#28 Operational Excellence Meets Dignity: Why Good Jobs Are Good Business with Zeynep Ton

Senthil sits with renowned MIT Sloan professor Zeynep Ton, author of The Good Jobs Strategy and The Case for Good Jobs, for a conversation to reveal how investing in frontline employees with fair pay, stable schedules, and meaningful career paths is not just ethical—but a true competitive advantage.

Hear compelling stories, research insights, and real-world examples from leading companies like Costco, Sam’s Club, and Mercadona that show how systemic change, not piecemeal fixes, creates better jobs and stronger businesses. Zeynep dives into the essential elements of a good job system and demystifies why more businesses haven’t made the switch—addressing the mindsets and organizational silos that keep most companies trapped in the “vicious cycle” of poor labor practices.

The conversation covers:
-Why “bad jobs” are a choice, not a necessity
-How pay, stability, empowerment, and operational excellence create mutually reinforcing systems for business and worker success
-What leadership qualities set apart organizations that transform frontline work
-Practical advice for leaders who want to start their good jobs journey

This episode is essential listening for business leaders, students, or anyone interested in reimagining work at the ground level—showing how dignity and profitability can go hand in hand.

Please visit our website, www.businessandsociety.net, for more inspiration.

Transcript

Senthil (00:02)
Welcome to the Business and Society podcast. I'm your host, Senthil. Every fortnight, I take a topic and explore it with some of the influential thinkers and practitioners. Today, we will discuss jobs. Not just any jobs, but good jobs. We will learn how some of the companies invest in their employees through fair pay, training, supportive operational practices to drive higher productivity, better customer service, and sustainable business success. I'm delighted to be joined by Zeynep Ton, Professor MIT Sloan and of The Good Job Strategy and The Case for Good Jobs. She's also the co-founder and president of the nonprofit Good Jobs Institute, whose mission is to help companies thrive by creating good frontline jobs. Her work has redefined how we think about frontline work and shows that things such as treating employees with dignity or investing in people isn't just the right thing to do, but it's a competitive advantage. Zeynep, welcome to the show.

Zeynep Ton (01:08)
Thank you so much for having me, Senthil.

Senthil (01:13)
Tell me, you came to the United States on a volleyball scholarship from Penn State, and now you are a leading voice at MIT shaping how companies think about frontline work. What was the moment when you realized that researching frontline jobs or good jobs was your purpose?

Zeynep Ton (01:36)
You know, before I came to the United States when I was in middle school, my father had a small factory and I spent the summers working in that factory. And I think I got a quick appreciation for the work that frontline employees do in that factory. so that started at a very young age. And then I came to the United States on a volley ball scholarship. Penn State changed my life. Coach Rose changed my life.

And I studied industrial engineering. So much of industrial engineering is related to work that people do in companies and how to design that work for high productivity, high motivation. ⁓ And then when I became a doctoral student at Harvard Business School, I don't know that I had an interest in frontline jobs, but I had an interest in studying something interesting, a business problem

that could help me grow as a scholar and that could also help companies. And ⁓ jobs again was not on my mind Senthil to be perfectly honest with you because my field is operations management, which is a nice continuation of industrial engineering. And I grew up studying, you know, work. I grew up studying Toyota production system, quality management, and all with the focus of

How do we design the work to improve the value for the customers all the time? ⁓ But then when I started my early research, looking at retail stores, I saw that stores were full of problems, full of problems, inventory-related problems. Products were not in the right place. Inventory data were inaccurate. And customers were experiencing stock-outs for products that were actually there. ⁓ These operational problems were big.

They hurt companies, they led to lost sales, they led to ⁓ higher costs, and they hurt supply chains. And when I asked the questions, why do these problems happen all the time? I found one of the answers in labor practices of companies. over and over, I saw that stores that had more employee turnover had more of these problems. Stores were understaffed, had more of these problems. And many retailers are operating in a vicious cycle of

Poor low-labour investment, high employee turnover, lots of operational problems, poor performance, and this vicious cycle continued. But still, I was approaching this from more of an academic, know, this is a big problem, it costs companies a lot of money, until I started spending time with frontline employees. And I came to the United States on a scholarship. This country has been the land of opportunity for me. And during my interviews, I started meeting so many

hardworking, competent people who were just not making it. Many of them were part-time, they had multiple jobs, their pay was very low, their schedules change all the time, and their life was in a turmoil, and their stories got to my heart. And I thought, wow, this is a problem that hurts companies, it hurts workers, there has to be a better way. So that was the transition for me to move more into

What is possible? Where can I see something different? So that was when I realized that would be my focus.

