Back in May I was at a conference and a colleague was giving me grief for having so many posts related Zeynep Ton‘s work on how retailers treat their workers. Today we are going back to that well because Ton has a new book out, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits. Here is the author giving an overview of her thesis.
The basic premise is that there is a coherent strategy that firms can execute that works well for both its investors and customers while creating desirable, good jobs for its front-line employees. Furthermore, this does not depend on charging customers a premium. Indeed, her focus is on low-cost retail and she discusses several retailers that price quite competitively despite treating their employees quite well. Said another way, the fact that, say, Wal-Mart offers crummy jobs is a choice on its part, not an absolute necessity for being a low-cost player.
So I have to say that I find this work really interesting and the book well worth reading. (I should also acknowledge that I was given a copy of the book for free.) There are several things that are to note.
First, if one thinks of Ton’s work in the context of all that has been written on service management, there is part of this that is not new. Many people (particularly James L. Heskett, W. Earl Sasser, and Leonard Schlesinger) have written about the link between long-serving, loyal workers and both labor productivity and customer satisfaction. This leads to the Service Profit Chain, which Ton references. What separates her take on things from earlier work is a real focus on job design and how employees are treated. That is, she is very much focused on operational excellence and what that means for how stores are staffed and run.
In doing this, one can argue that she is really marrying service management with lean operations. Here are the four prongs to the good jobs strategy:
- Offer less
- Standardize and empower
- Operate with slack
Now consider a popular depiction of the “rules” underlying the Toyota Production System that is given in Decoding the DNA of the Toyota Production System by Steve Spear and Kent Bowen. The first rule is “All work shall be highly specified as to content, sequence, timing, and outcome.” That specificity is what allows Toyota to validate its job design as well as what allows for it to evaluate its improvement efforts. Ton’s recommendation to standardize work is very much along these lines and for the same reasons. Standardizing both assures that necessary tasks (e.g., replenishing shelves) gets done right and can be accomplished in the allotted time. Further, recommendations to cross-train and operate slack give frontline workers the perspective and the time to help improve the process as lean manufacturers rely on workers to make things better.
Another link to lean ops is that this an entire package. There are reinforcing aspects of these recommendations (e.g., cross training is easier in a standardized environment with a limited scope of offerings). Much as lean implementations often fail to deliver stellar results when only some aspects of lean operations are implemented (e.g., slashing work-in-process inventories without actively engaging the workforce in continuous improvement), adopting only part of Ton’s recommendations is unlikely to be a winning combination. Anyone can offer less to customers but without investing in the workforce that gives the customer a reason to come into the store, that may just result in lost sales. An implication of this is that pulling this all together requires getting a lot of ducks in a row and cannot be implemented overnight. Just because some low-cost retailers are structured to provide decent jobs does not mean that all low-cost retailers can transition to such a strategy instantaneously.
A final point. This view of managing services has implications beyond low-cost retailing. Take, for example, running a college. Northwestern’s president co-authored a study that created a lot of buzz this fall since it showed that non-tenured track faculty at Northwestern did a “better” job of teaching undergrads than tenure track faculty. (See here for the Atlantic‘s take on it.) But there is then a question of what do you mean by non-tenure track. There is certainly a class of academics who have to piece together a living teaching courses across multiple institutions without really having a stake in any of them. (See here for a New York Times article on that.) However, it is not necessarily the case that Northwestern is delivering better results for undergrads by exploiting desperate, itinerate instructors. We have the following from a different Atlantic post (Are Tenured Professors Really Worse Teachers? A Lit Review, Sep 25).
The study did not show that adjuncts in particular make better teachers than tenured faculty. In fact, contrary to some of the headlines it generated, the study wasn’t really about adjuncts at all. Northwestern employs a large number of full-time, non-tenure track lecturers who, while they aren’t necessarily compensated like star research profs, aren’t subsisting on ramen and Mountain Dew wages either. …
Northwestern economist David Figlio, one of the study’s co-authors, told me that at least 82 percent of the credit hours taught by non-tenured faculty were handled by lecturers like Witte. And he noted that 99.4 percent of all non-tenure-track professors the study examined had worked with the school for at least six quarters. In other words, it was looking at experienced teachers who enjoyed longstanding relationships with the university.