect field managers, and representatives the COOandincluding executives, team —sponsored by theCEOor form acentralized implementation (2) to andhearts; appeals bothheads around customers andemployees that to (1)create acompellingvision As inany transformation, itisimportant ALIGN ONTHEGOAL ANDDIRECTION Trusting theprocess Sois iscrucial. In 2014, Elect atransition team. In2014, ZEYNEP TON THE GOOD JOBS SOLUTION ZEYNEP TON

home-office staffers elected by their temporarily decrease revenue, and Prototyping lets the centralized team peers, three district managers, and five some functions might wonder about discover how to break down functional top executives with creating a vision the effects on their compensation, silos and collaborate. This approach and strategy for the transformation. while people at any level might fear also builds momentum and converts This up-front effort generated for their jobs. I recently asked a cynics, because it’s easier and faster to companywide buy-in. Store employees store employee how she thought the show success. were excited enough to talk about the backroom replenishment process could Choosing units with strong leaders who transformation with customers, who be streamlined. She said she wouldn’t are excited about the transformation then felt even better about shopping at want it to be, because it might mean and with average performance — so that the chain. she could lose her job. meaningful improvements will be visible Hold workshops. Educating your All such objections need to be within a few months — makes success organization about the GJS ahead heard and addressed. One of the best more likely. Lessons can be scaled up of time through workshops with practices we have learned from TPS more easily if the prototype units are store managers, district and regional implementations is to make a public of average or typical size, location, and managers, headquarters functions, and commitment that apart from seasonal format. Choosing units reasonably close senior leaders is important for several workers, no one will be laid off because to headquarters lets the centralized reasons. Workshops help the functions, of the transformation. team visit regularly. some of which have never worked with one another, to have honest discussions START SMALL AND LEARN WHAT DETERMINE WHAT TO CHANGE FIRST and start breaking out of their silos. WORKS The good jobs scorecard discussed in I have run workshops in which store In multiunit service organizations, the part one of this article might tell you leaders felt comfortable telling desire to show results quickly and the that your company needs to change and headquarters functions how much habit of top-down decision making highlight the biggest gaps that need to trouble their decisions had caused. often tempt companies to implement be closed, but it doesn’t specify what to Workshops also help the functions one big top-down change at a time. change. Here’s how to figure that out. understand how and why the GJS works That urge should be resisted. Diagnose yourself. This will help you as a system and what their role in it is. Work up from the front lines. Given identify priorities. Which GJS elements I often divide participants into five that the GJS is a complex system in do you already use? Where could you groups representing investment in which many things, big and small, improve? You will probably find many people and the four operational choices will change, and given uncertainty things to change, such as: of the GJS and ask each group what around the order of changes, top-down • how stores recruit, train, pay, and needs to change within that element to implementation is too slow, expensive, empower associates create a better customer and employee and tone-deaf to unit-level realities. • whether headquarters functions take experience and what will be required If the front lines aren’t involved in frontline work into account when from the other groups. This helps creating the initiative, their buy-in and making decisions and coordinating participants immediately grasp the commitment will be low. with one another dependencies. The transformation may be largely • whether the relationship between Finally, workshops will help you planned at headquarters, but it should headquarters and the stores is a identify and address objections early be executed from the front lines up. two-way street so that, for example, on. For example, many retailers already Not every company is willing to do store processes are standardized feel desperate about slides in traffic. this. When I suggested it to the chief with input from frontline workers So marketing or finance’s response to people officer at a big-box retailer, she and headquarters has a mechanism the principle of focusing and simplifying replied, “We typically don’t ask them; for hearing ideas from the field might be: “Are you crazy? We’re we tell them.” You can’t implement the You can’t overhaul everything at getting killed. We need to sell more GJS that way. once, and revamping some elements products, run more promotions, stay Prototype and scale up. An of your operating model will be hard. open longer.” That needs to be talked approach that has worked well in That said, some changes will have good through. TPS transformations is to implement results only if complemented with Promise no layoffs. Some changes the new system in one unit or a few, others. Getting functions to coordinate in a good jobs transformation may learn and adjust, and then scale up. decisions may require new incentives,

HBR.ORG THE BIG IDEA 11 THE GOOD JOBS SOLUTION ZEYNEP TON

leadership, and organizational enough to get really good at helping many centralized resources to a few structures. Higher pay won’t make customers. prototype units for several months. your employees more productive or Quest’s tack of stabilizing first is a good And relying on just a few units to drive engaged if their work remains unstable. model. Until work processes, workloads, change in hundreds or thousands But it will inspire more of them to stay turnover, and absenteeism have been of others may not feel right. If the longer and become better at what addressed, companies will find it hard company is under pressure to improve they do, which will help you stabilize to implement changes such as cross- performance, executives will want to operations. training, creating high expectations, implement companywide change as Start by providing stability. and empowering employees to make soon as possible. You can address these At Quest’s call centers, the GJS decisions. concerns in three ways: implementation began with this step. Look for little opportunities. Quest 1. Identify changes that have few The centers suffered from high turnover sought other small but meaningful dependencies and can work in and a 12% absentee rate. Supervisors ways to improve work, engagement, isolation, such as daily huddles, a spent most of their time fielding calls and customer service. One rep came better checkout process, a better that inexperienced reps couldn’t up with an idea dubbed the “Spanish cleaning process, and better handle, and customers were frustrated. whisper.” Although a caller could select recruiting. Empower units other than Conversations with reps and supervisors English or Spanish, the bilingual rep the prototypes to experiment with revealed that the main reasons for the who answered did not know which had improvements and share results turnover had to do with pay and career been chosen and would lose about 20 with the good jobs team. You can paths — basic employee needs. The seconds finding out. Working with a then create the first versions of new work was more complicated than that prototype team, the centralized team standards using store input. This at a typical call center, yet the pay was programmed the phones so that when approach can produce improvements about the same, and it didn’t rise as a Spanish-speaking caller was on the across the chain in a few months and employees acquired new skills. line, the word “Spanish” was whispered start changing the culture to one that To address these issues, Quest into the rep’s headset before he or she involves the frontlines. implemented step-based pay and a picked up the call. In addition to its 2. Apply some of what the prototypes higher starting wage and provided direct usefulness, this small change learned across the organization while clear career paths. To subsidize the helped break down silos, because the pilot efforts are still under way. higher wages, it found ways to eliminate several functions had to work together For example, once headquarters waste. Certain services provided by to implement it. (Another lesson from learns from a few prototype units phone could be offered in other ways, Toyota is that solving small problems how to reduce workload variability ones that both lowered costs and helps formerly isolated departments (say, by reducing delivery windows increased customer satisfaction. For learn to coordinate and collaborate.) It or avoiding last-minute changes example, many physicians preferred also signaled to reps that their opinions to promotions or deliveries), receiving normal test results by fax now counted. you can apply the new methods rather than by phone. Many patient Making many small improvements companywide. Simplifying work as calls concerned location, hours, or rather than a few big changes is also Quest did can also enable you to scheduling — things that don’t require powerful: Researchers have found that increase pay or benefits across the a rep’s expertise — so Quest made that the sum of many small improvements chain without overly hurting short- information more accessible online. often has a large impact and that term performance. By simplifying and focusing on small wins help sustain momentum. 3. Establish a channel for sharing the most important value it offered Big changes must come eventually. successes with other units so that customers — important medical But they are more likely to succeed if a they will be eager to make the same information as quickly and accurately foundation has been laid. changes. When Quest’s prototype as possible — Quest cut costs and teams presented their results to improved service. Much more had to SCALE, ADAPT, AND CONTINUOUSLY other teams, supervisors lined up to follow, and did, but the later steps IMPROVE try the new approach. probably wouldn’t have been possible if Executives of chains may have some Depending on the size of a prototype employees hadn’t first been given good problems with the prototype approach. unit and the level of initial stability, reasons to stay with the company long They may be uncomfortable devoting implementing all elements of the GJS