Senthil (04:58)
Great story. for outsiders like me who don't research good jobs, a good job simply meant fair pay and a respectful, safe workplace. But it is after reading your work, you realize it's more about competitive advantage. Could you walk us through some of the key elements of the good job system?

Zeynep Ton (05:21)
Yes, of course. he was already mentioned some, pay is, one of the most important elements of a good job. and pay has two components. It has hourly pay and then the number of hours because a lot of front line service workers don't have 40 hours a week every single week. And the absence of

sufficient pay and by sufficient I mean absence of sufficient pay so that people can live a decent life, can put food on the table and roof over their heads causes all sorts of problems. So if pay is missing, it's guaranteed that the job will be bad. If pay is missing, it's guaranteed that turnover will be high. And once turnover is high, it's guaranteed that leaders will design the job for

people who come and go all the time and they take decision rights away from people and use them as interchangeable parts, which makes the other parts of a good job missing, right? We want to have control over our lives. We want to have control over our work. Well, if you don't trust people because they come and go, you probably won't empower them to make decisions, right? Cross-training, doing multiple tasks is a driver of motivation. It makes the job more meaningful.

⁓ It enables people to thrive in front of the customers. Well, if people come and go, you probably don't want to cross-train people. So when pay is missing, the other components of a good job that could include meaningfulness, sense of achievement, belonging, et cetera, ends up missing as well. So pay is so important. So is career paths, right? Having a career path where you can grow in the organization and move up to higher paid and more responsibility positions.

Senthil (07:13)
What is the reason your research focuses on just frontline workers, not executives? Is it the pay or goes beyond that?

Zeynep Ton (07:23)
Yeah, it's because I'm an operations professor and I study work and I grew up looking at factories and service operations and honestly the reason that I ended up with the service part is because that's where my initial focus was retail operations and ⁓ then I very soon realized this is a big problem, important problem, I'm gonna stick to it.

Senthil (07:46)
Interesting. You argue that bad jobs are a choice, not a necessity. Why do you believe that and what are the costs of those choices, both for people, frontline workers and for business?

Zeynep Ton (08:01)
Yeah, one of the things that I realized when I saw a lot of companies in that vicious cycle that I mentioned was it was the mindset that drove this vicious cycle. Because for a lot of business leaders who have been told that labor is just a cost to be minimized, market pay is the right pay, lean and mean is what drives efficiency, they make the choice of not investing in workers.

and then dealing with all the consequences, high turnover, operational problems, and poor sales, and profitability. But this is not inevitable. There is another choice. And it's not that I'm making this choice up. There are companies in low-wage industries that are making this choice. ⁓ If you look at Costco, Costco is the world's third largest retailer.

the average pay at Costco just last year was over $31 an hour. It's higher than the auto factory workers in the United States. So they made a very different choice than other companies Whenever Costco's co-founder, Jim Sinegal comes to my class, my students are amazed. Like, how can you pay people so much more than your competitors do? And he says, it's not altruism. This is good business.

And of course, it's not only high pay, high investment and people choice that they make, they create a whole operating system designed for high productivity and motivation, but it is a choice available to every business leader in every industry. If a company like Costco, which competes on the basis of low cost and has single digit profit margins, can do this. If a company like Quicktrip, which is a convenience store chain with gas stations.

Small, convenient store chain with gas stations. ⁓ Again, with single digit profit margins. Can do this. If a supermarket in Spain, Mercadona, Spain's largest supermarket chain, if they can do this, why couldn't others? So that is a choice. And one last thing that I will say about that choice Senthil is that during the last eight years through the nonprofit Good Jobs Institute that I co-founded with Roger Martin, ⁓

My former MBA students and I had the opportunity to work with a lot of different companies. And we have seen that even companies that are operating in that vicious cycle, it is possible for them to change into a virtuous cycle of investment in people, smart operational choices, and much better performance in a wide range of industries.

Senthil (10:42)
Interesting. That lies the paradox, isn't it? If you go and speak to an executive in a competitive industry, they often say, look, our margins are too thin. They say that it's not easy to do it in our sector. And you called out some of the examples like Costco, Mercadona,

What are some of the changes that they make and what made those changes stick? sustained this transformation.

Zeynep Ton (11:03)
I can tell you

a little bit about the good job strategy Senthil the components, because it's the components that change. But even before getting to the change, because what I found is that a lot of companies are very action oriented. You give them a task, but they'll go forward and they'll implement it. They'll go for it. oftentimes, we...

