A Secret Ingredient for Competitive Advantage? Good Jobs

Call it a great resignation, a great inspiration, or a great rethinking, it’s clear that with respect to work life for many people things are never going to be the same as in the ‘before times’. That’s not necessarily a bad thing, because far too many jobs were awful then, too.

“Our People are Our Most Important Asset”

Whatever they say while sloganeering, the reality is that many employers treat front-line workers as “low-skilled.” This aggravating way of clumping people into supposedly higher-skilled (and therefore better compensated) and lower skilled workforces leads to any number of unfortunate results, and not just for the workers concerned, but for their employers as well. I have written previously about the pernicious effects of requiring college degrees for all kinds of jobs that don’t really need them, which has the unintended consequence of raising the price of that labor. It also shuts out people who can’t afford the time or money to get a degree.

Never mind that a great many of those jobs directly have to do with quality of life. Serving customers in the hospitality industry, keeping hospitals clean and safe, unloading critical goods, unclogging a drain, replacing a critical part on a vehicle…the list of things that are essential is vast, indeed.

New research by the National Bureau of Economic Research (NBER) finds that workers with bachelor’s degrees “have dramatically better access to higher-wage occupations where the skill requirements exceed the workers’ observed skill.” In plain language, that means that if two people with identical backgrounds were to seek the same opportunity, it would be denied to the non-degree holder and offered to the degree holder.

The NBER papers’ authors suggest that instead of calling people without formal credentials “low skilled,” a better phrase would be to think of them as STARS – standing for “skilled through alternative routes.” This respects both the skill level of the person, and also recognizes that there is more than one way to become excellent at creating an outcome.

Some simple practices

For all the employer complaints about not being able to find workers, there are straightforward remedies they could undertake. Some are even relatively easy to implement. Drop the algorithmic handling of applicants’ resumes (that screen people out on the basis of often-irrelevant criteria). Recognize that your previous problem of having to manually sort through resumes has disappeared!

Allow open access to opportunities to anyone who can complete a qualifying test. Consider turning to talent pools that you might otherwise overlook – for instance, a program called “Second Chance Hiring” run by the Manufacturing Institute offers on-ramps to good jobs for the many Americans with a criminal record.

Insist on at least two under-represented candidates in any hiring pool. Be understanding if an otherwise qualified candidate has a gap on their resume – there can be any number of explanations. Look for evidence that a person has taken on a new challenge and stuck with it, even if it isn’t work related.

In the somewhat longer term, employers could benefit from investing in the workforce they say they need. One model, which has been used very successfully in places like Germany is that of an apprenticeship. Unlike the United States, being on a “dual training” track with some time spent on the job and some time spent in formal classes, is considered a perfectly respectable path to a good future.

Some places have started to realize that a system that presupposes a college degree to have a good life leaves a lot of people out, and costs employers valuable talent. For instance, in southeastern North Carolina, a group of manufacturers have created a partnership to help build up the local labor force and make sure that those with skills and drive can move forward in their crafts.

From a public policy point of view, we could get rid of non-compete clauses which reduce a workers’ ability to change employers and thus seek out a better deal. The Economic Policy Institute estimates that “somewhere between 27.8% and 46.5% of private-sector workers are subject to non-competes.” There is, finally, considerable attention being devoted to the issue.

There is also the question of the design of jobs themselves. Here, the classic way to think about this comes from the work of Greg Hackman and Richard Oldham, who discovered that we really can influence how engaged people are at work and how much they will therefore be able to contribute. You can think of these as the antidotes to the causes of employee burnout. According to my Friday Fireside Chat guest Jennifer Moss, burnout comes from 6 interrelated factors that work together: 1) excessive workload; 2) perceived lack of control; 3) lack of recognition; 4) poor relationships at work; 5) lack of fairness and 6) values mismatch. Note how these elements seem to be opposite sides of the same coin.

People are not just costs

A bigger step forward in rethinking the way we organize employment is to follow the guidance of MIT’s Zeynep Ton. Ton is the author of a terrific book called The Good Jobs Strategy which makes the point that if companies provide good jobs and support their people with excellent operations, they can create a powerful competitive advantage, even in low-margin sectors.

Ton’s deep insight is that loyal employees who are treated well and given the proper tools can, instead of being units of cost, enhance a company’s growth and performance.

After all, think about the service providers you enjoy doing business with. Do they shunt you off to someone in a distant call center you can barely understand? Do they have staff on the shop floor who have so little understanding of the products they are selling that you and they are figuring out the user manual together? This was blamed as a contributor to the untimely demise of Circuit City, once a “Good to Great” company. Do your questions get handed from person to person with no one seeming to know who has the answer? Of course not! Instead, you’d prefer to do business with companies whose people are helpful, responsive and knowledgeable.

Ton has now created the Good Jobs Institute, a not for profit organization dedicated to helping companies implement the good jobs strategy in their own workplaces.

Implementing the Good Jobs Strategy

If you head on over to the Good Jobs Institute’s website, you’ll get a crash course in how to redesign your workplace to capture the upside of good jobs. It’s more than paying people better or offering them better benefits (although that doesn’t hurt). It’s about creating a self-reinforcing system that allows your organization to create greater value for customers, which translates into greater willingness to pay, which translates eventually into more revenue.

There are four operational pillars to the Good Jobs approach:

1. Focus and Simplify. Good jobs companies know what value they are trying to deliver to their customers, train their employees to deliver that value, and simplify operations so that employees aren’t bogged down by contradictory or interruptive demands. They give their people the tools to do a great job for customers.
2. Standardize and Empower. When the customer focus is well understood, routine work that doesn’t require human skills can be standardized, while work that makes a noticeable difference to customers can be given to human beings to do. In addition, bureaucracy is limited while people closest to the customer are able to make decisions without having to get permission from anyone else.
3. Cross training. Cross-training allows employees to escape theTaylorist straightjacket of narrowly defined, piecework type jobs to be able to more flexibly respond to demands as they arise.
4. Operate with slack. You only have to look around at the total mess our global supply chains are in to recognize that too much optimization in any system is dangerous. Too little slack in the system means that any small disruption to the norm can blossom into a major systemwide failure.

Making these operational conditions work also suggests that companies are prepared to invest in their people, with training, benefits, chances for advancement as skills improve, and the opportunity to grow in their roles. And underlying this in turn is a commitment to valuing people as creative contributors rather than malfunctioning robots. Jim Sinegal, the co-founder of retail giant Costco, put it this way:

“Part of our philosophy in our business is that if you go out and hire good people and provide good jobs and good careers and good opportunities, good things will happen in your business.”

So what does any of this have to do with competitive advantage?

Here’s the thing. Increasingly, competitive advantages don’t come from features or attributes of products or even services. They come from interactions and from things companies do uniquely well. A good jobs strategy is hard to copy for others who haven’t made the investment. Unfortunately, it’s still rare, which gives you the opportunity to access great talent. It’s long term in a short term world, and it’s time-consuming to build. Get all of those things right and you create the basis for real, long-term, lasting advantage. Further, it contributes to your resilience as an organization if you have people who can flexibly respond to challenges.

And it’s more fun for everybody.

Worth some serious thinking about good jobs.

Written by:  Author Unknown, from Rita McGrath Group blog.