HBR.ORG THE BIG IDEA 12 THE GOOD JOBS SOLUTION ZEYNEP TON

can take more than six months. Once In the three years preceding the 2014 improvement, 1,001 of which have been the elements of the system are working launch of its good jobs transformations, implemented. Of $2 million in savings, well together, the centralized team Mud Bay’s same-store sales grew $1.2 million came from those ideas. can start rolling them out more widely. at an average annual rate of 6.5%. . . . It should keep in mind what we have From 2014 to 2016 same-store sales learned from TPS implementations: growth averaged 11.0%, and the Better jobs make for a better society. Don’t impose the same playbook on company’s overall sales grew much Employees do higher-quality work other units; rather, involve them in faster than the industry’s as a whole. when they are knowledgeable and implementation and allow them to The average hourly wage of Mud Bay’s empowered, when they have sufficient adjust and adapt it. This may take store employees, including managers, resources, and when they and the work longer, but it will ensure buy-in and get was 18% higher in 2016 than in 2013, they do are respected. Customers — better results. and employee turnover in 2016 was which means all of us — are treated Good jobs companies do not 33% — down from nearly 45% three better and are more likely to come standardize processes once and expect years earlier. Customer satisfaction is away satisfied. In the past century conformity. They involve their employees now at its highest level ever: Stores we saw that higher pay and better in continuously improving processes. get love letters from customers and working conditions in manufacturing The key to both scaling and improving is seldom receive fewer than five stars on contributed to a bigger middle class having a centralized process owner and a Yelp (the largest 100 retailers average and a stronger economy. Now it’s the clear process for hearing frontline ideas, 3.2 stars). In 2013 just 65% of store service sector’s turn. experimenting with them, and rolling employees worked 30 or more hours a An economy with more good jobs is them out across the network in a way week. The 2017 figure thus far is 82%. neither inevitable nor utopian. It is a that ensures buy-in. Quest started its good jobs choice we can make. The Good Jobs The transformation is quite an transformation in July 2015. Since then Strategy has proved that the trade-off undertaking — one that requires totally it has seen a 20% reduction in its call- between pay and prices can be broken. committed leadership and disciplined transfer rate (calls that must be passed The CEOs of service companies have a execution. But it is worth the effort. on to someone else because the first unique opportunity to generate more rep can’t field the question) and a 40% value for their investors and customers THE PAYOFF improvement in how quickly calls are while creating meaningful work for Good jobs transformations have worked answered. By March 2017 turnover had millions of people — work that will allow well — for employees, customers, dropped by 53%, absenteeism by 66%. them to escape poverty and join the companies, and investors — in a variety Within eight months of implementation middle class. That’s a privilege and a of settings. reps had submitted 1,556 ideas for responsibility.

HBR.ORG THE BIG IDEA 13 THE GOODJOBSSOLUTION We don’t needto move people into good jobs;weneedto make the jobsthey have good Martin ones.by Roger L. ARTICLE IT’S TIMETO MAKEMOREJOBSGOOD O on whichweneedto take action. jobs inAmericaisaburningplatform itbecomesclear thatbad to doin2015, a single lens, asFlorida andIdecided own, butwhenthey are viewedthrough School since2007. Florida, acolleague atthe Rotman from1990s. Thesecondwas Richard I worked inthelate 1980sandthe fromwas Michael Porter, withwhom insight camefrom acolleague. Thefirst to restructure many ofthem.Each body ofworkcaptured inthe1990 This insightarose from thevast THE MICHAELPORTER INSIGHT Both insightsare valuable ontheir me thatweurgently need America andconvinced thinking aboutjobsin insights have shapedmy ver thepast30years two areas, sothey realize fewer economies employment sellonly withintheirlocal wages. productivity, whichisreflected inhigh and helptheiremployees achieve high scale up, invest inR&D andbranding, State, ofcourse. Asaresult they can Jersey don’t sellonly intheGarden pharmaceutical companiesinNew beyond theirimmediate areas — sell theirproducts andservicesfar services). the country(asinretail care andhealth one that’s dispersed fairly evenly across pharmaceuticals andsoftware) orin a fewsmallgeographic areas (asin that’sindustry clustered inoneor matters whetheryou workinan Nations. Porter shows thatitreally book HBR.ORG THE BIGIDEA14 Industries with dispersed Industries withclusteredIndustries employment The Competitive Advantage of

GETTY IMAGES wages are significantly lower. lower thaninclustered and industries investment). Asaresult productivity is doesn’t warrant considerable capital for, say, alocal landscapingcompany R&D andbranding (themarket demand of scale andtend to invest muchless in they’re notallowed —to createmuch as in hospitals:They are unable —often, marketing departmentsandorderlies making. Think ofpayables clerks in any, independentjudgmentanddecision routine-intensive; they involve little, if high wages. Thesecond kindofjobsare employers, they whichmeans earn and freedom to create value fortheir and doctors: They are given thespace making. Considermarketing executives independent judgmentanddecision intensive; they involve ahighlevel of kinds ofjobs.Thefirst are creativity- making ajobinvolves andseestwobasic independent judgmentanddecision distinction betweentheamountof content ofyour job. Florida draws a in whichyou workbutrather onthe Class, 2002 bookThe RiseoftheCreative capturedThis insight, inthebest-selling THE RICHARDFLORIDA INSIGHT focuses not on the industry focusesnotontheindustry ZEYNEP TON THE GOOD JOBS SOLUTION ZEYNEP TON

The Structure of Jobs in the Modern U.S. Economy Combining insights from Michael Porter and Richard Florida reveals four basic types of jobs.

Creativity-intensive Creative-in-clustered Creative-in-dispersed industries with limited ability to scale RICHARD FLORIDA’S up — dominate, as shown below left. OCCUPATION CATEGORIES What is surprising is what happened Routine-intensive Routine-in-clustered Routine-in-dispersed when we plotted the average wage for each type of job against the average wage for all U.S. workers. Clustered industries Dispersed industries As the graphic below right shows, MICHAEL PORTER’S INDUSTRY CATEGORIES those holding a creativity-intensive

SOURCE ROGER MARTIN, RICHARD FLORIDA, MELISSA POGUE, AND CHARLOTTA MELLANDER © HBR.ORG job in a clustered industry are in the proverbial catbird’s seat. On average, they earn almost 80% more than the value as creativity-intensive workers. So all U.S. jobs. This gave us four types of national average, and far more than they earn significantly lower wages. jobs to examine, as shown above. workers in any other category. Yet Next we needed to know what share they make up the smallest share of the PORTER + FLORIDA of the U.S. economy is represented by workforce. Florida and I decided to combine the each job type (we drew on the most Do the good fortunes of these two insights to see how industry type recent data available, from 2012). employees result from having and job content intersect. We started Perhaps not surprisingly, routine- creativity-intensive jobs, or from by creating a two-by-two matrix for in-dispersed jobs — ones that lack working in a clustered industry? It creativity and are in lower-productivity appears to be the former; creativity- intensive workers in dispersed The Share of Job Types The Compensation for Jobs industries also earn more than the national average, although their in the Modern U.S. Economy in the Modern U.S. Economy premium is less than half that afforded A breakdown by occupational A comparison of average wages for each job to their creative counterparts in type with the average national wage, and industry categories, clustered industries. On average, Creative-in-clustered +78.5% workers in both routine categories Creative-in-clustered 13.9% earn far less than the national average. Those in clustered industries, who are fewer in number (they represent the second-smallest category), earn Creative-in-dispersed 24.8 significantly more than those in dispersed industries. The latter earn very low wages indeed — and they Creative-in-dispersed +36.1 account for almost half the workforce.

