By Zeynep Ton
Investing in workers drives business excellence
Subject
Themes
Across industries, from retail and restaurants to call centres and senior living facilities, most companies with large frontline workforces are trapped in a vicious cycle. They pay low wages, suffer high turnover, and respond by cutting costs further, adding complexity to chase sales, and designing work around the assumption that employees are unreliable. The result is poor operational execution, declining customer satisfaction, and a system that treats essential workers with little dignity. Profit can mask these failures for years, but the underlying weakness eventually catches up, as it did for Sears, Borders, Circuit City, and Toys "R" Us.
Across industries, from retail and restaurants to call centres and senior living facilities, most companies with large frontline workforces are trapped in a vicious cycle. They pay low wages, suffer high turnover, and respond by cutting costs further, adding complexity to chase sales, and designing…
The argument for combining high investment in people with operational excellence arrives at a moment when the American economy is grappling with intersecting crises of inequality, labour market disruption, and declining public trust in institutions. The 2020s have intensified each of these…
Most companies with large frontline workforces are locked into a self-reinforcing pattern of decline. Low wages attract a limited pool of applicants and fail to retain those who are hired. High turnover means constantly training new people who never reach full productivity. Understaffing follows,…
The decisive difference between companies that escape mediocrity and those that remain trapped lies not in resources, industry, or size, but in leadership mental models. Leaders who adopt the good jobs system place winning with customers ahead of short-term financial metrics. This is not a secondary…
When companies attempt to break out of the vicious cycle, the instinct is to add: more training, more technology, more incentives, more products. Research published in Nature confirms that people systematically overlook subtractive changes, defaulting to addition even when removal would be more…
Empowerment is one of the most celebrated management concepts, yet it fails spectacularly when attempted without the right conditions. One executive reports losing tens of millions of dollars after empowering employees. The reason is straightforward: empowerment relies on trust, and trust cannot…
The argument for investing in frontline workers is often presented in financial terms: higher pay reduces turnover, lower turnover improves execution, better execution increases sales. This framing is strategically useful because it speaks the language of boardrooms and investors. But beneath the…
A chief human resources officer at a large retail chain contacts Zeynep Ton after raising hourly pay for store employees. Despite the raise, the company still struggles to hire and retain workers. The CHRO wants to study whether improving schedules would help, treating the problem as an isolated…
At PayPal, a senior leader doing community service at a soup kitchen in Chandler, Arizona, learns from the kitchen director that many regular visitors are PayPal employees. An internal review confirms the alarm: thousands of workers, despite earning at or above market rates, run out of money between…
Quest Diagnostics consolidated twenty regional call centres into two locations in 2013 to cut costs. By 2015, both centres were over budget and delivering poor service. Three of every five customer service representatives left within their first year, unplanned absenteeism ran at 12.4 per cent, and…
Greg Foran arrives as CEO of Walmart US in 2014 to find nine consecutive quarters of declining same-store sales. "Profit can hide many sins," he observes. Stores are failing at cleanliness, stocking, and service. The supply chain is not working well. "Each rock I turned over indicated that our…
An MBA student writes that a panel discussion about H-E-B's approach to treating labour as an investment rather than a cost struck him as "a pleasant bedtime fairytale." He signs up for the service operations course anyway because "deep down, I wanted to believe that there was another way of doing…
Jim Sinegal cofounded Costco in 1983 and ran it as CEO until 2012 from a tiny office, answering his own phone and spending two hundred days a year visiting warehouse front lines. "Seventy cents of every dollar we spend to run our company goes to people," he tells students. "It is a people business.…
John Furner becomes CEO of Sam's Club in 2017, inheriting poor same-store sales growth, high employee turnover, and low productivity. Having started his career as an hourly worker in Walmart's gardening department, Furner believes in frontline employees. He raises pay for key positions, including…
Two companies engage enthusiastically with the Good Jobs Institute, quantify the costs of mediocrity, and then fail to follow through. A large retailer becomes the institute's first partner. A financial services CEO empowers his team to explore making call centre jobs into good jobs. Neither company…
The first move is subtraction. Research demonstrates that people systematically overlook subtractive changes, defaulting to adding rather than taking away. Yet removing workload from the front lines, by eliminating low-value activities, reducing product variety, smoothing deliveries, and cutting…
Once the initial investments and simplifications start producing results, three capabilities become possible that were previously out of reach: developing strong managers, empowering frontline employees, and building a culture of continuous improvement. Manager development must follow system…
By Zeynep Ton
Subject
Themes
Across industries, from retail and restaurants to call centres and senior living facilities, most companies with large frontline workforces are trapped in a vicious cycle. They pay low wages, suffer high turnover, and respond by cutting costs further, adding complexity to chase sales, and designing work around the assumption that employees are unreliable. The result is poor operational execution, declining customer satisfaction, and a system that treats essential workers with little dignity. Profit can mask these failures for years, but the underlying weakness eventually catches up, as it did for Sears, Borders, Circuit City, and Toys "R" Us.