The economic case for paying your cashiers $40K a year

[Scuba]

http://qz.com/65322/the-economic-case-for-paying-your-cashiers-40k-a-year/

The average American cashier makes $20,230 a year, which in a single-earner household would leave a family of four living under the poverty line. But if he works the cash registers at QuikTrip, it’s an entirely different story. The convenience store and gas station chain offers entry-level employees an annual salary of around $40,000, plus benefits. Those high wages didn’t stop QuikTrip from prospering in a hostile economic climate. While other low-cost retailers spent the recession laying off staff and shuttering stores, QuikTrip expanded to its current 645 locations across 11 states.

Many employers believe that one of the best ways to raise their profit margin is to cut labor costs. But companies like QuikTrip, the grocery store chain Trader Joe’s, and Costco Wholesale are proving that the decision to offer low wages is a choice, not an economic necessity. All three are low-cost retailers, a sector that is traditionally known for relying on part-time, low-paid employees. Yet these companies have all found that the act of valuing workers can pay off in the form of increased sales and productivity.

...

QuikTrip, Trader Joe’s, and Costco operate on a different model, says Ton. “They start with the mentality of seeing employees as assets to be maximized,” she says. As a result, their stores boast better operational efficiency and customer service, and those result in better sales. QuikTrip sales per labor hour are two-thirds higher than the average convenience store chain, Ton found, and sales per square foot are over fifty percent higher.

Entry-level hires at QuikTrip are trained for two full weeks before they start work, and they learn everything from how to order merchandise to how to clean the bathroom. Most store managers are promoted from within, giving employees a reason to work hard. “They can see that if you work hard, if you’re smart, the opportunity to grow within the company is very, very good,” says company spokesman Mike Thornbrugh.

[laundry_queen]

1. yep

companies vastly underestimate not only training costs but also hidden costs to high turnover and unmotivated workers.

Also, they underestimate the value of loyalty. When an employee is loyal because they see their employer will go the extra mile for them, they will be extremely productive employees.

In addition, there are some studies that show employees who feel worthless and underpaid will often try to 'even the score' by other means such as slacking or stealing. Especially in some retail, it is easy to steal a few things here and there. Even in an office environment, employees who feel like they aren't being paid enough will take paper home, use the photocopier for personal use, print things etc. All of these things are added costs. And, with higher wages, you are more likely to have higher quality applicants that are capable of holding a job for long term. The higher paying model is absolutely a GOOD alternative to the low wage model.

[Demeter]

5. or slandering their employer to potential customers

Although, it isn't slander when you tell the truth....

[AllyCat]

2. Wish I could rec more than once

[Mnemosyne]

3. See employees as assets, what a novel idea. nt

[groundloop]

4. I'd guess this has something to do with how well QuickTrips operate

I've never really thought about it 'til now, but every time I buy gas at a QuickTrip they're always clean, the cashiers get you in and out fast, etc. etc. They're definitely at the upper end of the scale for gas station/convenience stores. Gee, who'd have thought that decently compensated employees have anything at all to do with well run businesses and making a profit?

[1StrongBlackMan]

6. Two parts of this piece ...

literally had my head nodding:

The approach seems like common sense. Keeping shelves stocked and helping customers find merchandise are key to maximizing sales, and it takes human judgment and people skills to execute those tasks effectively. To see what happens when workers are devalued, look no further than Borders or Circuit City. Both big-box retailers saw sales plummet after staff cutbacks, and both ultimately went bankrupt.

And,

At the upper echelons of the American workforce, salaries have soared. Companies are accustomed to thinking of their highest-level employees as “talent,” and fighting to hire and reward people who will help grow the company.

The first is what has me hating every shopping trip, be it to the grocery store (except, the local Sprouts or wherever. If I can't find what I'm looking for, I can't buy it and I'm not happy about hunting for the product, then having to hunt for an employee to hunt for the product!

And, most companies have it backwards, as the real talent in the company aren't the ones assembling other people's work to make "high-level" decisions; it's the people doing the work that produces the data for those "high-level" decisions ... "Garbage in, Garbage out."

[paleotn]

7. That business model has been around for a long time....

....and predates Henry Ford, who's mentioned most often for adopting it. Some of the reasons why most businesses don't adopt it are herd mentality ("this is the way this type of business has always been run, so it's the only way that works&quot , focus on short term profits, greed and outright meanness. Studies have shown that when someone becomes really successful financially, they tend to want to pull up the ladder behind them. It seems like it's just a common mentality for the wealthy to pay shit wages to those they feel are beneath them. Luckily, a few decide not to fall into that trap, and reap the benefits of paying their people a good wage.

[BrotherIvan]

9. It's also accounting laziness and incompetence

I was in a meeting for a budget we had put together for a film. This big time producer--a title that used to mean something but now just means "jerk with money"--came in and we were discussing how to come in at the correct budget. This genius took a marker and marked on the summary page, smiled with satisfaction and said, "There."

He had marked out crew, lighting, and film stock. Those were the biggest lines on the budget so he just marked them out. Clueless.

These masters of the universe CEOs who think the answer to making ungodly profits is to fire everyone and pay crap wages. They don't ever look at why they have a million managers who do nothing. They don't look at inefficiencies or waste. They don't worry about doing the hard work of analyzing what sells and what doesn't. Nope. They just see the largest line, employees and their benefits and mark those out. Problem solved! Where's my bonus?

I agree with you that people just assume that to be a good businessman/woman you have to be ruthless. It's a movie stereotype. I'm glad to see articles like this, but I doubt it will catch on in a big way.

[xchrom]

8. Du rec

[Dustlawyer]

10. How did they forget this! Oh yea, greed and short term profits for one.

Being out of touch with the reality that if you don't value your employees they will do only the bare minimum to keep the crappy job and have a poor attitude to boot! Not having grown up doing the hard jobs, their 1st job is the one they got out of collage, they haven't a clue what makes workers tick!