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.

Building a Culture by Investing in Every Relationship

Maral Kazanjian, chief people officer at Moody's Corporation, will always remember her first day back after a stint with another company.“It was like rejoining your family or coming back to your college reunion where everyone knows you and cares about you and is so just happy to see you,” she said during a fireside chat at From Day One’s Manhattan conference. “I wish every person going to work could feel that included and welcome for who they genuinely are, because I really felt it in that moment.”Kazanjian, interviewed by Emma Hinchliffe, senior writer for Fortune, says that Moody’s cornerstone value is to invest in every relationship. “And what that really meant to us is me talking with you, me engaging a vendor, a colleague,” she said. “How I show up what I do matters. And the way I do it matters just as much.”Rebranding Human ResourcesOne way Moody’s invested in relationships with its employees was by rebranding the human resources department as the people department. “We didn’t want HR to be perceived as a back-office personnel function,” Kazanjian said. “We knew that truly we have a SaaS business, but our product, everything about what we do is our people.”In other words, “the crux of our business is our human capital. And to be an effective human capital function means understanding your business and driving activity that reinforces the things that matter. And for us, that’s trust and relationships.”Leaders at Moody’s work hard to ensure that every experience within the employee lifecycle, from hiring to talent growth to compensation and benefits, “matters in that value proposition of building a place that you can trust and rely on, and that we can trust and rely on,” Kazanjian said. In turn, that helps Moody’s customers have confidence in the corporation.What Employees Value MostEmployees like to feel they are connected to doing something that matters to the mission of the company, says Kazanjian. “I hear a lot about, ‘How do we tell the story of what we’re doing to our people and to each job, so they feel like they have a purpose and getting up and doing what it is they have to do,” she said.Team members also need a sense of psychological safety, which leads to a company operating with integrity. “If you feel safe, you can call out something that feels off to you,” she said. “If you don’t feel safe, you are not going to call it out with the same confidence and comfort.”Emma Hinchliffe, senior writer for Fortune, right, interviewed Maral Kazanjian of Moody'sKazanjian emphasized the importance of focusing on the whole employee experience. Leaders at Moody’s recognize that “work is just one component of your life, and no one’s life is the same every day. It’s incumbent on us as a company to create a space that enables people to achieve the goals of the company, while living a life that is as rich as they want it to be.”The Importance of InclusionWhen Kazanjian rejoined Moody’s in early 2022, one of the first things the leadership team discussed was diversity, equity and inclusion. “We hired a new officer and spoke about the title of that job,” she said. Each aspect of DEI is vitally important, but it starts with inclusion, says Kazanjian.Moody’s did a lot of rebranding around the idea of inclusion. One of the results was a video posted on the corporate website titled “Stand for Inclusion.”In the video, they “show vignettes of all different kinds of people at Moody's who look different, who have different experiences, who come from different backgrounds,” Kazanjian said. “We talk about how that mosaic of different people is what creates the richness of our business.”Having a diverse group of employees gives Moody’s the broadest perspective of insights. “But it also lets every person know no matter where you come from, you are safe here and you are welcome here.”Mary Pieper is a freelance writer based in Mason City, Iowa.

