Zeynep Ton – Associate Professor of Operations Management, MIT Sloan School of Management
How do we make better jobs for the population?
Problems with jobs today: 1) poverty levels wages, 2) few opportunities for growth – leading to anger and frustration. Creating good jobs is good for companies, as well as the population.
Phantom stockouts – where a product was meant to be in stock but no-one could find it – have been common in Zeynep’s research. These operational problems have a massive effect on low sales and profitability. Some of the answers to these problems are found by looking at employees – if there is a low quantity and quality of labour, there are more problems. Poor quality labour starts with an assumption that people = cost… so managers underinvest in people and recruit too few people, leading to a vicious cycle of worsening operations and lower sales.
Gave an example of a retail manager who had an unpredictable and arduous work schedule, didn’t feel like she was treated with respect by her manager. There is little stability in schedules so no time for managing – only time for fighting fires.
The conventional wisdom used to be that bad jobs and bad service was necessary for low prices – that if you invest in people, you have to raise prices. So Zeynop set out to show that this wasn’t the case.
Zeynop gave examples of companies that have good employee satisfaction and pay and high revenues – eg Quiktrip fuel stations, Mercadonna Spanish supermarkets. The question is – what’s their secret?!
Zeynop found that the investment in people lead to a need to get a return on that investment, which influenced the operational choices made, which then in turn lead to a need to get motivated people.
The four operational choices are:
- Operate with slack
- these operators stack their stores with more employee hours than predicted to require – this enables people to do their tasks accurately and to engage in improvement
- must set high expectations. If you have unmotivated employees, this would not be used well
- Offer less
- Mercadonna offers much fewer products than other supermarkets, leading to much less variability.
- Strategic – deciding what you are going to be good at and focusing on that
- Looking to simplify operations – creating an interface between HQ and the frontline, and making decisions to simplify productivity on the front line
- Employees can do different tasks – when busy they can tap into the till, when quieter they can manage inventory
- Standardise and empower
- standardising operations for employees and empower employees to make decisions for customers. Leads to more efficient employees, and customise the store for the local area.
This approach has lead to company values/mindsets based around 1) customers, 2) employees and 3) continuous improvement.