Creating good jobs is good business

Creating good jobs is good business

The Good Jobs Institute, founded by MIT Sloan’s Zeynep Ton, helps companies improve frontline jobs and company performance

There’s a widely held belief that for places like retail stores, restaurants, and fulfillment centers to be successful, they need to squeeze everything they can out of frontline workers and offer as little in return as possible. This extends beyond offering low pay to include irregular schedules, minimal benefits, no real career paths, and a general lack of regard for worker well-being among decision-makers.

It’s no wonder, then, that such industries struggle with constant worker turnover, low productivity, and poor worker morale.

The Good Jobs Institute is offering companies another path to success based on a framework developed by Zeynep Ton, a professor of the practice at the MIT Sloan School of Management. The system combines strategic investment in employees with operational decisions that increase employee productivity, contribution, and motivation.

By implementing what Ton calls the “good jobs strategy,” companies have seen large drops in employee turnover and higher worker productivity, and jumps in customer satisfaction and sales.

“Our mission is to help companies thrive by creating good jobs, but another part is to change the conversation about what it means to have a successful company and what is the role of employees in organizations,” Ton says.

The Walmart-owned Sam’s Club, for instance, reported higher revenue, higher productivity, and a plunge in employee turnover after adopting the good jobs strategy. More than the business metrics, though, executives say it has been humbling to be part of a movement that meaningfully improves people’s lives.

Tim Simmons, the chief product officer at Sam’s Club, got a personal look at the impact of the strategy when he was touring a club in 2019 with a regional manager who was announcing the first pay increases. People began to cry. Some later reported they no longer had to work a second job. Many said it changed their lives.

“I remind my students of what [influential business author] Clay Christensen taught me: Management is the most noble profession when it’s practiced right,” Ton says. “Our students, future leaders, not only have the opportunity to create great businesses and do well for themselves and their families, but also to change the lives of so many people for the better.”

Answering the call

In Ton’s first book, “The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits,” published in 2014, she lays out what she calls the “vicious cycle,” in which companies seek to cut costs by minimizing employee wages and benefits. The approach leads to poor working conditions, low morale, high turnover, and reduced productivity.

The book struck a chord with many business leaders, who contacted Ton asking for help. At first, Ton declined. She had a full-time job at MIT and four kids. But one night she was having dinner with Roger Martin, the former dean of Rotman Business School, and she mentioned that she’d declined to help a legendary CEO earlier in the day.

“He said, ‘That’s the worst thing you could’ve said, because if you want to change things, you have to figure out how to help,’” Ton recalls. “I said, ‘I’ll do it if you help me.’”

The two founded the Good Jobs Institute in 2017 along with Sarah Kalloch MBA ’16, who had taken classes with Ton and has served as the institute’s executive director ever since. The team decided to organize the Good Jobs Institute as a nonprofit to make it easier to ask others in the field for help and to stay focused on the mission.

“It just seemed like the right thing to do,” says Ton, who receives no income from her work with the institute. “The GJI has become a lab in which we learned how to apply my academic research to real life and improve the lives of low-wage workers in a way that helps companies.”

Eventually the team settled on hosting workshops and road-mapping sessions to help companies. Today the Good Jobs Institute’s process for working with companies depends on their size and type, but it typically starts with a two-day kickoff workshop with company executives and frontline managers.

The workshops begin with a discussion of the vicious cycle to help leaders articulate how the status quo is hurting their customers and competitive position. Later, the workshop uses the Good Jobs framework — which is made up of four operational pillars: focus and simplify, standardize and empower, cross-train, and operate with slack — combined with investment in people to help leaders imagine how an alternative system might drive better work and customer value. Company officials then begin discussing why they need the strategy for success and identify specific changes they’ll need to make in their organizations to adopt it. The workshop ends by reviewing case studies of other organizations that have successfully implemented the strategy.

“At the end of the workshop, there’s some urgency among the leaders to change, and some alignment around the types of changes needed to get there,” Ton says. “And then we work with companies to help them articulate why they need to improve frontline work, who needs to be involved, and what changes to make first.”

Ton says a lot of the institute’s work revolves around emphasizing to companies that the strategy is a system and that individual changes, like raising pay, will not work in isolation.

“The whole idea of the good jobs strategy is you invest in people, and you make choices that make their work more productive and enable higher contributions,” Ton explains. “Without the work design changes, investment in people is unlikely to pay off.”

Making good jobs mainstream

The Good Jobs Institute has worked with dozens of companies, including owners of convenience stores, retailers, call centers, restaurants, and pest control businesses. Companies that adopt the system report big drops in employee turnover — between 25 and 52 percent —along with significant increases in productivity and sales.

Ton doesn’t think it should be a surprise that empowering workers who are otherwise struggling to make ends meet pays off. In fact, she believes most people underestimate the impact a small pay raise can have on a low-wage worker’s physical and mental health.

Ton’s conviction has grown as she’s heard from the companies she’s worked with. One former student, Michael Ross MBA ’20, SM ’20, has come to Ton’s class to discuss his experience implementing the good jobs strategy at the pest control company he leads.

“He talked about how he was in the Marines before and had a deep sense of purpose. Then he went to a private equity firm and missed that purpose and missed making a difference, and now spreading good jobs has become his purpose,” Ton says.

Ross’s story is not unique. An employee at a restaurant that adopted the good jobs strategy told the owner it allowed her to buy back-to-school clothes from somewhere outside of Goodwill for her children for the first time.

“At a personal level, for leaders at many companies we’ve worked with, the change has been super meaningful,” Ton says. “One person, [Moe’s Original BBQ franchisee] Dewey Hasbrouck, said this has become his ‘Why?’”

Last year, Ton wrote a book on what she’s learned from working with companies, titled “The Case for Good Jobs,” and she says the Good Jobs Institute is currently working to create a more scalable model of its workshops so the approach can spread more quickly.

“We still have a huge chunk of people who don’t make enough money,” Ton says. “We still don’t have enough respect for the work that frontline employees do, from factories to retail stores to health care settings. That’s one of the reasons why people are fed up and looking for other opportunities. It’s what we’re trying to change.”

Source: Zach Winn | MIT News (https://news.mit.edu/2024/nonprofit-good-jobs-institute-0112)

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