The Good Job System: Empowering Essential Workers for Success

Essential workers deserve better pay and support, transforming low-wage jobs into dignified roles enhances productivity and company success.

### The Importance of Good Jobs: Transforming Essential Work for Dignity and Productivity
* 🧼  Many essential jobs, such as cleaning and caregiving, are often undervalued, yet they are **crucial for society's functioning**, especially highlighted during the pandemic.
* 💔  Workers like Janet, an early manager at a retail chain, face **unlivable wages and constant schedule changes**, forcing them into a **cycle of poverty** that affects their families and work performance.
* 📉  The high turnover and mistakes in labor-intensive sectors are often a result of **low pay and lack of investment in employee training**, leading to **poor customer service and wasted resources**.
* 🏢  However, companies like Costco have demonstrated that **paying workers well** can lead to **lower turnover rates** and **improved overall performance**, with Costco's turnover at **8%** compared to the retail average of **60%**.
* 💡  The "good job system" emphasizes the need for interdependent elements: **investment in people** and **creating productive, motivating work environments**, which can lead to **better outcomes for both employees and companies**.
* 🔄  John Ferner's leadership at Sam's Club illustrates the transformative power of **raising wages and improving work conditions**, resulting in a **16% increase in productivity** and a **25% drop in turnover**.
* 🌟  Ultimately, reimagining essential jobs as good jobs can lead to a **more engaged workforce**, **competitive companies**, and a **stronger economy**, providing **dignity and respect** to millions of essential workers.

I am so excited to be here to talk to you about work that is not glamorous, like cleaning bathrooms, shelving tomatoes, picking up trash, or bathing the elderly. During the pandemic, we called the workers who do this work essential because our world literally stops without them. Remember how we used to clap for them? You know, we've been talking a lot about AI robots, but this work is also unlikely to be automated, so these jobs are here to stay. But a lot of people can do this work, so the wages that are set by the market are low. In fact, market pay is often unlivable pay, and tens of millions of essential workers live in a vicious cycle of poverty and lack dignity, which also hurts their companies. Take Janet, a full-time early manager at a retail chain. Even as a manager, her low income didn't pay the bills for her and her son, so she had to have a second job. But she couldn't hold on to her second job because her work schedule changed all the time. One day, she might work from 5:00 p.m. to 9:00

p.m. p.m. The next morning, her shift might start at 5:00 a.m. Just imagine her life and imagine how little time she had with her son. My life is always in a turmoil, Janet told me. She couldn't sleep. Amazingly though, she still cared so much about doing a good job at work, but even there she failed in front of her customers all the time. One day she said to me, customers were yelling at her because the checkout line was too long. Some walked off leaving their full baskets. The line was too long because there weren't enough workers at the store, and so many of the workers who were there were new, so they were slow and made a lot of mistakes. They put the wrong product on the wrong shelf or left the expired milk in the fridge. When customers caught mistakes at the checkout, cashiers had to call Janet for help every time because they weren't trusted to adjust prices or even solve the smallest problems. Controls like that drove people crazy and wasted everyone's time. Janet

begged for more staff, but her store's poor performance meant even a lower labor budget, which meant more mistakes and higher turnover, so she was always starting from square one, rehiring, retraining, more firefighting. You know, these dynamics are so common in labor-intensive services like retail stores, restaurants, call centers, nursing homes, hotels, that it seems like it's the only way for companies to keep their costs down, but it's not. You know, it's true Janet's company isn't spending the money on labor, but they are spending the money on rehiring, retraining, on lost sales from long lines, empty shelves, and poor service, on all the wasted products and wasted time. Now, I'm an operations management professor at MIT. We can't stand waste or inefficiency in operations, so that's the reason that I began researching service operations 25 years ago. But then, when I met hardworking people like Janet who weren't making it, their struggles got to my heart, especially as an immigrant who believes in the American dream. So, figuring out how to improve

company performance and jobs became my work mission now. Luckily, some companies have already figured this out. So, Jim Sagal, Costco's co-founder and my business hero, this is my class. My MBA students are always so curious. They say, How can Costco, the world's third-largest retailer, afford to pay workers so much more than other retailers and provide its customers the lowest prices? Here's how much Costco pays compared to other retailers. Huge difference. And Jim's answer is always the same. He says, Paying your fellow workers well isn't altruism, it's good business. Costco's employee turnover is a fraction of the retail average, 8% versus 60%. And its 20-year stock performance is so much higher than other retailers or S&P 500. You might say, Yeah, but Costco is an exception. Jim Sagal is brave and brilliant, and that's the only reason they can keep their cost low and wages high. But it's not just Costco. Others like Maradona, Spain's largest supermarket chain, Quick Trip, a convenience store chain with gas stations.

have also turned what was typically considered low-wage, high-turnover jobs into good jobs. Now, these companies all pay their workers more because the absence of sufficient pay guarantees high employee turnover. But pay alone is not going to make Jan's job a good one, and if all Janice's company did was to pay workers more without raising their productivity, then that would mean either higher prices or lower profits. Higher pay requires higher productivity, and higher productivity requires better work. Here is how work at Janet's store would be different if her store operated more like Costco or Quick Trip or Maradona. Everyone's priority would be the customer, so when there's a long line at the checkout, someone shelving merchandise would rush over to open a cash register because they would be cross-trained. When there are problems, experienced cashiers will be trusted to solve them quickly—no need to call Janet for help. They would also work fast, not just because they have expertise, but because corporate would do everything it can to simplify their work. Janet's store would also operate with slack, meaning