Routine-in-clustered 16.5 MOVEMENT ACROSS GROUPS We wondered whether the picture painted by the 2012 data was stable, ABOVE so we looked at the earliest consistent AVERAGE NATIONAL AVERAGE data set, from 2000. We expected to BELOW find little difference over just 12 years, AVERAGE but we were wrong. (See the exhibit Routine-in-dispersed 44.8 “The Changing Share of Job Types and Routine-in-clustered –17.9 Compensation for Jobs in the Modern U.S. Economy.”) The changes are dramatic and Routine-in-dispersed –36.8 worrisome. The most disadvantaged category of workers, routine-in- SOURCE ROGER MARTIN, RICHARD FLORIDA, SOURCE ROGER MARTIN, RICHARD FLORIDA, MELISSA POGUE, AND CHARLOTTA MELLANDER © HBR.ORG MELISSA POGUE, AND CHARLOTTA MELLANDER © HBR.ORG dispersed, grew significantly, and

HBR.ORG THE BIG IDEA 15 THE GOOD JOBS SOLUTION ZEYNEP TON

The Changing Share of Job Types and Compensation little independent judgment and decision making not because that’s for Jobs in the Modern U.S. Economy inherently better for corporations Breakdowns by occupational and industry categories, and but because executives imagine it is better. JOB TYPE AVERAGE WAGES COMPARED WITH THE NATIONAL AVERAGE In “The Case for Good Jobs” and +78.5% “How to Build a Business on Good Creative-in-clustered 13.3% 13.9% Creative-in-clustered +74.0% Jobs,” the two-part article anchoring this package, Zeynep Ton argues that by increasing the independent judgment and decision making called Creative-in-dispersed 23.0 24.8 for in formerly routine-intensive jobs, companies will do better — because workers will become vastly more +36.1 productive. That means that employers Creative-in-dispersed +31.3 in turn can comfortably increase Routine-in-clustered 20.1 16.5 wages. The Good Jobs Institute, a nonprofit Ton and I founded, is helping companies undertake the ABOVE AVERAGE transformation. The upside will be NATIONAL AVERAGE large for businesses and employees BELOW alike. AVERAGE Routine-in-dispersed 43.5 44.8 Routine-in-clustered –13.9 About the author: Roger L. Martin is the –17.9 director of the Martin Prosperity Institute and a former dean of the University of Routine-in-dispersed –31.7 Toronto’s Rotman School of Management. He is a coauthor of Creating Great Choices: –36.8 A Leader’s Guide to Integrative Thinking 2000 2012 2000 2012 (Harvard Business Review Press, 2017). SOURCE ROGER MARTIN, RICHARD FLORIDA, MELISSA POGUE, AND CHARLOTTA MELLANDER © HBR.ORG wages for that group deteriorated the lowest-value, routine-in-dispersed sharply, whereas the earnings jobs. They will surely start to wonder advantage of creativity-intensive why they should support democratic workers rose steeply. capitalism when it doesn’t work for The only ray of hope is that the share them, and won’t anytime soon. of creativity-intensive jobs grew by And although it’s good news that more than two percentage points. the share of creativity-intensive jobs But by and large, that growth didn’t has grown, that growth isn’t helping lift people out of the lowest-earning, workers escape the very worst type of routine-in-dispersed group. It drew jobs. mainly from the less-disadvantaged The best — and, I believe, the only — routine-in-clustered cohort, which chance to save America’s form of decreased in size by almost four democratic capitalism is to forget percentage points. about moving people from one job category to another and instead to THE IMPLICATIONS FOR AMERICA change what it means to be in the Soon the breadwinners of more than bottom categories. We can transform half the families in America will hold the nature of routine jobs. They involve

HBR.ORG THE BIG IDEA 16 THE GOODJOBSSOLUTION A researcher took apositionatlarge retailer to understand thefrontline experience. Itwasn’t agood job. by Laura Amico CLOCKING IN:WHAT IT’S LIKETO WORK ABAD JOB Q&A: SARAH KALLOCH N investment inpeople. TheGoodJobs operational choicesthatleverage the frontline workers andformakingsmart higher wages anddeeperinvestment in refutes thistrade-off. Itadvocates for success andgrowth. andfew opportunitiesfor schedules wages; italsoresults inunpredictable That doesn’t manifestitselfjustinlow you mustkeep laborcostsdown. businesses withrazor-thin margins, offer low pricesandmake money in know theconventional wisdom:To probably knowthattoo. Butyou also jobs are notgood jobs. restaurant, you knowthatmostofthose ordered ahamburger atafast-food a sweater inadepartmentstore, or in lineatthegrocery store, hunted for holiday Ifyou’ve employment. stood Zeynep Ton’s GoodJobsStrategy If you employ people inretail, you swell withtemporary thoseranks December retail. InNovember and the United States workin early 9millionpeople in help orhinderfrontline workers in wanted to understand howsystems to spread theGoodJobsStrategy, I KALLOCH: WhenIjoinedZeynep HBR: APPLYING ANDTRAINING excerpts follow. hertimeonthejob. Edited during with Kalloch aboutwhatshelearned customer experience. I recently spoke prevent workers from delivering agreat to workinretail andwhatchallenges weeks to understand whatitislike retailer. Sheclocked inandoutfornine worker atalocal outlet ofamajorU.S. took ashort-term jobasafrontline that endTon’s colleague Sarah Kalloch taking thecurrent measure ofretail. To to make thetransformation involves isn’t easy. Part ofunderstanding how implementing theGoodJobsStrategy nonprofit shecofounded, recognize that prices thatare justaslow. service andhigherproductivity —and Strategy results inbetter customer HBR.ORG THE BIGIDEA17 Ton andtheGoodJobsInstitute, a Why go through thisexercise?

GETTY IMAGES simply don’t have the timeforthorough at othercompanies.Many managers diligence. manager, Iwould have donemore due a crazy résumé. IfIhadbeenthehiring never worked inretail andhadkindof alittlewhich was surprising—Ihad hired. They didn’t callmy references, did abackground check—andIwas interview atthesecondstore, andthey could notinterview me. Ihadabrief system hadbeendown all day andthey to have themtell methattheircomputer drove halfanhourto oneinterview only got acallfor aninterview from two. I stores to workinfrontline roles, andI No. Iappliedonlineto several retail bad-job experience? you specificallywanted a a good- or Did you choosetheretailer because and Iwanted to deliver. exercise, areal butthiswas jobforme, myand earn $11anhour. You callitan customers. Ialsowanted to workhard interviewing, training, andserving through thewhole cycle ofapplying, really understand theworkandto go people. excited, Iwas andIwanted to shelves look good, andIlove to help I love to organize things, Ilove to make doing. Ihadnever worked inretail, but the company’s goals. Ilearn bestby terms ofthecustomer experience and But that’s exactly whatwe’ve observed ZEYNEP TON THE GOOD JOBS SOLUTION ZEYNEP TON

