Why Improving Frontline Jobs May Be Your Company’s Ticket to Success–or Survival

BY Matthew Koehler | October 04, 2023

In the midst of several years of environmental, social, and economic upheavals, including the lasting effects of Covid on the workforce, consumers and workers have been pulling companies toward conscious capitalism. And while companies have been pulled, that isn’t the denouement of this story. 

Recently at a property summit in Australia, Tim Gurner expounded upon the need for there to be pain in the economy and for companies to flip the script on workers. Namely, workers should be afraid and feel lucky for their jobs, not the other way around. 

This seems to be the opposite direction of where companies should be going according to Zeynep Ton, a professor at MIT’s Sloan School of Management and author of The Case for Good Jobs: How Great Companies Bring Dignity, Pay, and Meaning to Everyone’s Work. 

“A good job could mean different things to different people. Right sense of belonging, achievements, purpose, recognition are all the ingredients,” Ton said, but there are “minimum conditions that all companies should have.” 

“Those minimum conditions are first, very obviously, being treated like a human with brains with a heart, not just a pair of hands. And then the second one is for pay to be high enough so that people can take control over their lives.” 

Ton was interviewed by Editor in Chief of the Harvard Business Review, Adi Ignatius. They spoke at a recent From Day One fireside chat in Boston

Market Rate Pay vs. the Good Jobs Strategy 

Taking a step back, Ignatius pointed out that Ton actually wrote two books about jobs, her current one The Case for Good Jobs and her previous The Good Jobs Strategy. In The Good Jobs Strategy, Ton used the low cost retail market as an example of how companies make a choice on two different ways to operate. Companies can choose to offer low wages, have low productivity, and high turnover rates. This is a “bad job strategy” according to Ton.

“The other world is to pay employees a lot more than competitors do, offer them better benefits, and design the job for high productivity, high contribution, and operate with low employee turnover, great customer service, and more,” Ton said. 

Ignatius brought up the fact that a lot of CEOs “care about the planet” per se, but don’t pay mind to labor issues. 

“It’s always amazing to me that some leaders talk about conscious capitalism, but when it comes to their frontline workers,” Ton said, are “completely fine with below subsistence wages” and all the problems that arise from it. She points to generations of business leaders being taught that “market pay is the right pay” and says the market pay mentality is driven by the idea that “labor is just another cost of production that is just like any other input.”  

“And when we think about inputs to production, the right pay is the market pay. So because people are just another cost, we should pay market wages. And paying market wages is so dominant, that people can’t even imagine operating any differently.”

Zeynep Ton, author of The Case for Good Jobs was interviewed in the grand finale session in Boston (company photo)

Using Costco as an example, Ton says co-founder Jim Sinegal comes to her classes every year to address students and his message is: Of course, you pay people more. “Because you understand that when people can’t focus on the job, turnover is going to be high. And now there’s so much research that shows that low pay is associated with all sorts of health costs. It even lowers cognitive functioning, low pay is equivalent to a 13 point reduction in IQ.”

Ton says the resistance to higher pay is short-sighted. Low pay and high turnover leads directly to high turnover costs. 

“We have worked with organizations, frontline organizations, and we’ve seen turnover levels, anywhere from 40% to 400%. So the direct costs are recruiting, hiring, onboarding, time to productivity training. Those costs can be 10 to 25% of the total labor payroll spent annually.” Turnover costs pale in comparison to other financial costs, like lost sales, mistakes, lower productivity, lower quality. 

Why isn’t higher pay being adopted?

Ton gave three reasons why she believes leadership is resistant to making the better pay change.

“There’s a lack of imagination that there could be another world. And one of the things that makes imagination very difficult is a lot of organizations make their decisions, looking at just numbers. And oftentimes, they work in silos, and they look at the history and what happened in the past. And that prevents them from imagining any other possibility going forward,” Ton said.

Secondly, leadership has a long laundry list of priorities, with board members and stakeholders being top priority and high turnover and the cost of high turnover being much lower. “The investors and board [are] not asking you about what’s your turnover? What’s your cost of turnover? How good is your customer satisfaction?” Given all that leadership has to deal with, accepting high turnover, and its costs, are simply easier.

