Good Wages Are Not Enough
Employees need more respect and responsibilities.
.. And I think one of the other bigger obstacles is that a lot of companies are still making a lot of money through mediocrity. They offer bad service, they offer bad jobs, but they are still making money.
.. Large organizations work in silos, and they get nervous when they hear that lots of things need to work together to achieve this great outcome.
.. You could get a product all the way from China to the store, and then the product would get stuck in the back and never make it to the floor. For a supply-chain person like me, this was heartbreaking.
As I looked into why these problems happen, I found that stores that had more employee turnover had more problems. Stores that had less training and were understaffed had more problems. Part of the problem was labor practices, and retailers were operating in what I call a vicious cycle. They start with this mentality that labor is just a cost, so let’s try to minimize the cost. That leads to operational problems, which leads to poor sales, which means the labor budget shrinks. The vicious cycle continues.
.. Knafo: So why has there been so much resistance?
Ton: [Costco co-founder and former CEO] James Sinegal often used to say, “Wall Street is thinking about making money between now and next Thursday. We’re thinking about making money for the next 30 years.” It takes a courageous leader to say that to investors. But those investors who are long-term investors will stick with you.