Why Retail Should Embrace “Employees First” Approach to Success

I have a new addition to my Christmas Wish List – the book The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, by Zeynep Ton, adjunct associate professor at the MIT Sloan School of Management. Though it won’t release until mid-January, I’m looking forward to reading it.

I heard a bit of a preview recently from the author on NPR. In the report, Ton describes the low regard many retail employers hold for their employees. Yes, margins in the retail industry can be particularly thin, but that doesn’t mean retail labor should be viewed as “a cost that needs to be minimized.”

Indeed, Ton points to research she’s done in the retail industry, finding:

“Companies that go cheap on labor lose more sales and profits than they realize and can find themselves in a vicious cycle. In retail, overworked, unmotivated, or under-trained employees often cause problems, for example by shelving products where customers cannot find them or by leaving expired products on the shelves. Such problems frustrate customers and mean lower sales and profits. Lower sales mean tighter labor budgets, which lead to even worse jobs — and the cycle continues.

“Meanwhile, a set of companies I have studied — including Costco, the QuikTrip convenience store chain, and Mercadona, Spain’s largest supermarket chain — offer their employees much better jobs than their competitors do while keeping prices low and doing well in all the ways that matter to any business — productivity, growth, and return to investors. They compete head on with companies that offer bad jobs in order to keep prices low — and they win.”

These findings are reflective of the “employees first” motto for business strategy. Your employees are your front-line in delivering on your strategic goals – whether that be creating new, innovative products, offering services, or selling goods in a retail setting. I would argue the need for deeply engaged employees is perhaps greater in retail as your employees directly interact with the paying public. The attitude and engagement of the retail employee makes or breaks profits every minute of every day.

Job quality is a management decision. As Ton puts it:

“Bad jobs are not necessary, even if we want low prices. Bad jobs are a choice that top management makes. Meanwhile, there is a better choice — better for everyone, not just for employees — that too few companies are making. I would never pretend that offering good jobs, low prices, and great returns all at the same time is easy. The good jobs strategy is complex and requires the kind of long-term thinking that many companies tend to lack. But it is a workable and sustainable strategy in which everyone — employees, customers, and investors — wins.”

Are employees first in your organization? How so?

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin, Montreal and Boston. Follow Derek on Twitter at @globoforce.

Comments

[Dan Walter]

Many (many, many, many) years ago I worked at Nordstrom. Working there in it's prime taught be amazing lessons about compensation, culture and success. Among them.
1. Pay your employees for the job you expect them to do.
2. Reward them if they outperform expectations.
3. Customers come first. They are the reason for existence.
4. Your front line employees are the only direct link to your customers. Therefore they come second. Treat them as if they are almost as important as your reason for existence.
5. Managers are there to make sure that employees can do their job (keeping customers happy).
6. Executives are there to ensure that everything runs smooth enough for the rest of the people in this cycle to be successful.

They had this simple inverted pyramid that has been re-used many times. The key was that everyone in the pyramid acted as if the pyramid drove their actions.

I also loved the "employee handbook" that I was given upon hire. It was a 5x7 glossy card that simply said: "Always Use Your Best Judgment". They hired people they felt had good judgment. They expected you to use it to be successful.

(google search the pyramid here. https://www.google.com/search?q=nordstrom+inverted+pyramid&tbm=isch&tbo=u&source=univ&sa=X&ei=2y2rUrXyKczYoAT7zoCQAg&sqi=2&ved=0CCkQsAQ&biw=1920&bih=950#facrc=_&imgdii=_&imgrc=tVK3-U9wi-bHPM%3A%3B9BRcmMdaXh0wyM%3Bhttp%253A%252F%252Fwww.covalentmarketing.com%252Fwp-content%252Fuploads%252F2012%252F12%252FNordstrom-Inverted-Pyramid.png%3Bhttp%253A%252F%252Fcovalentmarketing.com%252Fblog%252F2012%252F12%252F11%252Fnordstrom-quality-customer-service-for-over-100-years%252F%3B560%3B370)