“The playbook for a good job strategy is harder than the playbook of pay as low as possible. In the good job system, you pay high. You design the work, which means you cross train your employees. You empower them to make decisions. You make their work better. You pay attention to staffing levels, so they can come up with improvement ideas.”

The third reason these changes aren’t more commonplace is both a lack of conversation on the topic and a misplaced lack of trust between management and staff. 

“When they are stuck in their own vicious cycle of poverty, because pay is so low, they have all sorts of problems, cognitive problems, health problems. They’re not performing well on the job.” Ton says management incorrectly equates this to a lack of capability on the part of the worker. 
“Well, I can’t trust you, because you show up late. I can’t trust you, because you just yelled at the customer. So how am I going to empower you to make decisions? How am I going to invest in you?” Ton said.

AI as an Answer

Before stepping off the stage, Ignatius asked Ton what she thought about AI’s impact on labor. 

“I think it really depends on how we use technology, right? Technology doesn’t have an effect. Technology’s effect on work and workers will depend on how we use our imagination to deploy technology,” Ton said. 

Turning to the example of Sam’s Club, Ton described how they were able to use technology to better utilize staff, raise salaries, and improve the customer experience. She gives the example of purchasing a tire for your car several years ago versus now, a process that used to take 20 minutes or more. “Now with technology that processes just a few minutes. That means that the associate, instead of wasting their time looking through different manuals, can focus on the customer. They can ask you for ID. What are you using your car for? What performance are you most interested in? Do you want a low cost?” They are now better advocates for their customers. “And because their job is a lot more productive. Sam’s Club can pay them more.”

So what should business leaders talk about the next time they find themselves at Davos, for example?

“Instead of talking about other things, people at Davos should be talking about pay. And make sure that everybody makes a living wage,” Ton said.

Matthew Koheler is a freelance journalist and licensed real estate agent based in Washington, DC. His work has appeared in Greater Greater Washington, The Washington Post, The Southwester, and Walking Cinema, among others.