Forget about the connections in the big business system that we're thinking about and let me elaborate So when we have seen companies that were able to change successfully So from that vicious cycle to a virtuous cycle their starting point was why are we doing this? And why are we doing this and that why? was Very clear so they had their business objectives financial objectives. So we want to grow

50 % during the next two years, or we want to achieve this profitability. And then the next bucket was, what value are we going to provide their customers? How are we going to improve that value so that we can achieve our financial targets? And all the great companies, they grow their business and they achieve their financial metrics by constantly improving the value for the customers. So that linkage between customers and

financial performance is key. And then the third linkage is what's a frontline engine, a high powered frontline engine that can drive that customer value. And do we currently have that frontline engine? So when, when put in that context, wow, we need a strong high powered frontline engine to drive customer value. And that customer value is what drives our profitability, you know, financial targets, then

the question becomes, do we have that engine? And if we don't, what does it take to build it? So the good job strategy that I developed in my first book is about creating that very strong frontline engine. And the important thing that engine is that it has different parts, but they're all connected. ⁓ Part of it is investment in people. And by investment, I mean ⁓

higher than market pay. ⁓ It will be great if it's a living wage. Career paths, that are stable that allow people to have decent lives, high expectations, and then operational choices that ensure that people are super productive and motivated. So those choices create a high return on that employee investment. And those choices are also necessary for companies to keep their turnover low because

they make the job a much better job. So when one of the companies that adopted this system recently was Sam's Club, which is Costco's largest competitor in the United States. When they started this journey, they were a $60 billion retailer. This is around the end of 2017 or 2018 when they started on this journey. And first they clarified that why, what is the problem that we're trying to solve?

And then from there, they asked what are the set of connected choices we can make to reduce our employee turnover, to improve our customer satisfaction, to improve productivity. And their changes included investment in people changes. For example, they raised pay for certain positions that were very important for achieving high customer satisfaction and high performance. These were

meat cutters, bakery specials, team leads in the company, they raised their pay five to seven dollars an hour from a basis of fifteen dollars an hour. And they started increasing the percentage of full-time employees and started giving them stable schedules. Now that type of investment changes people's lives. When you are getting paid twenty two dollars an hour versus fifteen dollars an hour, now you don't have to have another job.

Now you can have one job, focus on that job. ⁓ When you have a stable schedule, you can actually have predictability in your life. So that changed people's lives. But of course, investment in people is not enough. So there are a bunch of changes Sam's Club did in the four choices that I talk about in the good job strategy framework, focus and simplify, standardize and empower, ⁓ cross-train and operate with Slack. Let me just give you a couple of examples.

⁓ One of the things that they realize is that when it comes to focus and simplify, they had lost their purpose. They had lost why they stand in the eyes of their customers. One of the important things about strategy that I've learned from my colleagues in strategy is that strategy is choice. It's about what you're going to be great at, but also what you're not going to be good at. Over time, Sam's Club, like so many other companies, had drifted from their

original model of offering their members who pay to shop at the company the highest quality merchandise at the lowest possible prices. So they looked at that customer offering and they said, what can we simplify from that offering? What should we not do? Over time, they've added four or five different memberships. They've simplified that. They've added so many different products to the assortment.

because under sales pressure, it's so much easier to add more and add more and get more sales from customers. And they reduce their product variety by about 25%. Now, that simplification made their employees a lot more productive. Now they can shelve faster. Now they can check out people faster. Now they can be knowledgeable about the products. And when you work faster, the company can pay you more.

They had on the both simplification and standardization and empowerment, they had brilliant use of technology to eliminate some of the tasks that didn't have to be done to save people time so that they can focus on the customer and solve customer problems. And they cross-trained their employees and have ownership in different sections. So they did a bunch of different operational choices. But those choices were key to making the investment in people

work and the choices were connected to one another. For example, cross-training would have been very difficult if they hadn't eliminated some tasks and if they hadn't reduced their product variety. Cross-training would also be very difficult if they didn't invest in people. If you don't invest in people, your turnover is very high, then people are going to say, why do I perform this other task for you too?

And at the same time, that cross-training along with simplification enabled them to offer stable schedules to their employees. So I mention all this to say that it's a system change, not like one or two separate changes that they made to achieve the outcomes that they want to achieve. Higher customer satisfaction and loyalty, higher productivity, and lower turnover.

Senthil (18:16)
Got it. listening to you, it's not like implementing one piece of intervention here and there, but it's a systemic change. And I think that's one of the biggest changes I have seen reading both of your books. While your previous work emphasized it as more of a strategy, your latest work, The Case for Good Jobs, argued, it's a system, good job system. Is that a fair observation?

Zeynep Ton (18:39)
Yes,

yes, absolutely, absolutely. And it is, you know, I think for my second book, I try to emphasize this even more because after my first book, I started receiving a lot of calls from leaders in HR and they would reach out to me and say, hey, we want to raise pay. Hey, we want to improve schedule, schedule predictability.

