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7 management practices that benefit low-wage workers

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In November 2015, 28 Gap stores in San Francisco and Chicago began a field experiment with researchers: The stores introduced an app and related management guidance designed to stabilize scheduling for part-time sales associates.

The app allowed workers to swap shifts, the guidance provided managers with tools for setting stable weekly schedules, and core teams of employees were guaranteed at least 20 hours of work per week.

While much of the retail industry has embraced unstable — or “just-in-time” — scheduling, this instability often causes problems for low-wage workers, who can experience work-life imbalance, inconsistent income, less sleep, and difficulty scheduling shifts at a second job.

Researchers behind the Gap store experiment hoped to show strong evidence of employee and employer benefits as a result of more stable scheduling — and they did: By the end of the 9-month experiment, store productivity was up 5.1%, and labor costs had decreased 1.8%. Stress among workers with children went down, and there were increases in sleep quality for younger employees and those who worked two jobs.

However, the predictability and consistency of employees’ schedules improved only modestly. The culprit? Last-minute shipment decisions and onsite visits from the corporate office prompted managers to change schedules regardless of the experiment.

The mixed results of the Gap experiment highlight the challenges managers face as they try to stabilize schedules to improve employee productivity and organizational performance, while providing opportunities for worker mobility.

The report from MIT Sloan scholars, “Employer Practices and Economic Mobility: Future Directions for Research,” examines existing research and presents takeaways and recommendations for seven management practices that impact low-wage and disadvantaged workers.

“Increasing economic inequality is a major problem in the U.S., and the management practices that organizations choose can have an important impact on the lives of workers,” reads a statement from the MIT Institute for Work and Employment Research, with which co-authors  and Aishwarya Yadama are affiliated.

Along with stable scheduling, the improvements to management practices explored in the report include:

  • Pay and wages — Better pay means more money for workers, a reduction in race-based income inequality, and increased family income. It can also encourage more productivity and reduce employee turnover. But among different types of pay and wages — standardized pay, performance-based pay, and compressed wages for example — the benefits and challenges differ depending on a firm and its employees. The result, according to the authors, is that “there is insufficient evidence that wage increases pay for themselves through indirect productivity or cost reduction channels.” They write that effectively raising pay may require external factors like minimum-wage legislation, labor union pressure, or informal norms across industries.
  • Leaves – Paid or unpaid time off for workers can improve job continuity and economic mobility, the authors write. And research shows that leaves also encourage job continuity and increase the percentage of women in the workforce. But there are risks of negative impacts on jobs and careers, such as a company avoiding hiring women because of the chance they’ll actually use the offered leave, the authors write. In addition, more research is needed on how paid leave affects economic security for men and for caregivers and non-college workers regardless of gender.
     
  • Recruitment and hiring — Practices like formalized hiring processes, targeted recruiting, and internships can help expand access to higher-paid roles, according to the authors. But one of the biggest hurdles in expanding this access are existing — but sometimes unnecessary — requirements for formal education credentials, like college degrees. A study of 26 million job postings found that in 2015, only 17% of incumbent production supervisors had college degrees, despite 67% of new job postings for those same roles requiring one. Additionally, structural barriers can prevent racial minorities and women with caregiving roles from acquiring credentials and maintaining continuous work histories, which can appear to hiring managers as less trustworthy or as proof of a lack of commitment.
     
  • Promotions — Promotions can be a direct way for low-wage workers to increase their income, while firms benefit from more motivated frontline workers eager for a chance at job mobility. But internal hiring is not always a ladder of opportunity for those lower wage workers, particularly if they’re employed at firms with few mid-level opportunities for growth. Additionally, supervisors may unknowingly introduce bias into promotion systems. The authors write that structured career ladders that avoid segregating marginalized groups are needed and that “some low-wage workers may benefit from clear pathways for skill building and job switching.”
     
  • Work systems — Improvements to work systems such as worker autonomy and empowerment, social networks, employee training and offering employee feedback, encourage alignment between employee and employer outcomes. “The promise is that when all components of skill, contribution opportunity, and motivation are present, employees will be more productive, generating purpose that can be shared between workers and employers,” the authors write. However, it’s unknown how well work-system designs can expand access and growth opportunities for diverse workers.
     
  • Diversity, equity, and inclusion initiatives — Setting diversity goals or targets encourages hiring managers to prioritize qualified applicants from underrepresented groups, the authors write. Additionally, employee resource groups can help with mentoring and creating a supportive organizational culture. Diversity training may reduce manager and co-worker bias, however “diversity and harassment training have the potential to worsen conditions for people of color and white women,” the authors note. More research is needed on how DEI and anti-harassment initiatives directly affect diverse candidate retention, and how diversity practices affect low-wage workers over the long term, the authors write.

Explore the complete report commissioned through the WorkRise Network, part of the Urban Institute.

For more info Meredith Somers News Writer (617) 715-4216