Humanity and Innovation: Fostering a Purpose-Driven Work Culture

John Deere has been in business for more than 200 years, with a reliance on four core values: quality, integrity, innovation, and commitment. But just this year it added a fifth value: humanity.“When you think about who we are as an organization, and how it’s articulated, it means that we will treat our people and our planet with dignity and respect. And that means that we create environments that are inclusive. They’re diverse in that we have practices that are internally sustainable, as well as externally sustainable,” said Crystal T. Jones, head of talent acquisition, Americas at John Deere. With centuries of success behind it, the organization was still ready and willing to update its mission and practices to stay aligned with evolving cultural values.In an era of rapid change, purpose-driven environments are increasingly more important. How can leaders navigate cultural shifts within their organizations that prioritize meaningful work, and foster employee satisfaction and belonging, loyalty, and overall well-being? Jones and other industry experts answered these questions and more at From Day One’s Chicago conference.Building a Purpose-Driven Work Environment“It’s no secret that companies with a purpose driven work environment are by many measures more successful,” said moderator Kim Quillen, business editor at The Chicago Tribune. But it can be daunting to try to predict what employees want. “The big thing with purpose is to continue to talk about it,” said Trevor Bogan, regional director, Americas at Top Employers Institute. “Don’t be afraid. It can evolve and it can shift.” Bogan says that his company tracks this through employee surveys.Mikki Sud, EVP, global head of total rewards at JLL says her organization links its activities back to its purpose of “creating healthy, inspiring, innovative spaces for people and our planet” both internally and externally. “With 40% of our carbon emissions coming from the built environment, we have a critical role in helping create a sustainable world,” she said.“But also, we connect our employees to those goals through robust training efforts, like net zero carbon training, as well as AI and automation. And last year, we saw a 20% reduction in our carbon emissions through these efforts,” Sud said. Leaders as Purpose AmbassadorsOrganizational purpose must be driven by leaders who can be encouraged through training and incentives. Tracking of purpose-driven behavior is also embedded in JLL’s talent review and performance management process, says Sud. “Our hope is that as leaders fully start to embody [our values], that eventually it will start to disseminate across the organization, and then the sense of belonging to the enterprise will be enhanced as a result,” she said.Gus Viano, VP of global diversity, equity & inclusion at Brink’s, notes that while leaders may attend trainings and have good intentions, sometimes their actual actions still don’t embody the organization’s stated values.The panelists spoke to the topic "Cultural Transformation and Meaningful Work: Nurturing a Purpose-Driven Workplace" at From Day One's Chicago conference“Employees feel engaged when they hear our leaders talk about DEI, but then when they see that behavior not represented in their actions, then they have serious doubts,” Viano said. So, inclusion training may require some difficult, frank conversations. For larger corporations with a global reach, Viano says, it’s also important to be mindful of different cultural norms and expectations surrounding DEI. You may have to adjust training language and areas of focus based on those local sensitivities and needs. Bringing Your Whole Self to Work“People don’t leave their diversity in the trunk of their car when they come to work. They bring the whole self to work, invited or not invited,” Viano said. Employers need to be ready to engage with employees from many walks of life and communicate purpose to them in a way that keeps everyone excited.Different generations are looking for different types of meaning in their work, Bogan says, and Gen Z especially wants to see their identities reflected in the leadership team. “When organizations have a diverse workforce, when they have women leaders, when they have people of color, when they have people from different countries and different perspectives, the profitability goes up, the well-being goes up, [and] the purpose and feeling of belonging goes up,” Bogan said.“It’s no longer about what’s written on your website. Candidates want to see and feel what you say.”Jones also emphasized the importance of ensuring employees can see and understand the impact of their work on the wider community, to help drive that sense of purpose and meaning home.Encouraging employees to come to the office, helps drive engagement and a sense of belonging, Sud says. “A recent Bloomberg study showed that those in the office actually spent 25% more time on career development,” she said. “It's a sense of belonging, and the fun that comes from being in the office, the personal interactions, the sharing of stories of your families or your hobbies. You can’t really have that watercooler talk in a virtual setting.” That said, Sud believes it’s also important to recognize that employees need quiet time for work too. “We are really being deliberate about creating the ‘me’ spaces as well as the ‘we’ spaces,” she said.Rewarding and Measuring SuccessEmployees should be rewarded for driving purpose and be recognized in a way that is most meaningful to them. “Our rewards are linked to business purpose and performance, connecting individual team and organizational performance. So when we deliver the best solutions for our clients, JLL does well and our people do too,” said Sud. Compensation should not be the only driver. “It’s the culture, it’s the purpose, it’s the leadership aspiration,” Sud says, that brings employees satisfaction.Just trying out new strategies from time to time is not enough, Bogan says. “You need to get involved with data and analytics to see and measure what you do really well and what challenges you have. That’s really impactful, because the numbers don’t lie,” he said. Having the hard data will help leaders justify the need for new programs and tactics, though the data should be shared by all. “If we silo, then we’re not getting better. We’re not learning about how we work, hearing different ideas and different perspectives,” Bogan said.Purpose-driven analytics should be not just quantitative but also qualitative, Jones says. “We’re interested in not just what you do, but how you do it,” she said. Through engagement surveys, Jones says, John Deere saw the need to add humanity to its core values. “Just make sure you’re not just asking the questions,” she said, “but that you’re ready to deal with the responses that you get back.”Katie Chambers is a freelance writer and award-winning communications executive with a lifelong commitment to supporting artists and advocating for inclusion. Her work has been seen in HuffPost and several printed essay collections, among others, and she has appeared on Cheddar News, iWomanTV, and CBS New York.