Can you work with us and can you help us show the return on that investment? And I keep thinking, well, raising pay alone was never my intention or schedules alone, you they don't even work on their own. So I wanted to emphasize that system part a lot more in the second book.

Senthil (19:23)
So if the good job strategy is so effective and you're saying that your research shows it's profitable, why don't more companies adopt it? What stops them?

Zeynep Ton (19:27)
Yeah.

Yeah,

this is the question that I get all the time, Senthil. And when I give a presentation and I talk about the good job strategy, the first response is, yeah, I can totally see this work. It's so obvious, right? And the different parts and how they work together to create a strong frontline engine. And then they go, but then why is it so rare if it's that obvious? And I think it has at least two big

reasons that there are more than two, but I'm going to emphasize the two big reasons. ⁓ One of the big reasons is the mindset. ⁓ And that mindset is, you know, for decades, people have been taught that labor is a cost. It's a labor to it's a cost to be minimized. It's just like any other cost on the on the income statement. It doesn't show up as an investment in the in the balance sheet.

And therefore, market pay is the right pay. We can't justify anything else. And if that drives high turnover, that's inevitable. So be it. That mindset pulls people into the low investment in people, high turnover model. Whereas the mindset of leaders like Jim Sinegal, like John Furner, who made the changes at Sam's Club, Isidor Sharp, the founder of Four Seasons Hotels, their mindset is...

No, employees are drivers of value. And if our objective is to be customer focused, we can't afford to operate with high turnover. We have to do what it takes to create that strong frontline engine. So a huge part of it is mindsets and how we think about labor. And then the other part has to do with the systems part. It's oftentimes so much easier to divide the organizations into different parts.

and analyze each part and optimize each part. And when we approach it that way, we don't end up creating a system that works brilliantly together. Even when I mentioned the linkages between financial goals, customer goals or the strategy and frontline engine, there are different parts in the organization that focus on each part, right? The finance team might...

our forecast, know, what our sales going to be, our strategy team might say, what are our growth objectives. And then there might be a brand team that does a brand analysis of customer value. There's HR that does what investments do we make, their logistics that do their logistics. So they're so disconnected from one another. So this requires seeing the company end to end with a focus on the customer.

And that integration is oftentimes hard, it's tricky in organizations. I think that's what we've learned at Good Jobs Institute and that's something that we've learned how to help companies deal with this trickiness part of how to make those connections and how to make a case. ⁓ What set of changes you're gonna make first to be able to close the gaps that you want to make.

⁓ to achieve, but that I think the connected system part is the hardest part of the good job strategy and why it's not as common as I would like it to be. But what we work toward is making this the norm, not the exception. That is the aspiration for those of us at nonprofit good jobs institute. That's the aspiration that I have in my both research and teaching at MIT.

And that's where I hope ⁓ companies will go.

Senthil (23:21)
Great. And is your focus only on the retail sector. When you say you want to make it normal at least your research and some of the examples you have presented is predominantly retail sector. ⁓ Is this model only fit for retail or am I wrong?

Zeynep Ton (23:35)
absolutely not. Absolutely not. And that's what I've learned since 2014 when my first book came out. ⁓ Because I got approached by leaders from a wide range of contexts, from call centers to health care to insurance to restaurants. And there are examples of companies that are right now we're working with an HVAC company. They have HVAC technicians who go to people's homes and they're using the good job strategy.

to create a better model for their ⁓ HVAC technicians. We've seen it work at call centers, at Quest Diagnostics adopted this to have big improvements in turnover, in customer satisfaction, in productivity. We've seen it work at restaurants. And it's not just large companies. Small companies can do this too. One of my favorite examples is Mo's Original Barbecue, ⁓ two units of a franchise

⁓ They adopted this, a small business owner. It was scary to make all that people investment when you're a small business owner. It's your money and now he's growing the business. And now he says he's happier than he's ever been before because he's giving good food to the customers who are coming back and he's changing the lives of his employees. So absolutely not just retail.

Senthil (24:53)
impressive.

That's great to know. One of the common themes I could observe from your work and listening to some of your TED Talks and interviews is you don't take more of a moralistic perspective in approaching this entire problem. You keep reminding us that, look, it's an operational thing. I'm an operational professor. There is a competitive advantage. Is that intentional because leaders listen to profitability and stuff or

Zeynep Ton (25:24)
Well, it's also the truth and it's also how I started my research Senthil. The only reason I started working on this was because I had quantified the cost of that vicious cycle.

