Why It Pays to Pay Employees More
We blogged a while back about how some retail firms succeed by hiring more, not fewer, floor employees, and by treating them particularly well. Among the examples: Trader Joe’s and Whole Foods; among the counterexamples: Michael’s.
This prompted an e-mail from Hal Varian, Google’s chief economist. (If you don’t know of Hal you should, as he’s an impressive and fascinating guy — check out the Q&A he did here a few years back.) His e-mail reads:
Saw your piece about Trader Joe’s et al. Here’s one reason to pay people more than their market wage (from my textbook):
Gabor Varszegi has made millions by providing high-quality service in his photo developing shops in Budapest. (See Steven Greenhouse, “A New Formula in Hungary: Speed Service and Grow Rich,” New York Times, June 5, 1990, A1.)
Varszegi says that he got his start as a businessman in the mid-sixties by playing bass guitar and managing a rock group. “Back then,” he says, “the only private businessmen in Eastern Europe were rock musicians.” He introduced one-hour film developing to Hungary in 1985; the next best alternative to his one-hour developing shops was the state-run agency that took one month.
How Many Workers Is the Right Number for a Retailer? Stories from Trader Joe’s, Michaels, and Whole Foods
A reader named Quinton White points us to an interesting article by Jim Surowiecki in The New Yorker about how retails firms are succeeding by hiring more workers and spending more money training and rewarding them. Surowiecki writes:
Read More »A recent Harvard Business Review study by Zeynep Ton, an M.I.T. professor, looked at four low-price retailers: Costco, Trader Joe’s, the convenience-store chain QuikTrip, and a Spanish supermarket chain called Mercadona. These companies have much higher labor costs than their competitors. They pay their employees more; they have more full-time workers and more salespeople on the floor; and they invest more in training them. (At QuikTrip, even part-time employees get forty hours of training.) Not surprisingly, these stores are better places to work. What’s more surprising is that they are more profitable than most of their competitors and have more sales per employee and per square foot.
Listen Carefully as Our Menu Options Have Recently Changed
Moving houses has always been like having three teeth removed without anesthetic. These days the pain is accentuated by having to wait on the phone hearing, “Please listen carefully as our menu options have recently changed.” That’s corporate-speak for, “Don’t even bother pressing zero hoping to speak to a human. That’ll just put you back at the beginning.”
My latest such adventure started with an email from the phone company (Verizon). I was told that a technician would come to hook up our new service during the time “window” of 8 a.m. to 5 p.m. If a window is an opening in a wall, then 8 am to 5 p.m. is more like the whole wall. Trying to shrink the window, I spent more than an hour on hold for one person after another who could only forward me to someone else equally unhelpful. The circular chain of authority finally snapped when the last person claimed (all this discussion is at 10 a.m. on the day itself) “We have absolutely no way to reach the technician.” And then asked “Have I provided excellent service today?” Read More »
A Great Answer From a Flight Attendant
A while back, I wondered why flight attendants don’t get tipped. Here’s a nice response from a reader named Barb, who retired after 36 years as a flight attendant with US Airways. Her suggestion sounds pretty perfect to me. I particularly liked her “schmuck” observation: Read More »
Something to Think About While You Wait in Line at KFC
Photo: emile I’ve loved the chicken at KFC ever since I was a kid. My parents were cheap, so KFC was splurging when I was growing up. About twice a year my pleading, perhaps in a combination with a well-timed TV advertisement, would convince my parents to bring the family to KFC. “What is so Read More »
Amazing Customer Service
As my research agenda has turned lately to thinking more about business and how companies can maximize their profits, I’ve spent a lot of time pondering customer service. So far, this is the single best example of customer service I have ever heard about, courtesy of Zappos. The Zappos story will be difficult to beat, Read More »
You’re Hired: Now Quit
Say you’re hired for a new job. At the end of a four-week training period, your new boss offers you a big bonus to quit right then. Would you stay on the job, or take the money and run? Zappos employees interact on Twitter. Think of it as an employer’s test for whether you’ve come Read More »
Maybe This Guy Should Be Running Delta Air Lines
I recently blogged about a suboptimal customer service experience with Delta Air Lines. (As a couple of commenters pointed out — see Nos. 28, 36, and 44 — one of my assumptions was probably wrong, but that doesn’t change the thrust of the story very much.) So it’s nice to report a really good customer Read More »
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