hiring. Their stores are experiencing asleep. Two women left several times stock shelves and answer customers’ high turnover, and they need to fill for smoke breaks. I read everything on questions. The first cashier they positions fast. They end up hiring the the walls. Finally a staff person came matched me with did not speak much wrong people, which is bad for the in to talk to us. He started right in with English and hadn’t been trained as a company, bad for employees who pay periods, schedules, how to clock trainer. In fact, no one had been. The aren’t the right fit, and bad for existing in, and the attendance policy. He then second cashier I was matched with employees, who get a teammate who is showed us three completely unrelated left me alone at the register to use the unable to contribute. and totally bizarre videos: one that bathroom. During that time I rang up a seemed to be about customer service, mother and son and forgot to give them So you got the job. Then what? one on how to use heavy equipment, one of their bags. I was horrified. They Training. My training group of six and one on benefits — which I did not had been kind, and I had completely included one person who probably qualify for. There was some important failed them. should not have been hired — I knew safety information; we skipped over This went on for days — ineffective within 10 minutes of meeting her that that. He did not talk to us about the cashier shadowing and failing in front of she was not reliable. And it turned out company’s strategy. Or culture. Or customers, interspersed with computer- that she was frequently absent, which our roles. Or how many people it based training. And after all that made work worse for the rest of us. But employs. Or how many customers it shadowing, I never cashiered again. the manager was contending with tight serves. Or anything that would provide The Good Jobs Strategy encourages labor hours, high turnover, and high a foundation for why we were there cross-training. You want people to have absenteeism. He needed to fill roles and and what we were part of and why we mastery in one or two areas but to be could not escape that vicious circle. mattered. By the end of day one all I flexible enough to do a couple other jobs I was told that after some general knew about the job was that I needed as well. But to me, this was the worst computer-based training, I’d be paired to show up. way to cross-train. I wasn’t trained well with a staffer in my department who enough on the cash register to feel would train me in my specific job. I felt Do you think this happened because comfortable working it. Meanwhile, I good about that plan — but it’s not the company didn’t value its frontline wasn’t gaining skills in the job I had what happened. employees? Or was it something else? been hired for. It made me less effective I had about 40 hours of training — It’s a systemic problem. It was and less able to serve customers. but 20 were wasted by technology frustrating, because that profoundly glitches, unproductive shadowing disorienting orientation cost the THE 40-HOUR 20-HOUR WORKWEEK outside my department, and just company money and goodwill. We were Did you go to your manager with your waiting to be told what to do next. paid two hours for sitting and waiting. concerns? When I finally got onto the store floor, We were not treated with respect or I almost never saw my manager, partly I was unprepared to do my job. I had set up to succeed for the customer. The because we often worked different not even had a store tour — I had no manager orienting us seemed pulled shifts. Also, because the store had idea where things were or where they in several directions. And this happens such incredible staff instability, he belonged in my area, never mind in the at companies across the U.S. Managers never knew whether workers would whole store. I was terrified. operating without slack in high-turnover come in or not. I think he kind of gave environments are often unable to create up on managing and just did the tasks DAY ONE: A NEW JOB ALREADY? conditions in which new employees can himself. When I came in — every day, What was your first day like? learn and thrive — and that drives even and on time — he never had anything Orientation started at 9 am. I was put in more turnover. planned for me to do. a room with several other new hires. No One day I came in for a nine-hour one said anything to us — we were not Now you’re on the job. Did it improve shift and saw a manager restocking given an agenda. once you got into the flow? shelves in my section. I thought that For the next two hours the manager Unfortunately, no. Weirdly, on my was odd — I would be there for the called people into his office one at a first training day a manager told me next nine hours, and that was my job. time to do paperwork. We had nothing to shadow a cashier. I was surprised, But I moved to a different area and got to do while we waited for our turns. because I hadn’t been hired for a to work. I work hard, and I work fast. We just sat in the room. One man fell cashier position. I’d been hired to Within 90 minutes the whole section

HBR.ORG THE BIG IDEA 18 THE GOOD JOBS SOLUTION ZEYNEP TON

looked great except for some stockouts, contribute to the company and, frankly, Were there things you could do on which I was not trained or equipped to so that the time would pass quickly. your own to make the customer solve. I had 7.5 more hours in my shift, And I really wanted to be able to help experience better? Would you have but the manager I had seen earlier people. But I never had the tools or felt comfortable proposing changes to was gone. I did whatever I could. I put knowledge I needed — and I hardly ever headquarters or your managers? things away and answered customers’ had assignments. I tried. We always talk about the questions, but it probably added up fact that much of what needs to be to about 10 minutes of work per hour. COMMUNICATION BETWEEN THE improved is invisible to headquarters It was a gorgeous summer Saturday, FRONT LINE AND HEADQUARTERS but clear to frontline workers, and and it was not busy. I was basically Did you ever feel like taking matters that is totally true. I had ideas for jumping up and down and waving my into your own hands when things were addressing various operational arms, screaming, “Give me more work,” going poorly? challenges, and so did my coworkers. but no one cared. That day I wrote in That really wasn’t possible. They were not radical changes; they my notes, “How am I supposed to care Headquarters had clear plans for were easy, often cheap or no-cost about my work if no one cares about the store — but they did not always solutions that would have saved time me?” correspond with the realities on the and money or given customers a better The kicker is that I hadn’t wanted to ground or the resources we had. experience or both. come in that day. I’d asked for the day During one of my shifts we got the But we had no outlet for our ideas. off so that I could attend an event that floor plans for a holiday display. I In fact, if you brought up a challenge night. They’d offered to have me come helped set up the infrastructure for with a manager, you were labeled a in and leave earlier, but the schedule it — hooks and baskets and shelves. It troublemaker. I found this out the hard never got changed. Our schedules were was going to be a good day: I had a big way. I brought up a problematic process totally unpredictable. I had asked to project, and I love holidays. to a manager and asked if there might work 20 hours a week, but I was usually The plans for the display sent by be a better way to do it. She excoriated scheduled for 40 and had to ask the headquarters looked great. Our final me in front of other people. I felt she manager to change it. The situation was display did not. We were missing was basically telling me to be quiet and completely untenable, but everyone maybe a third of the merchandise, and do my job. had to deal with it — we were told it we weren’t allowed to fill in the gaps A coworker who had been there for was a system error, but it happened with holiday merchandise we had on years saw this and reached out to me every week. Nothing was done to hand for other sections; we had to on break. He was very kind and said he correct it. Schedules changed all the leave parts of the display empty. As was sorry for the way she had treated time. frontline workers, we had no visibility me — but that was the culture. He said, I don’t think it was the nature of into why that happened. Maybe visual “If you just do what they say, they will this particular company that caused hadn’t talked to planning, or logistics love you. If you bring them problems, the problem. It was the nature of a was delayed, or something went wrong they will hate you. If you make them do business in which the labor model outside the store walls. Time, money, any extra work, they will hate you.” generates bad jobs. We have seen this and materials were wasted — and the Again, in this chaotic environment — kind of chaos and instability at other customer suffered. which we have seen at other retailers — retailers. One grocery store manager Supply chains and planning are very managers did not have time to at a company we studied wanted to complex and will never be perfect, but problem-solve. They barely had time to develop people and build his team the best companies simplify whatever get tasks done — forget hiring, training, but found himself behind the register they can and empower stores to developing, and leading. I don’t several hours a day because people adjust when things change — and give think they were encouraged to solve didn’t show up to work. With a tight them the slack to do so. We were not problems or that they necessarily had labor model, there was no slack in the empowered to adjust the floor set, so the skills and resources to do so. They system. Retailers may think this saves it sat half empty even though we had needed people to keep the boat afloat, money, and it may in the short term — merchandise in the back, which hurt not rock it. They could not spend 30 but it is very costly in the long term. business and made me feel we were not minutes solving a problem even if that All I wanted to do every day was be trusted to make decisions in our own could save thousands of hours in the busy and productive so that I could store. future — there was just too much to do

HBR.ORG THE BIG IDEA 19 THE GOOD JOBS SOLUTION ZEYNEP TON

in the moment to think long-term and the rewards that come with good jobs innovate and improve. and strong operations can ensure that companies weather this tough ENDURING AN EMOTIONAL ROLLER retail time and come out adaptable, COASTER, FOR $100 A DAY agile, and profitable. That’s a win for How would you sum up your nine everyone. weeks at the store? Working in a retail store is physically and emotionally exhausting. Physically, I was lifting heavy boxes, walking all around the store, going up and down ladders, and standing on my feet all day. Emotionally, I was on a roller coaster. When I had a clear assignment or could connect customers with what they’d come in for, I felt good. But most of the time I experienced frustration, boredom, and waste all around me. Every day I came home demoralized and drained, and with less than $100 to show for it. I had some wonderful coworkers who went above and beyond to do their very best every day, to support one another, and to make the customer experience as good as possible. It takes real skill to ring someone up quickly, and it takes time and attention to get to know hundreds or thousands of products so that when the time comes to help a customer, you can do it well. But the system did not allow any of us to be as productive and engaged as we wanted to be. Operational inefficiencies and a lack of investment in people wasted talent, time, money, productivity, and consumer trust. Retailers have options: They can invest in people who will be problem solvers and customer service dynamos and who will own their store operations and make them productive and positive — and profitable. Or they can underinvest in people and operations and create chaos and instability for employees and customers. The choice seems really clear to me. We know a lot about how to help companies transform bad jobs into good ones. It is not easy. But neither is operating in chaos. And