having enough staff to take care of the customer minimizes mistakes and does improvement, but operating with slack wouldn't work if there are slackers, right? So, so, so the standards would be high, and with turnover low, Janet would have time to develop her team and improve performance. Now, if you think about the work at the store, it's still not glamorous, and Janet will still go home physically exhausted but not defeated. She would feel valued, and she would take pride in creating a lot of value. So, what makes a job a good one, both for workers and companies, is not this or that thing, but it's a system. It's a system with two interdependent elements. One is investment in people, pay schedules, career path standards. The other is work that's productive and motivating, with simplification, empowerment, cross-training, and operating with slack. I want to make this system, which I call the good job system, the norm, not the exception. So, to do that, um, I started a nonprofit called the Good Jobs Institute, and I've been working with my former MBA

students and together we have now worked with more than 30 companies whose leaders wanted to adopt the system to win with their customers. We have seen small and large companies in different industries do it. A huge part of their success was their leaders' ability to imagine the workings of their own good job system and have the courage to adopt it. Let me give you an example. In 2017, John Ferner became the CEO of Sam's Club, which is Walmart's membership-based model that competes with Costco. Now, at the time, Sam's Club was struggling and way behind Costco in terms of labor productivity, member satisfaction, sales, and employee turnover. John was Sam's Club's 14th CEO in 34 years. Imagine the performance pressure, right, to show results in a short amount of time. One of the earliest changes that John wanted to make was to raise pay $5 to $7 an hour from a basis of $15 an hour for workers who cut meat, who worked in the bakery, who led teams. But John got pushback. HR said

don't do it. Last time you raised fate, it didn't reduce turnover. Finance said don't do it. It's not in the budget. There was no way for John to be able to prove with numbers that higher pay and higher pay alone, without the rest of the system, would pay off. But he was certain that Sam's Club couldn't be a great company if they didn't raise pay. You see, to be loved by their customers, their members, they had to have a motivated, capable team that can set up for Success. That was impossible without reducing turnover, and reducing turnover wasn't possible without raising pay because people were leaving for jobs that paid a couple more dollars an hour. So just like Jim Sagal, John could connect the dots between pay, turnover, productive work, and competitiveness. So he and his team took a leap of faith. They raised pay, and they did the hard bottom-up work to improve productivity and jobs. But when they announced the first pay raises, some employees cried. You know, for workers like Janet, a couple more dollars

an hour is the difference between working one or two jobs. It's the difference between getting enough sleep or not having a stable schedule. It's the difference between spending time with your son or not. And for Sam's Club, within the first two years, labor productivity measured as units sold per hour increased 16%. Employee turnover dropped 25% for hourly workers, even more for managers. Sales increased 25% without opening new stores. This type of performance improvement fueled more investment in people and record membership growth. The one struggling chain is now a growth engine for its parent company Walmart, which too is on a good jobs journey. And John Fer got promoted to be the CEO of Walmart USA. Now I'm talking a lot about retail, but it's not just retail. At Good Jobs Institute, we've seen similar results: higher productivity, lower turnover, more love from customers, and higher sales at restaurants, call centers, even at a pest control company. The success of these courageous early adopters, I hope, will make it a lot easier for others to make a bet on their people.

you know when we think about high-performance organizations, our first instinct is often to fix the people, right? But it turns out what really needs fixing is their work and their pay. The problem was never Janet; the problem was the system that Janet was stuck in. And if we see jobs like hers not as dead-end jobs but as good jobs that can provide dignity, respect, and a decent living, we would have more engaged and productive workers. We would have more competitive companies, a stronger economy, and a growing rather than a shrinking middle class. Tens of millions of essential workers would have hope instead of desperation, and that will be a blessing for all of us. Thank you.

The Case for Good Jobs — and Why They’re Good for Business Too | Zeynep Ton | TED

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Essential workers, who perform crucial but unglamorous jobs, often face low and unlivable wages, leading to a cycle of poverty and lack of dignity.

The unpredictable work schedules make it difficult for individuals like Janet, a retail manager, to balance multiple jobs and spend time with their families.

The high turnover of new workers and strict controls contribute to mistakes and inefficiencies, causing frustration for both employees and customers.

The Impact of Poor Labor Management in Retail

Poor performance in retail leads to a lower labor budget, causing mistakes and high turnover.

This cycle of rehiring and retraining results in wasted time and lost sales.

However, companies like Costco have demonstrated that paying workers well can reduce turnover and improve overall performance, challenging the notion that low labor costs are the only way to succeed.

Transforming Low-Wage Jobs into Good Jobs

Companies are now paying workers more to reduce high employee turnover, but higher pay alone is not enough to create good jobs.

A successful work environment requires higher productivity, cross-training, and empowering employees to solve problems.

The Good Job System, which includes investment in people and productive work, aims to make good jobs the norm through the efforts of the Good Jobs Institute.

John Ferner's Impactful Leadership at Sam's Club

John Ferner became CEO of Sam's Club in 2017, facing significant challenges in labor productivity, member satisfaction, and employee turnover.

Despite pushback from HR and Finance, he was determined to raise worker pay as a means to reduce turnover and motivate the team.

His bold decision to raise pay and focus on improving productivity ultimately aimed to create a capable team that could drive the company's success and compete with Costco.

The Impact of Good Jobs on Business Success

An hour can make a significant difference in work-life balance and employee well-being.

Sam's Club experienced a 16% increase in labor productivity and a 25% drop in employee turnover within two years, leading to record membership growth and increased sales.

The Good Jobs Institute has seen similar positive results in various industries, highlighting the importance of fixing work and pay systems to create engaged and productive workers.