How Employers Are Boosting Internal Mobility and Career Development

Developing talent from within a company’s ranks simply makes a lot of sense. The benefits include greater productivity because employees are motivated to reach their goals, cost savings and time savings from the job search and onboarding processes, and increased employee satisfaction as workers feel they are valued.But as with all corporate practices, how a company puts an idea into practice makes a difference. At From Day One’s Manhattan conference, a panel of leaders spoke to the topic, “Creating Opportunity Within: How Employers Are Boosting Talent and Career Development,” sharing the thoughtful and effective ways their organizations are successfully promoting employees.The executive panel discussion featured five dynamic and creative business leaders who described their own career development and the ways they support and encourage the same for others.At Visa, the message that career development is a priority comes from the very top, says Melissa Fridman, head of people and global merchant sales & acquiring at Visa, North America. Ryan McInerney ascended to CEO in February 2023, after being prepared for this transition for two years, Fridman says. And among his first actions as chief executive was to promote others into leadership roles, which reinforced the message throughout the company that there was career mobility.Fridman described the company’s efforts as driven from the top down and intentional, and relayed how as a new CEO, McInerney blocked off a few days this year with his leadership team to discuss talent across the company. “And everybody knows that, so in advance all the businesses are spending time with their HR partners and their leadership teams talking about talent. That type of intention and knowing that we’re being deliberate about succession planning because of the robustness of those conversations, [leads to a lot of] follow up action.”But a bottom-up strategy also works. Penguin Random House adopted a growth charter a decade ago that “infiltrated through our personal development conversations and put the power back in the hands of the employee,” said Joanne Mallia-Barsati, vice president of global talent management and development. This growth and development methodology was designed to create two-way coaching conversations between a manager and employee to elicit “how people really think about their careers, how they own their careers and how they are equally responsible in thinking about their development at the company,” Mallia-Barsati said.Brent Vader, VP of HR at Verizon recognized that at a company with a large frontline employee population, internal mobility and career development might look different than at other organizations. “It was very difficult to figure out how to make the right connections, you don’t just want to post and pray and hope that someone recognizes my profile. There has to be something more deliberate,” said Vader.And so over the course of a few years, Verizon created a program called Journey Forward to map out how ambitious frontline workers can get ahead. “It encompasses everything that we’ve talked about, whether it's finding a network, making sure you have a sponsor, and understanding the right skills and experiences necessary to qualify you for that next role,” he said.The panelists spoke about the topic "Creating Opportunity Within: How Employers Are Boosting Talent and Career Development," in a session moderated by journalist Jeanhee Kim The point of the Journey Forward is to give employees a systematic approach for their development plan, as well as a plan for getting training and finding a mentor, to make it easier to scale to their next opportunity.This effort to develop talent from within is a shift from the more traditional practice of attracting new talent to companies. A tell-tale sign that a company is serious about career development is when its internal career page is as sophisticated and thoughtfully designed as its external one, said Marcus Strang, lead solutions engineer of recruitment marketing platform Clinch.“We’ve started to see a shift in the market. Companies are realizing that there’s a much better ROI in investing in internal resources like career portals, talent networks programs, where employees who already work for you can get excited about their next job with you, instead of thinking they have to leave in order to grow.”The cost-benefit analysis points in favor of career development. “If you invest so much in an employee, and then they go elsewhere, and they take all the learning and all of the investment that you've made and bring it to another company, that’s really a big-time loss,” said Rose Fass, founder and chair of leadership development consulting company FassForward.Additionally, retained employees attract talent to your company: “They’re really your best advertisement, aren’t they?” said Fass.Mallia-Barsati says Penguin’s global immersion program, which adds a global dimension to its career development efforts, has created new business opportunities as well. Spending time in a new location allows the employee to get to know the team, understand the business, build connections, and really understand the culture, she says. From this program, they’ve experienced numerous business achievements, “including new imprints created, book partnerships and acquisitions,” she said.Jeanhee Kim is an independent journalist who has worked for CoinDesk, Crain’s New York Business, Money magazine and Forbes Asia.

