Zeynep Ton

Author, Speaker & Adjunct Associate Professor at MIT Sloan School of Management

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Archives for October 2012

Crummy Retail Jobs Are a Corporate Choice, Not a Law of Nature

October 30, 2012 by Zeynep Ton 1 Comment

Right on the front page of Sunday’s New York Times there was a story about part-time work in retail.  Steven Greenhouse, a Times reporter, and author of The Big Squeeze, highlighted the tough working conditions for part-time employees, especially their struggles with too few hours and ever-changing schedules.

As someone who has been studying retail for a while, I was not surprised by what I read.  But looking through the readers’ comments, I saw that many were surprised and upset.  Some likened the work conditions Greenhouse described to slavery and some blamed capitalism and greed for producing these bad jobs.  But other readers pointed out that bad jobs are the price society pays for low prices.  If companies were to pay more money to their employees or provide better working conditions, then the prices we all pay would have to go up. 

For example, a reader from Manassas, VA wrote: ”If ‘we the people’ demand that companies such as Jamba Juice and Fresh and Easy (and Walmart) hire more full-time and near-full-time employees, we should not be surprised when the prices charged to us go up to cover additional employee costs. We have demanded lower and lower prices for years now. As a result, the working conditions at companies have been squeezed, the benefits packages have been nearly slimmed out of existence, and the hours allotted to each worker have been cut.”

The problem with this very common view is that it assumes that an employee working at a low-cost retailer can’t be any more productive than he or she currently is.  It’s mindless work so it doesn’t matter who does it.  If that were true, then it really wouldn’t make any sense to pay retail workers any more than the least you can get away with.

One reader from Austin, TX was angry enough to call for a boycott, but even he bought into the bad-jobs-for-low-prices assumption: “We have a civic responsibility to boycott establishments that abuse their workers in the name of efficiency, even though this will mean higher prices.”

But this assumption is plain wrong.  Even low-cost retail work is not trivial and how you perform that work makes a big difference for the company’s bottom line.  This is not just my opinion; there are successful low-cost retailers that prove it.  These retailers invest in their employees and complement that investment with a particular set of operational decisions that I have identified.  That way, their employees are more productive. Far from being a mere cost—a drag on profits—these well-paid employees, with all their expensive benefits and training, are seen as an asset—a generator of profits.  These companies demonstrate that there is no need to choose between low prices and good jobs. It is possible (though nobody said it’s easy) to provide the lowest prices to customers and much better jobs for employees and great returns for shareholders, all at the same time. 

Let me give an example that is related to part-time work.  As Greenhouse’s article mentions, some retailers operate with 85% part-time workers. Their excuse is that they need that much “flexibility.” Sure, some flexibility is needed in retail.  The nature of most service industries is that customer traffic varies greatly.  Sometimes the store is crowded, sometimes not. But flexibility for 85% of the employees?  That’s just ridiculous!  

How do I know it’s ridiculous? Mercadona, Spain’s largest supermarket chain, offers the lowest prices in the country and it does so with over 85% of its employees full-time and even salaried, with very predictable schedules that are provided one month in advance.  Yes, these are the same employees—cashiers, people bringing bananas out from the stockroom—that other companies need to be so “flexible” with.

Don’t Mercadona customers visit the stores at different times?  Don’t the stores need flexibility?  You bet they do.  Go into a Mercadona store in the afternoon and it’s almost empty.  It’s the siesta time, I guess.  Go back in the evening and it’s full of people.  But pretty much the same number of workers are there throughout the day.

How does Mercadona get away with this? It invested in its employees.  Mercadona spends about €5,000 per new employee in a four-week training program which includes cross-training. So when traffic is high, employees help customers and when traffic is low, those same employees shelve goods and order merchandise.  There’s always something productive to do and pretty much any employee has been trained to do it well. That’s Mercadona’s idea of flexibility.

And by the way, Mercadona doesn’t do this for charity.  It’s highly profitable.  At a time when Spain is struggling (to put it mildly), Mercadona is thriving!

So it’s not the need to offer low prices that produces the kind of job Steven Greenhouse describes in his article.  It’s the choice made by companies to offer bad jobs.  We should all be outraged to see so many companies making the choiceto rely on bad jobs.  It’s the biggest waste in so many ways. It’s a waste of human talent and human dignity.  It’s a waste of corporate profits and shareholder value. And it’s totally unnecessary. We all need to do our part to stop all this suffering.  How?  See my previous post.

Filed Under: Uncategorized Tagged With: low wage/supply chain labor, part-time work, retail

Telling the Dalai Lama About Bad Jobs in Retail

October 20, 2012 by Zeynep Ton 1 Comment

Last week, I had the privilege of presenting my research to His Holiness the Dalai Lama.  My presentation was part of a panel in which scholars talked about the world’s big problems. Each of us spoke about what research in our field said about one of those problems, including what we could do to improve the situation.  Naturally, I talked about jobs—bad jobs. 