HBR.ORG THE BIG IDEA 20 “ THE GOODJOBSSOLUTION Jobs Strategy. by Zeynep Ton VIDEO In thiswhiteboard session,Zeynep Ton shows howyou canbegin implementing theGood GETTING STARTED ONGOODJOBS THE GOODJOBSSCORECARD HAS THREECOMPONENTS — PERFORMANCE.” EMPLOYEES, CUSTOMERS, ANDOPERATIONAL ►

PLAY 9:43 Good JobsStrategy. session you should beable to starttheprocess ofimplementing a those needsonyour operational performance.Bytheendof employees’ andcustomers’ needsandhowto assesstheimpactof through howto useit. jobs inyour company measure up. Watch above asTon walks you Zeynep Ton’s GoodJobsScorecard canhelpyou understand how HBR.ORG THE BIGIDEA21 Ton outlineshowto tell whetheryou’re meetingyour

GETTY IMAGES ZEYNEP TON

“THE RIGHTTHINGTO DO” THE GOODJOBSSOLUTION Walmart U.S. CEOGreg Foran talks withHBRaboutthe powerhouse. challenges andearly winsofbringinggood jobsto theretail Q&A: GREG FORAN W how seriously to take thesemeasures. ithasbeen hard ends meet, to know many states stillhave trouble making potential oftheU.S. retail workforce.” committed to unlocking thefull and madestatements like are “We improved benefits, expanded training, an hourforfull-time employees), workers’ wages (to anaverage of$13.85 its laborpolicies.Ithasraised frontline signs thatthecompany isrethinking But thepastfewyears have brought itoffersschedules all too many ofthem. hours andlife-disruptingunpredictable public assistance,andforthelimited ofstorethousands workers to seek benefits, whichhave forced tens of Given thatWalmart employees in by Steve Prokesch its low pay and over theyears for negative publicity a huge amountof almart hasgotten Mud Bay, Mercadona, andQuest including Costco, Trader Joe’s, QuikTrip, better. more productive andserve customers support thoseworkers, helpingthembe andrevampingindustries operations to workers inretail andotherservice empowering andinvesting infrontline Jobs Strategy. TheGJSisamodelfor subscribes to Zeynep Ton’s Good his present role Foran inAugust 2014, operations inChinabefore assuming Walmart’sNew Zealander whoheaded U.S., indicates thatit’s thelatter. A the president andCEOofWalmart Or dothey change? signalasea who have shunneditforitsHRpolicies? company’s reputation to wincustomers strong jobmarket andto burnishthe to attract andretain workers ina Are they modeststeps implemented HBR.ORG THE BIGIDEA22 A handful of other companies, A handfulofothercompanies, In thisedited interview Greg Foran,

GETTY IMAGES supply chainwasn’t workingaswell wasn’t where weneededitto be.The [Walmart’s term forallitsemployees] The engagement oftheassociates like cleanliness anditems instock. them to beinterms ofbasicthings be. Thestores weren’t where weneeded pricing wasn’t where weneededitto innoparticularorder,out, that was were not asgood asthey appeared. results indicated thatmaybe things But Iwasn’t unaware that thefinancial areallywas strong, vibrant business. U.S. before Icamehere thatit was FORAN: stores performing? ofWalmarthead U.S., howwere the HBR: expansion ofthemiddle class. day —amove thataccelerated the minimum pay ofhisworkers, to $5a decision to more thandouble the one comparable to HenryFord’s 1914 enormous impactontheU.S. economy, whichwouldto followhave suit, an Others mightbeinspired orcompelled this path,itcould prove atippingpoint. its clout inthemarket, continuesdown with its1million-plus employees and pursuing theGJS.ButifWalmart U.S., itscallcenters),Diagnostics (in are So Istarted digging. WhatIfound In 2014, when you became the whenyou becamethe In 2014, My perception ofWalmart ZEYNEP TON

ABOVE: COURTESY OF WALMART THE GOOD JOBS SOLUTION ZEYNEP TON

it should have been. Each rock I turned of things. By and large, that’s working type of job, people can perform another. over indicated that our business was for us. It fits pretty well with the Good When I read the book, I went, “Bingo!” past its prime and starting to struggle. Jobs Strategy, because all the way I called Zeynep — I didn’t know her — That was reflected in our comp store through we’ve tried to simplify the and asked if we could get together. A sales. Profits still looked OK, but profit business, standardize work processes, few weeks later I went to Boston and can hide many sins; it’s what your and empower associates. spent the day with her, touring stores customers and associates say about We call our approach to achieving and talking about the ideas in The Good your business that indicates whether that One Best Way. We have one best Jobs Strategy and the things we were it’s vibrant and healthy. When you way for managing inventory, one for doing at Walmart. looked at that, it was clear we had scheduling, one for setting shelves, Zeynep and I have continued talking, some issues. and so on. Standardization creates and I’ve encouraged my team to think efficiency. Getting routine tasks done about ways to adopt elements of the How did you think about improving faster lets associates spend more strategy, in terms of both how we talk performance? What did you do? time serving customers. We’ve still about it and the process itself. Having compiled a fact base, we had got work to do on cross-training so a discussion about the need to focus that associates can perform a wider You described at a high level where you on our store associates. We were range of tasks, and on operating with are. Could you be more specific about paying something like $7.65 an hour, slack — staffing stores with more labor things you’ve done to improve the cus- on average, as an opening wage. hours than the expected workload tomer and employee experience and But as you visited stores, met with calls for. But our journey is well under operational performance? frontline associates, and spoke with way, and it’s the right thing to do. Let me begin at the end. It’s been good their managers, you could tell we to see progress. But to some extent were having difficulty attracting the How did you hear about the Good Jobs the low-hanging fruit has been gained; right talent to apply for jobs, let alone Strategy? the hard work now begins. That’s what holding people for any length of time. About a year into our work one of the I see when I walk around our stores That led early on to a board decision consultants I use, who challenges and distribution centers, and it’s what I to invest more in our workers. We took what I’m doing and how I’m thinking hear when I talk to our customers and a pretty bold step, putting about $2.7 about things, said, “I came across this associates. We’ve done some really billion over a couple years into higher book, The Good Jobs Strategy.” I took good foundational things. But over the levels of pay, benefits, and training. it home and read it over a couple of past three years we’ve been fixing, and We knew we also had to address price days. It resonated with me. I thought, now we’re starting to talk about leading. and remodel a number of stores. We This is so blindingly obvious: If you “Fixing” is about getting the basics went to Wall Street and said, “If you simplify operations, standardize right. “Leading” is about how we can give us a breather on the bottom line, work processes, and empower your exceed industry standards rather than we’ll deliver an improved top line. But employees, you will get better results. simply meet them. When we think about it won’t happen in a year; it’s going to I particularly liked the empower moving from a mindset of fixing to one take three years.” process. Just standardizing isn’t good of leading, we mean the ways in which We did a number of things: We raised enough. Walmart will define the future of retail our minimum wage; started to deal with I’ve been working in retail for 40 by continuing to transform how we things like paid time off and benefits; years. If you don’t give people some operate and innovate. introduced “academies,” which are surety around how many hours they In terms of the fixing part: Our stores dedicated facilities where associates will be given and what their schedules are cleaner. Food is fresher, because in roles such as frontline supervisor, will be like, you create problems. we’ve made changes like reducing the department manager, and assistant I’ve watched businesses I’ve been amount of time products spend in the manager receive training in retail associated with do things like cut supply chain. Our associates have better fundamentals and area-specific skills; people’s jobs back so that they get tools. For example, they were using a changed the way people work in stores three hours here on Tuesday and four Telxon — a wireless barcode scanner by introducing more digitization and hours there on Wednesday. You can for checking prices and managing increasing their access to information; address that through cross-training inventory, which has been around for changed processes — a whole bunch so that when there’s downtime in one a long time. They’ve now got TC70