Katie Chambers | May 22, 2024

Firing Up the Talent Engines at One of the World’s Largest Airlines

When the pandemic hit, businesses and offices began to shut down operations for a rare moment of stagnancy. The travel industry especially took a drastic hit: flights were near-empty as people stayed home. For one airline, however, the pause was the optimal time to expand. In the first few years of the pandemic, United Airlines hired over 30,000 employees, a decision that differed from many other industries at that time. “​​In the months of the pandemic, we pre-hired in a couple of areas, pilots in particular, because of the long training timelines,” Kate Gebo, executive vice president of human resources and labor relations at United Airlines, said in a fireside chat at From Day One’s Chicago conference. “That was not something that we had historically ever done, but in the first few years of the pandemic, we hired 15,000 people each year for two years.”The choice to increase hiring during the pandemic was ultimately the right move, Gebo says. Revenge travel led to high post-pandemic flight demands and with a shortage of pilots on the horizon, airlines needed to take advantage of every moment to prepare, Gebo told session moderator Stefan Holt, an anchor at NBC5 News. Kate Gebo, Executive Vice President of Human Resources and Labor Relations at United Airlines, was interviewed in the fireside chat      She reflected on how United Airlines stayed ahead of the game during the pandemic and the strategies she takes to ensure United stays in front. “When we looked at the pandemic, we asked ourselves, ‘Are we going to stay the same or are we going to take this as an opportunity and grow?’” Gebo said. “We didn’t want to come out where we came in, we wanted to jump ahead.”Fueled by early retirement and an aging pilot population, analysts predict the global aviation industry will be short by 80,000 pilots by 2032. The shortage is a dire situation for airlines as they look to expand. At United, taking learning opportunities in-house became a valuable resource for talent and employees.“We don't want to just rely on whatever is out there, so we bought our own flight school, United Aviate Academy, in Goodyear, Arizona,” Gebo said. “We wanted to invest and provide world-class training, so you not only learn all the technical issues with flying but also understand the leadership and the culture at United.” Being a major airline with its own in-house flight school has its perks. The school builds a pipeline of talent for the airline and increases interest in the aviation industry, Gebo says.“Many other folks began to believe that they could get into aviation,” Gebo said. “Even though there's a little bit of a struggle because the qualifications and the training are tough, there’s a sense of accomplishment that we’re building here at Aviate Academy.”For United’s pilots and crew members, learning is still readily accessible to the community through designated training centers, Gebo says. “Our pilots have to go back to the training center every six months to up their qualifications or anytime they change aircraft types so during the pandemic, we decided to invest in a flight training center in Denver for our pilots,” Gebo said. “We can't just decide to hire a flight attendant and have them show up the next day, so we also invested in an in-flight training center in Houston for our flight attendants.”With heightened scrutiny surrounding Boeing planes, production of the planes is taking longer, affecting airline companies as they wait for delivery of aircrafts. To balance the now-abundance of pilots, United has encouraged their pilots to take time off, an announcement that caused some backlash. But unlike other industries, laying off employees isn’t a viable option, Gebo says. “Even though Boeing can't deliver an aircraft for us or push delivery of an aircraft, we have already hired those pilots six or nine months ago to make sure we were ready for the original schedule,” Gebo said. “We are oversubscribed on pilots right now and the delay in deliveries is so impactful to us because we are carrying those extra costs.”Keeping crew members on board is worth it in the long run, Gebo says, reflecting on the company’s choice to hire more during the pandemic.  “Turning the talent engine off is dangerous to your business because once you shut it down, it’s so hard getting the momentum back up,” Gebo said. “In the dark days when there were only 10,000 passengers, the easy answer would have been to shut it all down, but thank goodness we absolutely didn't.”Wanly Chen is a writer and poet based in New York City.

