Creating good jobs at a Texas grocery chain

At Texas-based grocery store HEB, applying the good jobs strategy—an approach described by MIT Sloan adjunct associate professor Zeynep Ton in her book, "The Good Jobs Strategy" — doesn’t mean being sweet, happy, and forgiving, said HEB president and chief operating officer Craig Boyan.

Instead, the company, which has more than 380 locations and 96,000 employees in Texas and Mexico, aims for a feeling of “restless dissatisfaction,” he said. “Think about the teachers you’ve been inspired by — they weren’t the nicest or the sweetest — they set the bar really high and gave you hard problems to solve,” Boyan said. “We have some very happy people, but our culture is restless dissatisfaction.”

Boyan appeared with Ton at a September 28 talk moderated by Don Sull, MIT Sloan senior lecturer and author of "Simple Rules: How to Thrive in a Complex World."

With an estimated annual revenue of $23 billion, HEB is ranked number 13 on Forbes’  list of America’s largest private companies. It was voted the most trusted company in America, according to the 2015 Temkin Trust Ratings.

Ton and Boyan shared five elements of a good jobs company:

Focus on employees.
Boyan called Costco Wholesale Company “the best company in America,” saying the company puts employees first and keeps prices competitive. “If you take care of your employees as number one, and then customers as number two, then the shareholders will be served as an outcome of taking care of employees. It makes a huge difference,” Boyan said.

Employees want to work for a company with purpose.
“Investing in people might just mean paying good wages and bonuses and having a really great incentive program … but I would argue that’s not enough for a good jobs strategy,” Boyan said. “What we are motivated by is working for a company of purpose that makes a difference in people’s lives. Instilling pride in regular jobs can be extremely valuable,” Boyan said.

Ton agreed and said it is possible to create an environment where employees can find pride and meaning in their jobs. “We need to pay attention to design the work for them to be able to connect what they do to the purpose of the company,” she said.

Internal competition, done properly, will motivate employees, but incentives may not.
Boyan said HEB fosters competition store by store. The company shares sales information with managers, who will see exactly what is sold in comparable regional stores each day of the week.

“Our employees … are always pushing to get better. That’s the good part,” Boyan said. “The bad part is that peer-to-peer [competition] can be like dog-eat-dog.”

Since incentives indirectly contributed to that negative competition, the company removed them for many employees a decade ago, and instead changed buyers’ incentives to be paid based on total company performance. Incentives for specific jobs and functions can create barriers to collaboration, limit changes to space allocation across departments and categories, and can get in the way of cross merchandising.

Putting people first means putting your money where your mouth is.
HEB starts each year with a commitment to pay employees more money and offer lower prices for customers. “That’s everybody’s challenge. None of us know … in any given year, about how we will solve this year’s ability to make those investments,” Boyan said.

“We make those investments, and we absolutely say that we are going to give more than 5 percent pre-tax to charities … We are absolutely going to pay a certain amount of wages. We are absolutely going to invest in price. And that’s where the strategy starts … it’s a constant effort to try to be better,” Boyan said.

Adaptation is important when striving to be a good jobs company.
“One thing you will see is that things change,” Ton said. Collecting and quantifying data and staying on top of what competitors are doing is one way to stay ahead of the game. “Customers want changes. Technology changes. Regulations change. It is those companies that are able to adapt to those changes … that tend to stay around and thrive.”