HBR.ORG THE BIG IDEA 23 THE GOOD JOBS SOLUTION ZEYNEP TON

handheld computers, and we’re looking intensifying competition from online They would say, “This isn’t going to to move to even better technology. The retailers? Or because Walmart has work. You can’t get more people coming customer experience has significantly saturated the U.S. market with stores into the stores. Walmart is too big to improved because of the actions we’ve and therefore has to get more out of its change. It’s done; it’s run its race.” All taken: remodeled, cleaner stores; existing stores? Or both? that did was make me determined to better-trained associates who can serve Both. Three and a bit years ago prove them wrong. customers more effectively; better in- Walmart was at a crossroads. We could stock positions; and the ability to get demonstrate to the market that we What has been the impact of the steps through checkouts quicker. had growth opportunities, or we could you’ve taken on turnover, absenteeism, In terms of the associates, there’s continue to concentrate on a bottom- morale, productivity, and customer a better induction process for new line profit. That’s a nexus a lot of satisfaction? hires. We rolled out a program called businesses find themselves in, not just I believe in the Good Jobs Strategy. I Pathways, which gives entry-level in retail. We made a decision to grow also believe in Net Promoter Scores. associates training and mentoring the top line. Part of that would involve Plenty of good businesses have really over their first few months. It’s developing an e-commerce offer, and good Net Promoter Scores. They didn’t designed to teach skills crucial for part would involve getting more people get them through luck. They got them retailing, including customer service, visiting our stores and putting an by working hard. We’ve significantly merchandising, teamwork, and extra item into their basket. If you’re a improved our Net Promoter Score. communication. After successfully shareholder, you’re not looking just for In fact, I was told by the chap who completing the program people receive bottom-line profits; you’re also looking coauthored the score that he’s never a pay increase, information about for long-term growth. seen a business our size move as the career paths available to them at There’s a second component, which quickly as we have in the past three Walmart, and a clear picture of what to me is even more important: the DNA years. So customers are noticing. experiences and skills are required to of Walmart. If Sam Walton [Walmart’s In terms of associates, we are still grow with the company. founder] were here today, he would be early in the journey. I’d like to tell you In addition, we have better training incredibly disappointed if we weren’t we’ve made massive inroads in terms of in how to use metrics and leverage doing a good job for our customers and turnover and retention. But the reality the available information to help associates. I know that not because is that we’ve bent the curve. We’re serve associates and customers. I’ve met Sam but because I spent 12 heading in the right direction, but we’re Every manager now has the ability to years with Jack Shewmaker, one of his only about 20% of where we need to get into significant people metrics — lieutenants. Jack joined the company be. such things as the number of open when there were only 32 stores positions, turnover rates, who’s and ended up being number two in How about productivity? completed training, and who’s due to Walmart’s leadership structure. He was We’re now growing sales faster than be trained. Finally, we’ve established the smartest retailer I’ve ever met. One costs; we’ve done that every quarter 200 academies, where the training of the reasons I’m here is Jack; he was a this year. There are other things I lasts anywhere from two days to a mentor of mine before I joined Walmart. measure: What is our cost per case week. About 250,000 associates will He taught me the value of looking after through distribution centers? How many have been through them by the end of customers and associates. So there’s units are we moving across checkout the year. a personal component to what I do: I scanners? All those things are beginning Something else I’m really proud of is know that if you don’t look after your to improve. We have definitely turned that we’ve improved what we call My customers and associates, you don’t the corner; we’re starting to head north. Share. All associates have the ability have to worry about the shareholders, to earn a bonus. And as you can tell because it’s just not going to work. The Good Jobs Strategy is a system — a from our latest earnings report, we’re Here are the reasons you take on the number of elements working together. doing better financially. That means kind of transformation we have: First, Are you applying all the elements? associates in more and more stores are you’ve got to believe in it. Second, We’re rolling out many pieces. We were becoming eligible for a bonus. there’s absolutely a financial aspect. rolling out some before I read Zeynep’s And third, you hate losing. Lots of book. Were your actions driven by people didn’t believe we could do this.

HBR.ORG THE BIG IDEA 24 THE GOOD JOBS SOLUTION ZEYNEP TON

There is a wonderful quote in the Zeynep talks about, and there’s a pretty book from Oliver Wendell Holmes Jr.: strong correlation between the way “I would not give a fig for the simplicity she thinks and the way I think. We’re this side of complexity, but I would give going to continue talking, and as I my life for the simplicity on the other mentioned, I’m encouraging my team to side of complexity.” A lot of people like connect with her and to think about her to simplify things. But they get no prizes approach more deeply. for doing so unless they have dealt with the complexity of the issues. I like Are you rolling out elements of the to get into the details and understand system together, or piecemeal? them. Only when you have understood We tend to focus on one element at them and dealt with the complexity of a time. Our approach to developing them do you have the right to simplify. and rolling out new ways to schedule We do understand the system part of associates is a good example of how the strategy. There are bits where we we do it. We’ll put a new process into are deeper in and others we’re still a store, start to work it through, and developing. learn. Then we’ll roll it out to five stores and see what happens. Then we’ll take Were there elements of the sys- it to a region of 80 to 100 stores. Then, tem you had to do before you could if we’re happy, we’ll start rolling it out consider tackling others? I’m thinking across the country. That’s often how we about what you’ve done with pay and introduce initiatives. It might also be benefits. how we will develop new apps and tools When I was 17, I started working full- for the associates. time. I got bored with what I was doing in a store, so I decided to take some What are the biggest challenges so far? night school classes. I learned about The single biggest challenge is change Frederick Herzberg, a psychologist who and the fact that we’re doing something looked at the factors involved in job on a scale most businesses don’t have satisfaction. He studied the industrial to deal with. Most major retailers — revolution and pointed out that it Costco, H-E-B, Food Lion — have 400 would be really difficult to motivate or 500 stores. We have almost 5,000. people to work in a factory unless you You can’t underestimate what happens provided clean running water, warmth when you go up by a factor of 10. in the winter, cool in the summer — the An awful lot of change management basics. and communication is needed to do What we did with pay addressed one anything at Walmart. You’ve got to get of those basics. It was so visible. And the army to march. while we will always have more to do in this regard, it gave people a reason About the author: Steven Prokesch is a to believe. It let us begin to do other senior editor at HBR. things. It was a critical first step.

