In many of the more advanced industrialized countries, retail jobs are not exactly seen as the top of the heap when it comes to pay and prestige. This is a shame because we all have contact with the people who work in these jobs on a daily basis, from getting food to other things which aren’t essential for existence, like coffee or items for that bathroom-fixing project we have been putting off. If retail workers aren’t happy or engaged both they and we suffer the consequences. You know, the long wait in line as a bored “associate”, as they are often called, begrudgingly takes money for the shirt you just bought. What if that were a more happy experience for both worker and customer? What would it take to make that happen?
First you would have to have someone in the job who really wants to be there; instead we often have people who see it as a last resort, because the pay is so bad that this kind of job is relegated to that level. So this brings us to something which is counter-intuitive to so many retailers:
I can hear the arguments now: “we cant afford to pay more for that job, our competition doesn’t pay more, we would go out of business”. But this is short sighted, as a new study demonstrates (more on that later). By increasing pay you have a chance to recruit from a whole other caliber of worker, not just from the pool of those who “can’t find anything else”. Your standards can be raised, including education levels. You can recruit more than a “warm body”, to use a terrible but realistic term, for the job, you can actually get someone who is motivated and willing to engage. Imagine that?! While pay is not the main reason for engagement, lack of decent pay does limit the pool of workers from which you can choose, including those who will be willing to engage. And while you might find a good recruit for lower pay in hard economic times, that poor pay will drive them out the door when things turn around and will de-motivate them even while they are there, but waiting to leave. It is a short term solution to a long term problem. By paying only “what the market will bear” you drastically limit your pool of candidates, lower engagement in your organization, and as a result lower customer satisfaction, productivity, profitability and even worker health. How do I know all this? Because I co-wrote a whole book about the connection between morale, engagement and these performance aspects!
–Train train train!
Another area where retail often cuts costs is in training; you can see that when you go to a lot of stores, people know the minimum which has been put into their heads by having a more senior person work beside them for, what? A day or so? Then they are on their own, and customers pay the price.
The research I am referring to is from Zeynep Ton, a Professor of Operations Management at MIT’s Sloan School of Management, who has studied this for years. The excellent TimeBusiness article on this is well worth reading, because it gives us data which support the ideas I have presented above. For example, that by investing in higher salaries for retail workers, and providing quality training, retail companies benefit by being MORE not LESS efficient and profitable. Here is a great quote from the article, originally published in the Harvard Business Review:
“Highly successful retail chains — such as QuickTrip convenience stores, Mercadona and Trader Joe’s supermarkets, and Costco wholesale clubs — not only invest heavily in store employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors.”
That’s right, lower prices result, which is quite counter intuitive. Ton deliberately studied “low-cost” retailers, to counter the argument that this might work at Nordstrom but not at the cheaper places. As her research discovered, lots of processes in a retail store which might appear to the outsider as simple and easy to do, are in fact not. Stocking shelves for example. Many things which require judgment, which is a quality that an underpaid, overworked, poorly trained retail worker might not a) have in the first place or b) might choose to leave at home!
What is interesting to me is that when I searched through this article, I didn’t find the words “morale” or “engagement”, except in the tags which drive search engines and which are embedded at the bottom of the text (or in my side bar here). How interesting. Yet this is the mechanism by which a better paid, better trained, better treated worker ends up driving (and I use that word very carefully, it is based on a lot of research) customer satisfaction, productivity and profits. Workers treated this way feel better, and so they work better. And as I mentioned above, by increasing pay and improving working conditions, a higher caliber of worker can be recruited: more motivated, more ambitious, more likely to engage with the job and the organization and its customers. The old saying might not be politically correct but it is at least partly true: you get what you pay for. I say “partly true” because you can pay more but recruit badly, and still end up with the “worker from hell”!
Finally, I want to point out that the article in TimeBusiness, and the underlying research, mention one of my favorite stores: Trader Joe’s. A food retailer which started out in southern California and was bought early on by German giant Aldi, Trader Joe’s is a poster child for everything which we are talking about here. Workers there, according to the article, make between $40,000 and $60,000 a year, not bad for a job in a very cool and clearly high engagement work culture! I go there at least once a week and have done that since moving to southern California in the late 70s. It is always a good experience, the people there are exceptional and the prices reasonable. Traders, as we call it, is the perfect example for the ideas presented here. Now what is amazing is that its parent company operates many stores in Germany which are really the opposite experience to what I am describing here. I even blogged about that. Can Aldi import its Traders experience back into Germany? I don’t know, there are (national) cultural barriers and a long history of doing something different. But it sure would be nice, for my 3 months spent each year in Germany, to have an upbeat “Traders experience” at their German Aldi stores! I wont hold my breath…..
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