I had seen how much problems at retail stores were costing companies money. Then through Good Jobs Institute, when we started working with companies, we saw that in addition to all the operational problems that cost a lot of money in terms of sales and cost, we also saw that turnover costs can be quite high as well, employee turnover costs. I mean, we've seen, we've worked with organizations that changed their entire roster in a year.

100 % employee turnover. Just the direct cost of that turnover, the hiring, onboarding, training, time to full productivity, can lead to 10 to 20 % payroll costs. Just the direct turnover costs. And then there are those operational costs that reduce sales and increase costs. But then the other thing, the other big cost is when company is operating in vicious cycle and

and deal with high employee turnover, there are so many things they can't do that make them a weaker company, a weaker, less competitive, less differentiated company. For example, if you're operating with high employee turnover and don't invest in people, ⁓ I can guarantee that hiring is not good. I can guarantee that training is not great because frontline managers are spending their time

dealing with operational problems, people problems, and they don't have time to hire the right people or train them well, regardless of how strong hiring might look on paper. You might have designed the best hiring practices, but they won't have time. I can almost guarantee that frontline employees won't be trusted to make decisions and to solve problems for customers. I mean, we've all been on the phone with call center workers where, you know,

They feel terrible because they can't make simple decisions. They just follow the script. And they waste their time. They waste our time. And they're stuck. But when you operate with high turnover, nobody can trust them. So it's the same thing with so many other areas as well. ⁓ I can also guarantee that when turnover is high and when we have this type of ⁓ system, capacity management is going to be bad. So.

there won't be enough people to get all the work done. all of the... And expectations will be low. So all of this creates a low trust, low expectation system and how can it be a competitive system? So there are financial costs and the competitive costs and as a business school professor, those are the costs that drove me to this. And of course I think about the ethical part and of course I talk about the ethical part and I will say...

So many leaders are attracted to the ethical part. I haven't yet met a business leader who does not care about their employees. Like I just haven't met anyone who pays employees low because just it makes them happy to pay them low, right? They think that this is, they don't have an alternative and I want to show them the alternative that I know they want to do the right thing, but this way they can do the right thing because it's also the smart thing.

But it's hard. I mean, it's hard. If it were easy, most companies would have done this by now.

Senthil (28:57)
Yeah, I'm glad you said what you said. One of the stories which stands out to me from the book is, I don't remember the company, but I think one of the senior leaders who went to a food shelter to do some volunteering work, and the food shelter folks told him that most of the employees who come here are your own employees. So that shows the information asymmetry between leaders and the frontline workers.

Zeynep Ton (29:25)
Yeah, that was a big surprise to me, Senthil, when I started spending time with senior leaders of organizations about the lack of awareness of the financial security of their frontline employees. Many of them knew what the hourly wages were, but most didn't know what the average take on pay was because they never looked at the hours. And when they found out that

Some of their employees are homeless. They go to food shelters. They can't make ends meet. ⁓ It was a shock to a lot of leaders that we worked with. that was one of the reasons why the first part of my book is awareness. Let's make you aware. Pay is a huge problem. And it has all sorts of consequences for workers. mean, they lose focus, so they can't do a good job on the job.

But other than that, low pay results in all sorts of health problems, obesity, heart problems, ⁓ opioid use, suicides, even cognitive functioning. It's associated with 13 point drop in IQ. Because when you don't have enough pay and you're constantly thinking about money issues, there's scarcity. So you can't think about anything else. So when you put these things together, you realize, wow. ⁓

I wish I spent more time with people. I wish I looked at the data on what people are being paid so I could be aware because awareness is number one before getting anywhere.

Senthil (31:03)
Let's suppose a CEO gives you a call and says, Professor Zeynep, I want to implement good job strategy. What would be your first question to him or her?

Zeynep Ton (31:12)
Yeah, my first question would be, what problem are you solving with the good job strategy? How does this fit to your overall aspirations as a company? To how do you want to win with your customers and always improve that value for the customers? And what are the problems that you have so that the good job strategy can help you solve the problem?

Senthil (31:33)
What would be the next question?

Zeynep Ton (31:37)
The next question that I would ask them or yeah, because I mean the next question depends on what their response is, right? If they tell me that look, know, we have these growth objectives but our customers are leaving us or they don't shop as frequently or they don't consume our services as frequently as we would like them to be.

Senthil (31:40)
Yeah, you would ask them.

Zeynep Ton (32:05)
And then I would ask them, what's driving that? Why do you think you have those problems? And it may come to employee turnover, then I might say, why do you think you have a turnover? So I might push them on that why a little bit. ⁓ But then I would invite them to work together to connect the dots between their system to identify the problem as clearly as possible, and then figure out what is their status quo current system.