It sounds like Walmart is planning to implement the whole system. If so, what are the next steps? We’re already doing a whole bunch of elements. We’re still learning about others. There is a strong correlation between what we’re doing and what

HBR.ORG THE BIG IDEA 25 C THE GOODJOBSSOLUTION Business Review Staff ahigh-growthpractice during phase. Here’s why. by The startupManaged by Qisputtingthe GoodJobsStrategy into CLEANING UPBAD JOBS ARTICLE that muchmore intriguing. It’s notjust make Teran’s applicationoftheGJS established companies.Thesethings of Ton’s retailers are older, more high-growth mode,whereas many retailer. Also, Managed by Qisina worked with,Managed by Qisnota were some basicdifferences. with otherserviceproviders.) Butthere marketplace forcompaniesto connect firmalsoprovides(The aplatform and employs more than700 W-2 workers. traditional partofthecompany, which plan forQServices—themore Jobs Strategy, orGJS,into thebusiness decided to integrate Zeynep Ton’s Good experience,” Teran says. customer, andabademployee business, badoutcomes forthe for. Alot ofthemwere unhappy. jobs they weren’t trained orequipped Employees were stretched thin,doing wanted done,wedid.” yes to everything. Whatever tasks you recalls. would “We pretty muchsay really knowwhatwewere doing,“ he supervising cleaners, because wedidn’t almost every nightcleaningor offices theday.business heran during jobs, moonlightingasastafferatthe maintenance doingallthose —hewas that provides office and cleaning launched Managed by Q—astartup whenheandhiscofounder 2014, control over your schedule. Andyou havein sight. little ifany minimum wage. There’s nopromotion not bringinghomemuchmore thanthe chances are you’re workinghard but are often badjobs.Have one,and Unlike mostcompaniesTon has So asthecompany grew, Teran “It created badoutcomes forthe norecipeThat was forsuccess. “During ourfirst Ispent year Dan Teran knows alltooIn well. Providing security. These workplace kitchens. furniture. Stocking Assembling modular leaning offices. Area. And it’s profitable. Angeles, andthe SanFrancisco Bay clients inNewYork, Chicago, Los to build acareer,” hesays. turns itinto areal platform on which could joband otherwisebeadead-end sets employees upforsuccess. furniture), Teran explains, thecompany requested ones(suchasassembling focusing onthemostfrequently (such astakingcare oforchids) and By notacceptingthosekindsoftasks knowledge thatitsemployees lack. take on jobsrequiring specialized stock options. owners ofthecompany, andthey get plan.Employeesa 401(k) are part are offered insurance health and average 120hours amonth,andthey anhour.$12.50 Full-time workers Employeesadvancement. startat pay, benefits,and scheduling, has focusedonfourthings: better. about makingfast-moving startups about cleaning upservicejobs;it’s also Is it working? ManagedIs itworking? by Qhas GoodJobs Strategy takes“The what In addition,thecompany doesn’t In applying theGJS,Teran ►

PLAY 2:52 HBR.ORG THE BIGIDEA26 Harvard Harvard on theplay button above. of theGoodJobsStrategy by clicking Hear TeranHear describehisapplication GETTY IMAGES ZEYNEP TON THE GJSCAN TAKE FROM LESSONS TPS THE GOODJOBSSOLUTION Implementing theGoodJobsStrategy requires huge changes. But there isaprecedent to learn from: theToyota Production System. by JamieBonini, Sarah Kalloch, andZeynep Ton ARTICLE T approaches istheneedforastable Good JobsSystem.”) Crucialto both Four Operational Choicesina “The (Seethesidebar that investment. the operational choicesthatleverage in terms ofinvestment in people and an operation. they canhelpuslearn howto change Toyota Production System and (TPS), hundreds ofimplementations ofthe to learn from, butthere have been been hundreds ofGJStransformations There tonot easy implement. haven’t with aspecificoperations is model, opportunities, andsupportingthem offeringthemcareerschedules, more, providing themwithpredictable which involves paying frontline workers —works. Butthe system, industries The GJShasmany parallels withTPS in retail andotherservice and customer satisfaction improving productivity or GJS—anapproach to he GoodJobsStrategy, unions —complex rotating sealed manufactures alarge variety ofrotating based inWaukegan, Illinois, that improvement acompany isDeublin, a prerequisite forcontinuous that knows people stability is neither cantheGJS. workforce, TPScan’t succeed,and capable, reliable, andmotivated or misunderstood. Butwithouta people stability—isoften overlooked arounds. ThefourthM—manpower, or depend onexceptions andwork- of qualityordelivery, oryour methods your suppliesare unreliable interms your equipmentkeeps breaking down, youall, can’t runagood operation if obvious andwidely accepted. After manpower. Thefirst three M’s are machinery, materials, methods,and hard andwell. up, stay withthecompany, andwork workforce —foremployees whoshow HBR.ORG THE BIGIDEA27 A good example ofanorganization the4M’s:In TPS,stabilitymeans

GETTY IMAGES workers. committed was to Deublin highturnoverwas amongtemporary not have thatkindofpeople stability. investigation revealed did thatDeublin wrong andthinkofways to solve An it. could quickly going identifywhatwas werework, attentive toand detail, could consistently follow standardized knew theproduct andtheprocess, required highly trained employees who people instability. Theline’s complexity those areas. But anotherbigissuewas and TSSCmademany improvements in and methodsinstability, andDeublin problem materials, was machinery, down31%was ofthetime.Part ofthe But thelinemakingrotating unions high standard forcomplex assembly. more than15%ofthetime—avery downtime, rework, orchangeovers no down forminordelays, equipment that amanufacturinglinecanbe through TPS.) organizations improve theiroperations partners andsuppliers andmany other has helpedhundreds ofToyota’s just-in-time production system. (TSSC five years to implement asophisticated over thepast Support Center (TSSC) with theToyota Production System haspartnered Deublin industries. mills, windturbines,andmany other bearings usedinmachinetools, paper The biggest people-stability challenge The just-in-time system dictates ZEYNEP TON

THE GOOD JOBS SOLUTION ZEYNEP TON

management roles. Turnover among THE FOUR OPERATIONAL CHOICES IN A GOOD JOBS SYSTEM temps dropped by 50%, and Deublin OPERATIONAL EXAMPLE found itself with a much more stable CHOICE and productive workforce. Now the firm was in a position to Focus and Identify what problems you help solve for your customers and streamline work with TSSC to implement its own simplify products, promotions, and services to maximize customer satisfaction version of TPS, called the Deublin and employee productivity. Minimize last-minute changes to deliveries and promotions. Focusing and simplifying enables higher wages, more- Performance System, and to transform predictable schedules, and higher motivation for employees; better its business. It has increased on-time service for customers; and higher sales and lower costs for companies. delivery performance from 50% to approximately 95% (the goal is 100%). Standardize Standardize routine processes (the unloading of trucks, shelving, and cleaning, for example) with input from frontline employees, and empower And with all employees engaged in and empower those employees to improve their work, provide input into merchandising continuous improvement — thanks (how much inventory to hold, which products to stock, how to display in part to real workforce stability — them, and so on), and solve customer problems. Standardization drives efficiency, while empowerment increases motivation and helps employees Deublin knows it can get there. contribute to higher sales. Greater employee contributions make possible People stability is also necessary higher pay. before implementing GJS operational choices, such as empowering people Cross-train Train employees to perform both customer-facing and non-customer- facing tasks so that they can vary what they do depending on to make decisions and giving people customer traffic — and train them in a way that ensures ownership and time to identify and solve problems, specialization. Cross-training means more-predictable schedules, higher that can work only with capable and motivation, better teamwork, employees who are more responsive to customer needs, and higher productivity (because there’s less employee motivated employees. As discussed downtime when traffic is slow). in “How to Build a Business on Good Jobs,” Quest Diagnostics, a provider of Operate with Staff your units with more labor hours than the expected workload so that medical diagnostic services, realized slack you can meet demand at peak times. Operating with slack lets employees do their work without making mistakes, deliver great service, and have it had to stabilize its workforce to time to identify and communicate ideas for improvement. It enables improve the performance of its call companies to cut costs and continuously improve. centers. It raised wages and offered a clear career path before embarking on GJS operational improvements such offering stable jobs for permanent subscribe to the GJS, such as QuikTrip as cross-training and empowering workers, but because of seasonal (a U.S. convenience-store chain) employees. Like Deublin, Quest variability in demand, it also used and Mercadona (Spain’s largest has seen significant performance temporary workers. Owing to a weak supermarket chain) have similar hiring improvements that have delighted applicant pool, many temps failed and training practices. (See “The customers. quickly and had to be replaced. Case for Good Jobs.”) They’ve found As both the Toyota Production Those who did well and would have that this higher investment in new System and the Good Jobs Strategy liked permanent jobs often left for employees pays off in people stability demonstrate, operational excellence companies that offered clearer career and operational excellence. cannot be achieved without great paths and better pay. Before Deublin Third, Deublin worked to keep its people who show up, are competent, could improve its production process, strongest performers. It raised the and want to improve. Companies it had to address this issue. starting wage for temps by 25% and often perceive a trade-off between First, the firm added a standardized gave them a 20% raise and increased operational inefficiency and people dexterity test, a behavior assessment benefits after six months on the job. It investment, but it’s a false trade-off. test, and a process to make sure also roughly halved the time needed You’re going to pay one way or the it hired the right people. Second, for temps to secure full-time assembly- other. Either you invest in a well-paid, it changed its training procedures line positions — from 12 months to well-trained, well-motivated team to provide new hires with mentors six months — and explicitly laid out that will make your company better and to do a better job helping them how they could progress to machinist, every day, or you incur endless high master crucial skills. Retailers that supervisor, and mid- and upper-level penalties for your mediocre workforce