Wanly Chen | May 22, 2024

Empowering Employees: Cultivating Career Advancement From Within

“External hires are practical if you need to hire immediately. The market right now is booming because we have so much talent. But it doesn’t solve a long-term issue, and if we don’t address the long term issue, it’s soon going to become a short-term concern.”This was the warning from Steph Ricks, senior account executive and partnership development leader at education tech platform Strategic Education, at From Day One’s live conference in Washington, D.C. Failure to retain talent, failure to provide them with advancement opportunities, whether vertical or lateral or some combination of the two, is an existential threat to a company’s potential.At the event, Ricks and her colleagues in HR and talent development assembled for a panel discussion on how employers can create opportunity within organizations by boosting internal mobility. The consensus was this: democratize, market, prioritize, and measure.Opening Mobility Opportunities to AllUnless the direction of travel is upward, it may be tough for employees to envision the ways their career might go. Examples likely exist in their current company, yet many remain unaware of the multidirectional career paths that surround them.Workers have to be able to see what’s available, says Terri Hatcher, the chief diversity and inclusion officer at global IT provider NTT Data Services. To show employees what’s available, the company uses an AI-driven talent-management system that can turn employees on to open roles that suit their skills. Hatcher also hosts storytelling events. In one recurring series, women in the company tell their stories about their career growth. “Specifically,” she said, “they talk about the programs in our company and the tools they’ve used that have helped them grow.”A workforce development strategy, to be truly effective, must be democratic. By analyzing the demographics of workers advancing up the ladder at NTT, Hatcher discovered that some segments were being excluded, and it had become evident in the composition of leadership teams. The middle management layer was the bottleneck. “We noticed that people in middle management were not advancing, and women were not advancing, so we took hold of that. There is no way we’re going to be able to see a difference in senior leadership if we don’t see anything change in middle management.”Encouragement also has to come from people managers, not least because they have the influence enough to ignite or dampen a career. Hatcher found that even though training programs were open to all, and women knew that they could nominate themselves, they weren’t quick to do so. “You might open up a program to everyone, but you’ve got to really market that program to everyone,” she said. “Your managers have to be in on it, they have to be encouraging people to get out there and get engaged. Because sometimes people don’t feel like it’s for them for whatever reason.”Maryland-based medical network, Adventist HealthCare had run its emerging leaders program for several years to warm reception, but in 2019, Brendan Johnson, the organization’s SVP of human resources, examined the demographic makeup of the program cohorts and found that the program participants did not reflect the company’s workforce. So they opened the program to everyone in the company – all 6,000 of them.The panelist spoke in a session titled "Creating Opportunity Within: How Employers Are Boosting Internal Mobility"“That completely changed the way that we made sure that everyone was aware of opportunities.” With that, leadership opportunities were no longer about who you know, but about how much you want to grow. Three years later, said Johnson, the demographics of the leadership program looked like the demographics of the workforce.Without clear expectations for high performance, leadership teams naturally sort themselves homogeneously, says Johnson. “If you don’t have a strong and very objective way to measure top performers, top performers end up being the people that look like your presidents and look like your vice presidents.”Knowing the right people and being exposed to new functions and departments can unlock tremendous opportunity. “I don’t think that any of us in this room would find our next opportunity by applying for a position,” said Ricks of Strategic Education. “I think it’s going to come down to our networks.”Carrie Theisen, the SVP of total rewards at Fannie Mae noticed that in her organization there were certain barriers to mobility, one in particular that the company had inadvertently erected: Pay grade bumps came only with promotions but as Johnson reminded us “not everybody wants to grow up and be a leader.” So Fannie Mae changed the pay structure so that individual contributors had the potential to make as much as people managers. To market opportunities, Theisen chose to link career progression with the company’s employer value proposition, live well, and build the employee experience in the service of advancement.Prioritize Internal MovesOne of the simplest tips came from Steph Ricks: give internal hires priority. She describes the standard practice as her former company, Wayfair. “When a [requisition] went live, we would interview anyone internal who applied for the role. If we weren’t satisfied, then we offered interviews to any employee referrals. If we didn’t find the talent we needed there, then it was open externally.”Theisen’s advice was to plan well into the future. “Succession planning is most effective when it starts at the top,” said Theisen. “We present our succession plans to our board quarterly. They include for every key role across the organization and the key successors. Are they ready now? Are they emerging?” She found that the board was eager to prioritize diverse representation at all levels, and this would be her contribution.Tracking movement and paying attention to changes over time, that’s how you get better at internal mobility, panelists said. At Adventist, Johnson reports quarterly to the board on internal versus external promotions. He aims for more than 40%, and in the last five years, he’s been able to report 50%–60% internal hires.And he has his own measures: “We shifted last year from measuring employee engagement to measuring employee fulfillment.” Engagement, he said, is about what the employee is doing for the company, hedging the question, “will you still be here in three years?” But by measuring fulfillment instead, Johnson hopes to shift the onus, and learn whether the company is doing enough to retain its workers.Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the Economist, the BBC, The Washington Post, Quartz, Fast Company, and Digiday’s Worklife.

Emily McCrary-Ruiz-Esparza | May 17, 2024