UPDATED 17:59 EST / MAY 18 2016

TON NEWS

Want a profitable business? Redefine your operations | #WomenInTech

This week the SiliconANGLE Women in Tech Series focuses on a segment from the MIT Sloan Expert Series, which provides the latest news and research coming out of MIT Sloan. The guest this week was Zeynep Ton, an adjunct associate professor at the MIT Sloan School of Management and author of The Good Job Strategy, a book that reveals how empowering employees promotes profitability.

Based on Ton’s research in the retail industry, she found that “changes in workplace design, including raising employees’ wages and giving them more control and responsibility over their work, translates into higher profits for companies and superior returns for investors.”

Financial drain or gain?

“Typically, all companies see their employees as a cost, something that reduces profit, but what I have found in my research is that if a company is smart about how they deploy their employees, their employees can be a source of profit rather than a driver of cost.

“What we found in our research is that while retailers did a pretty decent job getting the right product out to the right store at the right time, they dropped the ball in the last 10 yards of their supply chain and their stores were full of problems.

“Products would be in the back store room and not out on the shelves and customers would experience a stockout. We thought retailers had great data, but it turned out their data wasn’t accurate so their promotions were not carried out. What we found in our research was that all the operational problems had a huge impact in store sales and their profits.”

Explaining the whys

“The obvious question was: ‘Why do these problems happen all the time?’, because it was so prevalent across so many different companies. And we found that stores that had more employee turnover had more problems.

“Stores that were understaffed did not have enough people to get all the work done, had more problems. Stores that just didn’t have enough training had more problems, and, in fact, we saw that retailers were operating in what I call a vicious cycle.”

The vicious cycle is an expensive problem

“It’s a pattern you see over and over again because the viscous cycle starts with the mentality that people are just a cost and companies try to minimize that cost. That results in too few employees and not investing in their quality in terms of raises training, etc. Those lead to operational problems – operational problems lead to lower sales and profit, and, of course, as companies’ profits are lower they can’t replace their people because of budget constraints. And the vicious cycle continues.

“And when you talk to executives, all you hear is this is the only way we can offer the lowest prices to our customer. If we want to offer lower prices we must offer bad jobs and we must offer bad service.”

Do they have a point?

“They absolutely do not have a point. Leaving employees behind with bad jobs is a choice, not a necessity. And the best proof of that is that there are a bunch of companies out there that are simultaneously offering the lowest prices to their customers and good jobs to their employees and great returns to their investors.”

Cross training leads to productivity and happy employees

“If you think about retail or any services environment for that matter, there is a lot of variability in customer traffic, so customers come in different patterns. So if you have a cashier and all they know how to do is operate the cash register, when you have no customers that employee will be idle, not doing anything. … When you are cross-trained to perform a variety of tasks, your job is more exciting … and is associated with higher motivation.”

Hope for the future: Change the business leader

“The Labor department is doing great work. We are seeing higher minimum wages in some states … but policies aside, what we need is business leaders to change. It is going to be up to the business leaders whether we are going to have an economy with good jobs or not.

“I am so hopeful about the next generation of business leaders. I see them in my classrooms … the millennials are excited to be part of something bigger than just making money … they want to change what it means to run a good business.”

Don’t blame investors

“Using investors short-term expectations as an excuse not to follow the good job strategy is just an excuse. There are a group of investors who want to find companies who are getting great value. The good job strategy is not just good for workers it is good for investors.”

Watch the video below to hear more about the research and what Ton believes will change the economy.

Photo by SiliconANGLE

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