Growth

Walmart doesn’t operate here in the UK, I was never impressed by the store when I lived in the US and rarely shopped there. My mental image is “pile it high, sell it cheap” – which was actually Tesco. Evil empire exploiting workers and customers alike. But, it seems I’m wrong. My image might have been correct once upon a time but Walmart now follows something called the Good Jobs Strategy: they invest in their workers, train them, pay good wages, give them more meaningful work and reap benefits which more than pay for the extra costs. Rather than being a cost employees drive growth.

The dominant operating model of many companies may well be pay-as-little-as-possible, avoid training and any other non-essential costs, accept high staff turn over and have supervisors police and micro-manage employees. Yet there is another model which seems workers as a growth driver and it delivers higher returns.

While there are examples from health care, manufacturing and elsewhere it probably easiest to see the Good Jobs Strategy in retail companies: Trader Joe’s and Costco in the US, Zara and Mercadona in Spain, and here in the UK Richer Sounds.

I’ve been hearing about Good Jobs Strategy for a few years now and finally read Zeynap Ton’s The Case for Good Jobs a few months ago. Yet I’ve hesitated to write about it because Ton’s case is rooted in the “low-paid” occupations like retail. I generally work with high-paid knowledge workers – engineers, sometimes accountants or marketeers, and so on.

Yet the logic applies whatever the wage level. When salary costs are higher the cost of recruiting and onboarding is going to be higher too. The same arguments I’ve been making under the banner of “agile” apply to good jobs strategy: listen to employees, expect them to do quality work, trust then and enrol them in process improvement.

Today’s standard business strategy is often to keep staff costs low: pay as little as possible, avoid costs like training and if possible keep staff on “zero hours” contracts so there is no need to pay them if they are not needed. But, if you apply a little systems thinking here and look at what happens you realise this model is failing employees and employers alike.

Because wages are low employees are always on the look out for (slightly) higher paying jobs. So staff are prone to move often. Which means that employers are constantly spending to recruit and onboard new staff. That also means that staff don’t know much about the product offering, say, where to find things in the shop; which in turn means customers service is poor and customer loyalty is low, opportunities to up-sell and cross-sell are lost. Staff are costs to be limited.

Working for such an employer is not a lot of fun. Staff might need to hold two jobs to pay the bills. So why should the staff commit? Why should do anything more than they need to? – especially when the employer doesn’t go anything more then the essentials. Why should they smile? And why would they stay when someone else offers 10¢ and hour more?

McGregor’s Theory-X “Works are lazy” becomes a self-fulfilling prophecy.

Now flip it around: Good Jobs Strategy is Theory-Y thinking, staff are growth drivers.

Such companies invest in their staff, pay decent wages, train them, trust them and allow discretion in work. Now staff stay, so hiring and onboarding costs are reduced. They understand how the business operates and what the product line up is so customer service improves, customer loyalty increases, up-selling and cross-selling increase and the world is a happier place.

Many will say I’m dreaming, that is not how the world operates. Maybe, but Zeynep Ton has collected the evidence and shows that it does payback. Walmart is the evidence, it used to follow the standard strategy but for over 10 years has followed good-jobs and the results show.

I suspect at some level everyone, CEOs included, innately understands this. Thus the question is: why do companies undermine themselves by not treating workers well?

Unfortunately, the answer is that bad jobs are so normal that anyone (CEO included) who suggests something different undermine their own positions. CEO feels compelled to keep costs low because it is the standard model and everyone – shareholders included – expect it. And if the CEO feels the pressure all the other managers will too.

Now, why am I writing about retail jobs in a blog more concerned with high paying occupations? It is because I see the same thing. Recently I came across a company that moved technology engineering to high-cost Finland because it saw the engineering standards would pay back. Paying high wages for quality work was cheaper than paying low wages for rubbish.

Forget low wages. The people I work with – the likes of product managers, software engineers, even managers – all get paid far more than minimum wage but they still suffer from a lack of training, lack of trust, lack of discretion and excessive tasking (micromanagement). High staff turn over and lack of business knowledge are the result.

Secondly, the more I work with OKRs the more I see that company purpose is really important. Anyone who has joined my OKR training workshops, or seen recent presentations, will have seen my “Eggs”. Near term goals (the objectives for this quarter) need to support longer term goals (the product goal or annual OKR). That goal needs to support the greater mission goal, and the mission goal needs to support the company purpose.

Goals nest inside goals. Several levels, but ultimately you need an outermost goal. That needs to be purpose. Without purpose there is nothing to align goals, and weak purpose (“make more money”, “do more stories”) isn’t very useful, meaningful or motivating.

Good jobs strategy ties together other ideas. In a bad jobs environment there can be no psychological safety, which in turn means no organisational learning, so process improvement (agile) is shot though, there is no improvement process, effectiveness and productivity are hobbled. You need a good jobs strategy to make it all work.

OKR adoption is one place to start breaking this cycle but there are others. Start by surfacing issues and improving jobs. If this makes sense and you’d like to move in this direction please get in touch or book a call to chat and lets see what can be done.