And from that systems, where do we want to go? If we look at the five elements of the good job strategy, invest in people, focus and simplify, standardize and empower, cross-train, operate with slack, what is the ideal state? What kind of changes can we make to make our problem go away? If the problem is employee turnover, if it's low customer satisfaction, how do we make the set of changes that we can make to make that problem go away?

And then we would look at like, what changes do you make first? How do you make those changes? How do we get ideas from the frontline? So it will be a process, but it will be an iterative and collective problem solving process.

Senthil (33:18)
Great. ⁓ Listening to you makes it really clear that one should have an end-to-end view within the organization.

implies that it should come from the top. Tell us about the kind of leadership you have seen some of the retailers you talked about Costco, Sam's Club ⁓ and Mercadona. Tell us what differentiates these leaders? What did you find special in them?

Zeynep Ton (33:43)
Yeah, one of the things we've already talked about what differentiates them is that their mental model is very different than the mental model of many other leaders. They think that their fiduciary duty first is to customers. And once they're customer centered, then it's unacceptable for them not to be employee centered. So they think differently. ⁓

they spend a lot of time in the front lines. They're very humble. ⁓ The word humility apparently comes from Latin, and it means on the ground. So they're literally on the ground ⁓ observing work, observing people, and getting front line input. ⁓ They have tremendous discipline ⁓ and discipline to stick to their value proposition, discipline to ensure that their employees have good jobs.

and a ton of integrity. I mean, one of the things that I observe Senthil over and over is these leaders make integrity a habit. there's a Texas-based supermarket chain in the United States called HEB, and they're one of the most loved supermarket chains in the United States. They're only in Texas. ⁓

More than 100,000 employees, hundreds of stores, huge company, but they always do the right thing. When there's a flooding, HEB is going to be the first one to show up for the Texans to be as helpful as possible. When Jim Sinegal comes to class, the founder of Costco, he gives examples of times where he did the right thing, even though it was the expensive thing to do for the company.

⁓ But again, that's a habit inside Costco. And ⁓ that is a big leadership quality that I hope that my students will take to their organizations way after they ⁓ graduate from MIT Sloan.

Senthil (35:45)
Excellent. Let's talk about frontline workers as such. What would you say to them? Do they have any power to push their organization to embrace good job strategy? And particularly, we know that unionization is dropping. Are they simply a passive recipient of a system like good job system, or could they do something?

Zeynep Ton (36:05)
Yeah, mean, in the United States, first, know, Anna Stansbury and Larry Summers has a great paper that shows that the lower unionization rate is associated with lower wage growth in the United States, right? So there is certainly a link between unionization and wages. Unionization has declined tremendously over time, and it's even lower in the service sector.

where a lot of companies have distributed workforce in all parts of the economy and it's much harder to unionize in those settings. ⁓ Unions can certainly help with higher pay, better working conditions, ⁓ but at the end of the day, I think the success for workers is a combination of how well that union works with the management.

When that relationship is done well, ⁓ then when that is done through an eye for, yes, we want better jobs for employees, we want high productivity, high dignity, but high productivity is a critical element, which might include cross-training, which might include things that unions are sometimes resistant to. ⁓ That relationship, when it's productive,

can lead to great outcomes for both companies and workers. But it's just not a big part of the world for United States, at least right now.

Senthil (37:38)
Among the businesses you work with who implement the good job system, what is the one recurring challenge that you see coming time and again,

Zeynep Ton (37:48)
Yeah, I think the silos is a huge challenge. I'll give you one example of that. One company that we work with that did not implement the good job strategy. This is several years ago. And at the time, we used to do workshops with companies. Now we work with, we do problem solving. We do a series of sessions with senior leaders. But at that time, we used to do workshops.

And this was an audience that was a very skeptical audience. It's a huge company in the United States, public company, with a big frontline workforce, more than 200,000 people. And ⁓ even the skeptical people left the room convinced that if they could do this, they could create a competitive advantage because they would constantly improve the value for their customers and win in the market. So they left the workshop pumped up, excited.

They got a new CEO a couple of months later and this new CEO thought this was intriguing and she said, well, show me the money. ⁓ Part of what you want to do is to raise ⁓ pay. What is the return on that pay raise? And they did an analysis like business leaders oftentimes do because more and more, this is a fault to our business schools as well, Senthil. That's another conversation.

we are generating business analysts versus generating leaders who can see connections and who can use logic to make decisions. So they went to their business analysis group and they said, what happened last time we raised pay? They looked at the past, they collected the data and they looked at when they raised pay last time, what happened to employee turnover? What happened to customer satisfaction? What happened to sales?