How bad a problem is that? Here’s how I started:

We spend most of our waking hours either at work or thinking about our work.  We are often defined by our work, identified by it.   When our work gives us meaning and dignity, we feel fulfilled. We are happier.  When we are happier, society is healthier.  But according to the International Labor Organization, more than 900 million people in the world have jobs that do not provide a living wage, let alone dignity and meaning.  They have bad jobs.

Then I went on to describe bad jobs in the retail industry in the U.S.  I started with low wages.  A typical full-time cashier or salesperson who works 40 hours a week—which is supposed to be the definition of a full-time job—does not earn enough money to take care of a family of four.  If he or she is the sole breadwinner in the family, that family will be below the poverty threshold.  And by the way, even so-called “full-time employees” in retail are not actually guaranteed 40 hours a week of work (and pay) because 94% of retailers consider anyone who works more than 32 hours to be a full-timer.  So their income can vary by as much as eight hours of pay from week to week.

From work hours and pay, I moved on to work schedules. You might think that it doesn’t matter so much when the hours are as long as there are enough. If so, you haven’t worked in retail. Schedules can be all over the map; they change all the time and the workers only find out one or two weeks in advance.

I showed the Dalai Lama the schedule of a full-time employee I recently interviewed. Let’s call her Jane to protect her privacy.  Jane is not even at the bottom of the heap; she’s a manager.  She handles customer problems, equipment problems, and employee problems.   But Jane is an hourly manager and her schedule looks different every single week. 

Here’s what her schedule looked like for one particular week.  You can see that, on Wednesday night, she worked from 5pm to 9pm, but the next morning, her shift began at 5am.  She lives about an hour from the store, so that leaves her 6 hours to eat, sleep, get ready to go to work again. Not to mention details like trying to wind down from work so she can get to sleep. And she’s in her fifties. Imagine having a life or taking care of a young family when your schedule changes like this every single week!

The Dalai Lama doesn’t exactly work a 9-to-5 day, either, but I could tell that he was surprised and perhaps even upset. There were many problems that he probably already knew about coming into the panel.  From the questions he asked, it was clear that he knew about climate change, hunger, and inequality in the world.  But I think he was really surprised to see that jobs could look like this for millions of people, even in a developed country. 

He told me, “There should be an organization to look after these workers.” He was thinking of unions.  He’s right. It’s unreasonable for workers to be treated this way.  It’s unreasonable for companies to operate this way, especially when we know that it is possible and highly profitable to operate differently (see my HBR piece on this).

I think we all need to do our part to take care of these workers.  We all need to do our part to convince companies to operate differently.  What can we do?  Here’s what I told His Holiness:

At a minimum, we can do something as customers.  When either of two stores or either of two restaurants has what you want at the price you want it, why not choose the one that treats its employees better?  When customers care, companies may also start caring.

Our politicians can certainly play a role. When they speak about the need for more jobs, they can start mentioning not just more jobs in terms of quantity but also better jobs in terms of quality.  We don’t just need more high-tech jobs and fewer retail jobs. We need more jobs of any kind, which pay a living wage and give a person a sense of doing something worth doing—which can easily be retail. Politicians can’t solve this problem themselves, but they can acknowledge it and encourage companies to offer better jobs.

Thought leaders like the Dalai Lama can play a role: They have a chance to communicate the message to business leaders, often with a lot of media and other people looking on. And if they want to know how companies can do better—if that’s really true or just wishful thinking—I am happy to send them my papers and case studies (and certainly my book to be published next fall!).

And professors, like me, who teach future managers, can play a role.  In addition to teaching our students tools and techniques, we can start teaching them how to use those tools in a meaningful way. We can remind them that there are different ways to make money. Some ways are good just for companies and some ways are more sustainable in that they are good for companies, their employees, and society.  We can encourage our students to take the better way and teach them how to get there.

We can all do our part so that there are more people in this world who feel the way Patty Donovan feels about her job.  Patty works at QuikTrip and she’s proud to have me use her name and QuikTrip’s. QuikTrip is a big chain of convenience stores that have gas stations. Patty’s job includes, among other things, such seemingly unpleasant tasks as cleaning gas pumps and toilets.  But she doesn’t see her job as a rotten job at all—not even as an okay job with some rotten parts. Like other QuikTrip employees I interviewed, she sees her job as something much bigger.  Here’s what she told me:

“You’re working with 12 or 14 people . . . they go out and they touch 12 or 14 people . . . so I get to make a really big impact in so many people’s lives, just by trying to get them to see . . . what QT’s ending goal is and that’s for everybody to be successful, you know, and everybody to be happy. “

Patty finds meaning and dignity in her work and she is paid well, has good benefits, and doesn’t have to juggle a schedule that would drive anyone crazy.  

Every person who wants to be a manager in a business has the power to ensure that people who work with him or her have dignity and meaning in their work, even if their job is to clean toilets.  And that’s powerful. We can make a big difference in this world if we want to. And that would make our lives more meaningful and ourselves happier! As Patty herself said of her own job taking good care of customers and being taken good care of by her employer, “What else do you want in life?”

Filed Under: Uncategorized Tagged With: low wage/supply chain labor

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