Where Employees Are Assets and Real Money Is Made

"Companies that invest in higher salaries for low-level employees find success in a competitive market." This was the tagline from a recent article in The Atlantic by Sophie Quinton that I though we should all take a look at . . . and ponder.

Not because I think it means that we should all increase our salary ranges. There's something more at work here. The article covers two stores where I like to shop -- Costco and Trader Joe's. (And another, called QuickTrip, that I am not familiar with.) I enjoy the two stores because the prices are great and the service is always wonderful. Odds are you like them, too.

Compared to most retailers who consider employees a cost to be minimized, Zeynep Ton of MIT's Sloan School of Management reports that these stores operate on a different model. "They start with the mentality of seeing employees as assets to be maximized." And their stores achieve better operating efficiency and customer service, resulting in higher sales. From a customers' standpoint, these stores are a pleasure to shop in. I choose them over online shopping, another outcome of the stores' employee investment that increases sales.

As the article points out, higher employee costs need to be balanced out somewhere. Costco stocks products on pallets, for example. Trader Joes keeps their stores small. But there are more lessons for us in the article about the economic outcomes of valuing employees. So much so, that Harvard uses the stories about these stores' strategies as case studies.

'At the upper echelons of the American workforce, salaries have soared. Companies are accustomed to thinking of their highest-level employees as "talent," and fighting to hire and reward people who will help grow the company. Now Trader Joe's and QuikTrip are proving that lower-level employees can be assets whose skills improve the bottom-line as well.'

What would make a better topic for study and discussion at your next staff meeting? Here are two uniquely effective business strategies that are supported by uniquely innovative talent and reward strategies. And there couldn't be a better time for this discussion. After all, the trend toward lower paid, part-time employees continues to grow in most industries. It's always easier to be penny wise and pound foolish.

Cutting employees to cut costs hasn't just affected customer service in retailers. Most of us can name a range of businesses where the consumer experience has changed for the worse since the Recession (including, perhaps, the company shown on your own email address). This article from The Atlantic is part of a series called, "The Next Economy." It will be an economy, I guess, in our near future where it still takes academic research for us to learn -- or to learn once again -- that "underinvestment in workers can result in operational problems . . ."

Or, instead of putting out fires, you can take the time to analyze the truth about the outcomes of your company's own strategies and make some progress today.

Margaret O'Hanlon is founder and Principal of re:Think Consulting. She'll join Ann Bares and Dan Walter of the Compensation Cafe to speak the unspoken -- Everything You Do (in Compensation) Is Communication -- in an upcoming book. Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, she was a Principal with Towers Watson. Margaret is Deputy Director of the International Association of Business Communicators (IABC) Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University, Bloomington. Creative writing is one of her outside passions, along with Masters Swimming.

Comments

[ans]

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[ans]

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