And their analysis concluded that yes, higher pay had an impact on turnover. It had an impact on customer service and sales. But it was so small that the pay investment at the time they were thinking about raising pay to $15 an hour, we can't justify it given the small effects. Now, this was a wonderful academic analysis, all else being constant. What happens if you raise pay? But of course, if you raise pay alone, nothing is going to happen.

It's a system. So that has been such a recurring issue at large companies that just go to what is the return on investment of this initiative or that initiative And it takes a while to change the mindset and have the leaders think in connections and in systems.

Senthil (40:32)
So it's silos. You amply talked about the customer centricity in your work. The entire system revolves around delivering superior value or service to customers. I'm looking at it from a different angle now. As customers or consumers, say if we walk into a retail shop and we see the job systems are not great, we see demoralized employees, is there anything we can do as a consumer to push that company to embrace?

a good job system.

Zeynep Ton (41:03)
Yeah, you know, I used to say shop with your values. But as customers, one thing I've learned, Senthil, is that and this is there is no research about this to customers will do what's best for customers. Right. If it's easier to shop on Amazon, they're going to shop on Amazon, regardless of what Amazon might do. This is not not to say that like anything negative about Amazon.

But they purchase with their values when their values are on their health, their own well-being. So if I know that a product is better for me, I'm willing to pay more for that product. So I'll do the extra effort. I don't know that ⁓ they will go to a store that's farther or a restaurant that's farther because they treat their employees more. Now, customers are attracted to companies that take care of their employees because they get great service.

⁓ But that is again more rational business reason than, you know, I'm going to go to the store because they take care of their employees. I wish there was more of that. You I was on a panel once, this is a funny, well, not so funny example. I was on a panel once with the CEO of a burrito chain, a local burrito, you Mexican burrito chain in Boston. And he said, I wish my customers cared just as much about the people

as they do about the chickens that we grow. And it's like they're very, you know, they care about are the chickens, you know, organic? Are they free range? Do they have air time? You know, all those things. And he says, I found out that some of our employees sleep in their cars. So, but.

But that's not something as society that we have that much awareness about or we bring to the front and center of the conversations as we have done with ⁓ our health or even animal rights.

Senthil (43:09)
Zeynep Where do you see momentum building? Are we seeing a shift in how businesses value frontline work?

Zeynep Ton (43:17)
Yeah, you there was a short while during the pandemic when ⁓ the frontline workers were called essential workers. We were calling them heroes. We were clapping for them. ⁓ And that was a moment. ⁓ And I don't know that that moment, Senthil, led to any big important changes. ⁓ So.

I think that if we have more examples like Sam's Club, like Quest Diagnostics, like others who have created much better frontline jobs and much higher performance as a result, then others might start changing as well. There's something called institutional isomorphism. Companies tend to do, especially when they are under uncertainty, they tend to imitate others. So if there are...

enough examples of companies that are doing this and creating good outcomes, then we could have great momentum, but we're not there yet.

Senthil (44:24)
You have spent years researching what makes work better. What gives you hope right now, particularly at a time artificial intelligence is everywhere and some recent research shows that particularly the entry level jobs are going to get affected. What gives you hope?

Zeynep Ton (44:44)
Well, I always have hope in humans ⁓ to do amazing things. And what gives me hope is, especially with artificial intelligence now, AI is having the most impact on information processing type of jobs. And when you look at the economy, especially the service sector, is the one, except for call centers, if you put the call centers apart.

but that's exactly the sector that is less going to be affected by robots or AI. Not that AI or robots can't do specific tasks, but even when they can, humans are oftentimes more preferable. And the reason is service environments, think restaurants, think hospitals, think retail stores, there are so many different products.

and different sizes, different shapes, different fragility that requires dexterity. And there's a lot of variability that comes from customers. They come at different times, they ask for different things, they even evaluate the service experience differently. Humans are a lot more flexible to adapt to those changes than robots or technology can. Somebody in a retail store

might be cleaning the floor because a customer has spilled their coffee, and then they might be shelving a product, and then they might be answering a customer question, and then they might be ordering merchandise. So one hope I have is for us to recognize that these are the jobs that we have right now in the United States. More than 40 million people work in services, and these are the jobs we're going to have in the future.

In the United States, if you look at the job growth during the next 10 years, ⁓ of the five top occupations with the most job growth, three are frontline services. So this is where the new jobs are coming. So we don't have a choice. If you want to have a strong middle class, if we want to have people who have hope versus despair, we don't have a choice but to create high productivity, high motivation, high dignity.

and good job systems. So that's where my hope comes from.

Senthil (47:09)
Excellent. Zeynep, we moving to the last section. I will ask three final questions. We call this section how I did it. ⁓ I ask all my guests, these are fairly standard questions. ⁓ Moving beyond good jobs, these questions are about your own life, your own personal experience. First question, in moments of pushback or failure, what principle keeps you grounded?

