Companies don't have to choose between low costs for consumers and higher wages for their workers, according to a new book by an MIT Sloan School of Management expert that outlines a "good jobs strategy" that benefits employees, customers, and shareholders alike.

The book focuses on low-cost retail. "The major low-cost retailers that I researched have been able to reject the either/or choice between good jobs and low prices," says MIT Sloan Adjunct Associate Professor of Operations Management Zeynep Ton, whose book, The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits (Amazon Publishing), is available on Jan. 14. "And these firms often deliver better financial performance than their competitors."

The book is based on Ton's examination of the practices and performances of major businesses across the globe, including Costco, Trader Joe's, the convenience store chain QuikTrip, and Mercadona, a major Spanish supermarket chain. "The argument that I make for a good jobs strategy is not just academic or idealistic theory," says Top. "It is based on good business practice.

The firms she analyzed for the book see greater human investment, in both wages and training, as not just socially useful policy but as part of a broader competitive business strategy, says Ton. They design and manage operations in ways that increase worker pay and productivity, enhance the customer experience, and improve their bottom lines - and all at once.

The book details how firms can make this happen. "The first component of the good jobs strategy is to invest in people," says Ton. "That means much more than just higher wages. It means seeing employees as capable human beings who can drive sales and increase growth. Human investment also includes better training as well as smarter scheduling."

The other main component of the good jobs strategy is to leverage these added investments in labor to ensure a high return, partly through what Ton calls "some very counterintuitive choices" by these firms. Ton describes four choices in her book, starting with offering less to customers. For example, while a typical supermarket stocks more than 40,000 products, a Mercadona store features only about 8,000 products. By offering fewer choices, the company reduces costs and increases the productivity of workers by creating a simpler environment in which they can perform more efficiently and with fewer errors.

The next choice is to standardize the routine processes but at the same time empower employees to improve those standards and make decisions for their customers. The third choice is to cross-train employees so that workers can do many jobs. So if there is a long line at a cash register, an employee stocking shelves can open up another register or help with customer service. The fourth choice that underlies the good jobs strategy is to operate with slack in staffing so that employees have time to perform all their tasks, help customers, and cut costs by engaging in process improvement.

"These choices work extremely well together and with investment in people" Ton says.

The strategy called for in this new book is complex and requires the kind of longer-term thinking that many companies tend to lack. "Excellence is always harder than mediocrity," says the author. "But the returns are greater as well."

Zeynep Ton is Adjunct Associate Professor of Operations Management at the MIT Sloan School of Management. The Good Jobs Strategy is available at Amazon.com.

MIT Sloan School of Management
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