HBR.ORG THE BIG IDEA 28 THE GOOD JOBS SOLUTION ZEYNEP TON

in the form of higher turnover, higher inventory costs, lower quality, worse customer service, and less responsiveness and adaptability. Investing in people stability may seem expensive, but the alternative — a poor-performing operation — is much costlier.

About the authors: Jamie Bonini is a vice president of the Toyota Production System Support Center, a not-for-profit organization affiliated with Toyota Motor North America that since 1992 has helped other organizations adopt the Toyota Production System. Sarah Kalloch is the executive director of the Good Jobs Institute, a nonprofit whose mission is to help companies thrive by providing good jobs to frontline workers. Zeynep Ton is an adjunct associate professor at MIT’s Sloan School of Management, a cofounder of the Good Jobs Institute, and the author of the two-part article anchoring this package.

HBR.ORG THE BIG IDEA 29 THE GOOD JOBS SOLUTION ZEYNEP TON

PORTFOLIO ZEYNEP'S RECOMMENDED RESOURCES The literature on the benefits of good jobs and the costs of bad jobs practices is growing fast.

ARTICLES RESEARCH AND CASES HBR, where the Good Jobs Strategy found purchase, has published many articles on The literature on the benefits of good jobs and the costs of bad jobs topics related to good jobs, especially change management. And the popular press practices is growing fast. has picked up on some of the good jobs work.

“Why ‘Good Jobs’ Are Good for “Managed by Q’s ‘Good Jobs’ “Irregular Work Scheduling and “When Does Paying More Pay Retailers” Gamble” Its Consequences” Off?” by Zeynep Ton. This article by Adam Davidson. Davidson by Lonnie Golden. In many by Hazhir Rahmandad and highlights the costs of bad jobs explains how Dan Teran, a service settings, erratic and Zeynep Ton. This paper uses a and shows how four low-cost cofounder and the CEO of unpredictable schedules hurt systems dynamics approach to retailers are thriving by offering Managed by Q — a startup that workers as much as poverty-level understand whether good jobs good jobs. provides office cleaning and wages do. are profit-maximizing in mass- maintenance — forwent the gig- market service industries and “Leading Change: Why economy model of working with “Man’s Search for Meaning: The to identify strategies for offering Transformation Efforts Fail” contractors and instead offered Case of Legos” good jobs in settings with high by John P. Kotter. This classic good jobs. by Dan Ariely, Emir Kamenica, demand variability. article explains the eight largest and Dražen Prelec. At good jobs mistakes that hurt change “The Magic in the Warehouse” companies, frontline employees “How to Change a Culture: efforts. A must-read for anyone by Neal Gabler. Gabler provides connect their work to making a Lessons from NUMMI” implementing change. a good description of Costco and difference for their customers. by John Shook. The NUMMI how it thrives by offering good Ariely and his colleagues tell us transformation is my favorite “Why Change Programs Don’t jobs. why that matters. transformation example. This Produce Change” paper explains how changing by Russell Eisenstat, Bert “Spanish Aisles: Why a Low- “Quest Diagnostics (A): work and showing respect to Spector, and Michael Beer. Price Retailer Is Thriving” Improving Performance at the people through better work One of my favorites. Beer — a The Economist discusses Call Centers” design can change culture. wonderful mentor — and his Mercadona. by Zeynep Ton and Cate Reavis. colleagues explain why top- This case makes clear that “Mercadona” down change programs rarely “Curing the Addiction to operational excellence is not by Zeynep Ton and Simon work. Growth” possible without people stability. Harrow. Mercadona, Spain’s by Marshall Fisher, Vishal largest supermarket company, “Working Anything but 9 to 5” Gaur, and Herb Kleinberger. “Managed by Q” excels at operations. For an by Jodi Kantor. Kantor does a This article presents a by Zeynep Ton and Cate operations professor like me, great job helping us see what methodology for identifying Reavis. One of the questions being at a Mercadona store is like unpredictable schedules do to when a retailer should slow its this case asks is, “Is it possible being at a Toyota factory. workers. store-opening rate and adopt to implement the Good Jobs a new operating approach. It Strategy while growing quickly?” “QuikTrip” “The Good Jobs Strategy” makes clear that good jobs We will find out in a few years! by Zeynep Ton. The QuikTrip by Joe Nocera. This piece are especially important for convenience-store chain follows describes my journey to the mature companies that need “The Most Underrated Skill in the Good Jobs Strategy. If good Good Jobs Strategy. to generate more revenue from Management” jobs and outstanding financial their existing units. by Nelson P. Repenning, Don performance are possible at Kieffer, and Todd Astor. Being convenience stores, they are thoughtful about what problems possible anywhere. to solve before taking action is crucial. This paper explains how to do that better.

HBR.ORG THE BIG IDEA 30 THE GOOD JOBS SOLUTION ZEYNEP TON

BOOKS VIDEOS These books paint a picture of where the jobs are, what needs to change to Hearing the voices of people involved in a good jobs transformation is transform bad jobs into good jobs, and how to make that change. a valuable way to learn how it works.

The High-Velocity Edge: How Good Jobs America: Making Business Leaders Talk About Market Leaders Leverage Work Better for Everyone the Benefits of the Good Jobs Operational Excellence to Beat by Paul Osterman and Beth Strategy the Competition Shulman. This provides great by Good Jobs Institute. Costco by Steven J. Spear. Spear, who data on where jobs are and on cofounder Jim Sinegal and other spent years studying the Toyota the need to upgrade low-wage business leaders discuss why Production System, provides jobs. their companies follow the Good an excellent description of how Jobs Strategy. Toyota and other companies use continuous improvement as a Good Jobs Transformation at strategic weapon. Quest Diagnostics by Good Jobs Institute. In this Management on the Mend: The short video, Quest executives Healthcare Executive Guide to talk about the implementation System Transformation of the Good Jobs Strategy at by John Toussaint with Emily their call centers. Adams. Although this focuses on health care, many of its lessons are relevant in other contexts as well.

The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits by Zeynep Ton. This covers more than 10 years of my research.

Shaping the Future of Work: A Handbook for Action and a New Social Contract by Thomas A. Kochan and Lee Dyer. A history of the employment system over the past few decades and a description of what’s needed to reach shared prosperity.

HBR.ORG THE BIG IDEA 31 NEXT IN THE BIG IDEA: JANUARY 2018 ENDING SEXUAL HARASSMENT Public platforms for reporting bad behavior and research on creating safe workplaces both indicate a generational change in how men and women attain — and retain — power in the workplace. HBR explores the risks and rewards for leaders as they seek to address one of business’s most open secrets: Sexual harassment affects too many of us.

Unlimited Access Is Now Yours Get one full year of exclusive access to HBR content and member benefits. Subscribe now at HBR.ORG/SUBSCRIBE