Let’s Build The Economy Around Good Jobs

The Harvard Business Review says it’s time to invest in people.


A recent Harvard Business Review article recently caught my eye, titled “Rebuilding the Economy Around Good Jobs”, which makes the case that the economy relies heavily, too heavily, on ‘bad jobs’, those that require people to take substandard wages, which results in low productivity, low morale, and high turn over. With the entire world battling Covid-19, the author believes the time is now to bring back ‘good jobs’, those that pay well, improve motivation, productivity, and contributions. One of the hallmarks of ‘bad jobs’ is low performance, since the motivation to do more simply isn’t there. As the author Zeynep Ton says, “As the tussle over federal pandemic assistance in the United States has made clear, many service companies, even those whose financials looked fine, were already in trouble. A big part of that trouble was a focus on labor-cost minimization, which led to low wages and benefits, inadequate staffing, and as few full-time positions as possible. In this “bad jobs” system, frontline employees are inadequately trained, often underequipped, and disrespected. They can’t focus on the job when they constantly worry about paying medical bills or putting food on the table. They leave when there’s another job that pays $1 more an hour. Unit managers are busy fighting fires due to high turnover and operational problems, with too little time to develop staff and really manage the business. This bad jobs system keeps customers underserved (and, in some contexts puts them at risk), deprives the company of a compelling value proposition and prevents it from adapting to changing customer needs. Combined with a weak balance sheet these reasons drove many bankruptcies, including BordersToys “R” UsSears, and most recently Neiman MarcusJ. Crew, and J.C. Penney.”

The author goes on to say “there is an alternative: A good jobs system that has already proven successful. Long before the pandemic, there were successful companies — including Costco and QuikTrip — that knew their frontline workers were essential personnel and treated and paid them as such. Even in very competitive, low-cost retail sectors, these companies adopted a good jobs system and used it to win.

“There’s a strong financial case for good jobs. Offering good jobs lowers costs by reducing employee turnover, operational mistakes, and wasted time. It improves service, which increases sales both in the short term and — through customer loyalty — in the long term. All these improvements can more than make up for the large investments in better wages, benefits, training, and scheduling. Indeed, in a recent paper, Hazhir Rahmanidad and I show that above-average wages can be a profit-maximizing approach even in low-cost service businesses. In addition, a good jobs system makes a company more resilient and more adaptive, as companies like Costco, Mercadona, QuikTrip, and H-E-B demonstrate. These qualities will be much called upon during and after the pandemic.”

Your own frontline workers aren’t necessarily those currently in the spotlight during this pandemic, although they could be. It might be worth considering all of your essential and key people as the frontline of your business, and its success going forward into the ‘good jobs’ future. These are all of the people you rely on the create and deliver value for your organization every day. Without the right people properly motivated, you can start a whole new kind of pandemic, this time at the heart of your business, which will weaken and decimate your ability to perform and compete in the new ‘good jobs’ era.

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