Zeynep Ton (47:38)
I think understanding where I want to go and what matters most. I had this failure. I had a huge failure ⁓ in 2009. I was at Harvard Business School. I was up for promotion. And the academia system is up or out. And I worked so hard to get tenure. And ⁓ I didn't get promoted. And it was a huge failure. It was a big.

public career failure, I was so embarrassed. But what I learned from that failure was that I looked at my life, I looked at my work, and it made me realize what matters most. And so I keep reminding myself now whenever there are smaller big setbacks, like what are you trying to achieve? And now get up and focus on what you need to do to achieve what you want to achieve.

Senthil (48:37)
inspiring what you accomplished from there. ⁓ What's one skill today's business leaders often overlook but absolutely need?

Zeynep Ton (48:49)
I mean, one of the things that I had mentioned was ⁓ we're generating business analysts and not leaders who can connect the dots and think in systems. ⁓ every year, my students, the MIT Sloan students, MBA students, they have a last lecture. ⁓ And that last lecture is they ask a few of their professors to give a lecture. And it's more about life lessons.

And this is not necessarily skills, but it's more, what life lessons do you have for us as we graduate from MIT Sloan? And I've been honored to give that speech a couple of times now. And I always go to two things ⁓ to my students in terms of advice. And these are both big picture related things, which are also connected to the failure that you asked me because I learned about these things after the failure. ⁓ One of them is.

Make your work meaningful. We spend so much of our waking hours at work with our colleagues, a lot more with them than with our families. So make your work meaningful. Make an impact in the world through the work that you do. That's one message that I give my students. And then the other one, which is definitely not a business skill, but it's a life skill, is make sure you invest in your family and in your relationships.

Because at the end of the day, that's what matters.

Senthil (50:21)
That's very impressive. Thank you. Finally, is there...

Zeynep Ton (50:24)
And then

I'll say that for investment in people, investment in your family, in your relationships, I make a job because I use the good job strategy to create time for making those investments. So that's research related.

Senthil (50:41)
You mean to say the time for

oneself to invest in us? Is that what you're saying?

Zeynep Ton (50:46)
No,

if you, you know, so how do you, you have 24 hours in a day, just like other people, right? So, so if, if, if, if I say invest in your family, invest in your relationships, how do you make that happen? So, so, so I use the four choices of the good job strategy. For example, I'll just give you one of them, focus, right? Identify what matters most and say no to all the things that, that, that you can say no to.

Senthil (50:53)
Right,

Zeynep Ton (51:14)
⁓ Costco, I remind my students Costco has this term called intelligent loss of sales. They deliberately don't give certain things to their customers, even though it might raise sales for them. So I asked them, what's your intelligent loss of sales so that you can focus on what matters most and invest in your family at the same time or cross training. My husband and I are cross trained to do a variety of tasks. So we have that flexibility or standardization. So I use a good job strategy.

to enable the investment in people and in our families and relationships.

Senthil (51:48)
I love that. Finally, is there a book you find yourself recommending over and over again to your students or to the businesses you advise?

Zeynep Ton (51:59)
⁓ Yeah, there are numerous books that I've recommended over and over again for different purposes Like there's one that is life of a frontline worker called Rivethead from a GM factory from many years ago That's one book that I've been recommending for many years But I just finished reading a book and I'm to be recommended doing that book over and over to my students to other business leaders my MIT colleague Nelson Repenning

who is in system dynamics group, so you can understand why I'm attracted to his work. And Don Kiefer, his colleague, wrote a book, There's Got to Be a Better Way. And it's brilliant. It's about improving work to both improve performance and improve jobs. And they talk about how, you know, find a small but important problem and start solving that problem using the framework that they have.

And it's brilliant. I'm a huge Toyota production system fan, and I do a lot of work with Toyota. But they also make the Toyota principles so accessible ⁓ without overburdening people. So I absolutely love their book, and I think business leaders will find it so useful.

Senthil (53:16)
Lovely. Zeynep, I want to say your work is such a powerful reminder that dignity and profitability don't have to be at odds. It's such an honor to read your work, to listen to some of the speeches that are available in public and get an opportunity to discuss with you today. Thank you so much for taking your time.

Zeynep Ton (53:36)
Thank you so much, Senthil, for having me. Thank you. I enjoyed our conversation.

Senthil (53:42)
Excellent. For those listening, I highly recommend both of Zeynep's books, The Good Job Strategy and The Case for Good Jobs, if you're interested in reimagining what work can be. If you enjoyed this episode, be sure to subscribe, share, and leave us a review. Thanks for listening. See you next time.