Promoting Well-Being While Boosting Performance in a Changing Workforce

Who does the work and how they do it is constantly evolving. “So, how do we make our work environments still attractive? How do we still develop our employees?” asks Kami Peterson, senior director, regional HR & employee Relations, U.S., Thomson Reuters. At From Day One’s Minneapolis conference, Peterson spoke on a panel titled “Boosting Productivity in a Changing Workplace–and Workforce.”“We need to think about not just the products in which we serve our customers, but also what type of product we are delivering internally. That’s programs, that’s processes,” Peterson told moderator Megan Thompson, Special Correspondent for PBS Newshour.Whether people are working remotely or hybrid, “There’s also the high degree of reactivity that we’re seeing that pervades the workforce,” said Andrew Deutscher, founder of Regenerate. “That’s partly stemming from the overwhelming workloads that we’re all contending with.” When employees feel their workload is too big, that diminishes productivity, says Deutscher.Workers are also dealing with a digital onslaught of emails and text messages throughout the day, which distracts them from more profound work. Other factors hampering productivity are diminished resources, meaning employees are forced to do more with less, and a lack of continuity due to high turnover rates, says Deutscher.How Company Culture Impacts ProductivityCommunication is the key to creating a culture that fosters productivity, says Chad Deshler, senior VP of U.S. sales for LifeSpeak Inc. “There are two common themes that I’ve seen with organizations," he said. “One is how you communicate, and the other is how you communicate.”In today’s workplace, some employees don’t feel their employers have a sense of loyalty toward them. “If you open up that door of communication and create a level of transparency, it goes a long way, sometimes even more than what a paycheck can do for somebody,” he said.Joel Geary, vice president of human resources, global business units & medical scientific affairs at Beckman Coulter Diagnostics, says it’s crucial for an international company to have a common culture and way of doing things that crosses borders. Beckman Coulter Diagnostics has many offices around the world, so whether you are in Dubai, Japan, India, China, Mexico, or the United States, “everyone from manufacturing to R&D to sales uses a shared language rooted in our continuous improvement business systems, a guiding force of our culture” he said.The company uses its strong culture as a recruitment tool, Geary says. “It’s a big part of how we fulfill the employee experience and deliver results,” he said.Strategies for Increasing ProductivityCarita Hibben, vice president of human resources at C.H. Robinson, says the company’s new CEO is emphasizing a new operating framework based on lean methodology. She said this means “having the discipline to hold yourself accountable to the strategy you are trying to drive.”“What we’re seeing with that from a productivity perspective is a continuous process improvement mindset, as well as elimination of waste,” she said.The executive panelists spoke about "Boosting Productivity in a Changing Workplace–and Workforce"C.H. Robinson is also going to its locations and asking desk-level employees, ‘“Where do we have the pain points in the process that we’re trying to evaluate?’” Hibben said. The company uses AI to make processes more streamlined and efficient so employees can focus on giving customers the personal attention they need.“I would encourage you as an HR individual to partner with your business to say, ‘What does this mean for your teams? And how can we think about upskilling? Or how can we think about where we shift our resources to work on things that are a value add to the customer?’” she said.Thomson Reuters recently began having learning days several times a year where employees can sign up to learn from both internal and external speakers. These skills-based sessions are where team members “gather in our new world and help move the change, or the pace of change even faster,” Peterson said. “That’s definitely made an impact on performance.”Well-being and ProductivityEmployees aren’t as productive if they try to come back to work while they are still sick, and “we also know when we’re physically healthy around our sleep, or nutrition, or movement, we’re more focused and optimized in what we’re doing,” Deutscher said.Company wellness activities that have a high impact don’t have to come with a high cost, says Geary. For example, Beckman Coulter Diagnostics’ Chaska, Minnesota, facility does a 5K walk/run annually on a workday. The production line adjusts schedule so employees who want to participate, can participate, and it’s an annual highlight.“Don’t underestimate the value of a small group of people that are very passionate about something and want to make a difference with their teams and their organization,” said Geary, referring to the program that has been valued for over 12 years now.Physical health is only part of the equation. When people are emotionally and mentally healthy, they are better equipped to deal with setbacks and challenges, not only in their personal lives but also in the workplace, says Deutscher. “We’re more creative problem solvers when we have more energy to bear,” he said.Thomson Reuters now gives employees two mental health days per year. The entire company shuts down for those two days. “Everybody asks around, ‘What are you going to do during the mental health day?’ We’re trying to create that safe space, reintroducing that it’s OK, we all need a break. And they will talk about going into the spa or spending the day with their spouse,” Peterson said.Deschler pointed out that most of the people in the room for the panel discussion were in the “sandwich generation,” meaning they care for children as well as elderly parents. In addition to their oftentimes complex caretaker duties, they are also working full-time.“So, when I talk to companies and organizations, we’re trying to think of creative ways to engage their population so that they can feel productive and healthy. When you're taking care of yourself, we all know that you’ll be more productive,” he said.Mary Pieper is a freelance writer based in Mason City, Iowa.

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

RELATED STORIES

Building a Culture by Investing in Every Relationship

How Employers Are Boosting Internal Mobility and Career Development

Promoting Well-Being While Boosting Performance in a Changing Workforce