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The Good Jobs Strategy: A Q&A with MIT Sloan's Zeynep Ton

Zeynep TonZeynep Ton, Adjunct Associate Professor of Operations Management

InThe Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, published in January, Zeynep Ton, adjunct associate professor of operations management, delves into more than a decade of research about retail and service companies. She argues that even in low-cost businesses, good jobs are good not only for employees, but also for customers and employers.

This book appears to be about workforce issues. But it’s really about developing operational excellence.
When I studied companies that offered good jobs to their employees, low prices to their customers, and great returns to their investors, all at the same time, I found that the key to doing all this was operational excellence. The good jobs strategy is a blend of investment in people and four operational choices that ensure a great return on that investment in people. One of those four choices is to offer less. Companies that follow the good jobs strategy offer fewer products to their customers. They do so because they find it to be the most sustainable way to provide superior returns to their investors. I say this to my students all the time. Companies can certainly make money not following the good jobs strategy. But especially in service industries, bad jobs lead to frustrated customers, lost sales, and lower long-term profits. Bad jobs also cause a lot of suffering for people who have them. We live in a country where more than 45 million people are poor. And bad jobs are not necessary, even if we want low prices.

You’re an operations specialist. How did you end up writing a book about the workforce?
During the first several years of my academic career, I focused on problems that had to do with supply-chain literature. I was seeing that even in companies where the back end of the supply chain works so well, the front end—the stores—didn’t work so well. As I was studying these problems, I started interviewing people and collecting and analyzing data. I began to see that inventory problems were often caused by people. Stores that had high employee turnover and less training had more problems. Companies would spend millions of dollars on supply-chain technology only to have the ball dropped in the last 10 yards. At some point, I started connecting the dots between the business problem and the social problem of having millions of people with bad jobs, and I thought that it shouldn’t have to be this way. We know that if you want to be exceptional operationally, it has to be through a combination of operational design and people.

Every large company out there professes to offer good jobs. They can’t all be that good, right?
There are some big companies that say they provide good jobs, but it’s absolutely not true. Especially in low-cost services, they don’t see labor as an asset, but as a cost, an interchangeable part, and workers feel that. We desperately need more companies to follow the good jobs strategy. It’s not an overnight thing, but I hope the evidence in this book will encourage some companies to follow the strategy. On a different note, if the minimum wage were to be raised to a high enough level, it may compel some companies to adopt the good jobs strategy, as they find ways to make workers more productive and more central to their success. There is compelling evidence that companies following this strategy perform really well. We need executives with the courage to pursue these strategies.