Excellent book – and an argument – that explains that long-term business objectives, which include good jobs for the employees, beneficial for the company in general. Cutting costs by creating “bad jobs” is a business choice and it is generally harmful to the company itself in the long run, measured beyond next two quarters.
This is one more book that emphasizes that successful companies who put their customers first, employees seconds, and shareholders third. This approach benefits everybody: customers, employees, communities and becomes fundamental decision for the company’s long-term profitability.
Below is the chart of Costco (good jobs approach) and Walmart (infamous for minimizing personnel costs).
One of the most interesting parts is approach to operations and considering good jobs a part of operational approach – what, after reading the book, makes complete sense. Examples used in the book concentrates primarily on retailers – companies that very often pursue “bad jobs strategy.”
Model retailers design and manage their operations in a way that makes their employees more productive, reduces the cost of doing business, and puts employees at the center of the company’s success. The way model retailers design and manage their operations turns out to be the means by which well paid, well trained employees create even more wealth than they cost.
- Offer less. Offering less variety an no promotions reduces the costs and, surprisingly, improves customer satisfaction.
- Standardize and empower. Model retailers standardize routine tasks, but give employees more flexibility to manage non-standard situations and help customers.
- Cross-train. Model retailers manage differences in store traffic with changing what employees do, rather than the number of employees, what allows to provide stable schedules for the employees and assure more knowledgeable and satisfied work force.
- Operate with slack. Model retailers prefer a degree of over-staffing to under-staffing. Over-staffing improves customer service and actually reduces costs by allowing employees to be involved into continuous improvement.
Difficult times reaction:
- The company that needs to address short-term balance sheet implements layoff of the higher paid and more experienced employees, what result in the need to hire more employees when the business rebounds and incur hiring and training costs. Short term gain – long term expense increase.
- The long-term oriented company tries to improve operation to realize the savings – the results are not as immediate, but the benefit of the improvement will remain with the company when the business rebounds and will contribute to the competitive advantage comparing with the companies who managed the business cycle with layoffs.