I am so excited to be here to talk to you about work that is not glamorous like cleaning bathrooms shelving Tomatoes picking up trash or bathing the elderly during the pandemic we call the workers who do this work essential because our world literally stops without them remember how we used to clap for them you know we've been talking a lot about AI robots but this work is also unlikely to be automated so these jobs are here to stay but a lot of people can do this work so the wages that are set by the market are low in fact Market pay is often unlivable pay and tens of millions of essential workers live in a vicious cycle of poverty and lack dignity which also hurts their companies take Janet a full-time arly manager at a retail chain even as a manager her low income didn't pay the bills for her and her son so she had to have a second job but she couldn't hold on to her second job because her work schedule changed all the time one day she might work from 5:00 p.m. to 9:00 p.m. p.m. the next morning her shift might start at 5:00 a.m. just imagine her life and imagine how little time she had with her son my life is always in a turmoil Janet told me she couldn't sleep amazingly though she still cared so much about doing a good job at work but even there she failed in front of her customers all the time one day she said to me customers were yelling at her her because the checkout line was too long some walked off leaving their full baskets the line was too long because there weren't enough workers at the store and so many of the workers who were there were new so they were slow and made a lot of mistakes they put the wrong product on the wrong shelf or left the expired milk in the fridge when customers cot mistakes at the checkout Cashers had to call Janet for help every time because they weren't trusted to adjust prices or even sold the smallest problems controls like that drove people crazy and wasted everyone's time Janet begged for more staff but her store's po performance meant even a lower Labor budget which meant more mistakes and higher turnover so she was always starting from Square One rehired ing retraining more firefighting you know these Dynamics are so common in labor intensive services like retail stores restaurants call centers nursing homes hotels that it seems like it's the only way for companies to keep their cost down but it's not you know it's true Janet's company isn't spending the money on labor but they are spending the money on rehiring retraining on Lost sales from long lines empty shelves and poor service on all the wasted products and wasted time now I'm an operations management professor at MIT we can't stand waste or inefficiency in operations so that's the reason that I began researching service operations 25 years ago but then when I met hardworking people like Janet who weren't making it their struggles got to my heart especially as an immigrant who believes in the American dream so figuring out how to improve company performance and jobs became my work Mission now luckily some companies have already figured this out so Jim Sagal Costco's co-founder and my business hero this is my class my MBA students are always so curious they say how can Costco the world's third largest retailer afford to pay workers so much more than other retailers and provide his customers the lowest prices here's how much Costco pays compared to other retailers huge difference and Jim's answer is always the same he says paying your fellow workers well isn't altruism it's good business Costco's employee turnover is a fra of the retail average 8% versus 60% and it 20year stock performance is so much higher than other retailers or S&P 500 you might say yeah but Costco is an exception Jim Sagal is brave and Brilliant and that's the only reason they can keep their cost low and wages high but it's not just Costco others like Maradona Spain's largest super market chain Quick Trip a convenient store chain with gas stations have also turned was typically considered low wage high turnover jobs into good jobs now these companies all pay their workers more because absence of sufficient pay guarantees High employee turnover but pay alone is not going to make Jan's job a good one and if all Janice's company did was to to pay workers more without raising their productivity then that would mean either higher prices or lower profits higher pay requires higher productivity and higher productivity requires better work here is how work at Janet store would be different if her store operated more like Costco or quick trip or Maradona everyone's priority would be the customer so when there's a long line at the checkout someone shelving merchandise would rush over to open a cash register because they would be cross trained when there are problems experienced cashiers will be trusted to Sol them quickly no need to call Janet for help they would also work fast not just because they have expertise but because corporate would do everything it can to simplify their work Janet store would also operate with Slack meaning having enough staff to take care of the customer minimize mistakes and do Improvement but operating with slack wouldn't work if there are Slackers right so so so the standards would be high and with turnover low Janet would have time to develop her team and improve performance now if you think about the work at the store it's still not glamorous and Janet will still go home home physically exhausted but not defeated she would feel valued and she would take pride in creating a lot of value so what makes a job a good one both for workers and companies is not this or that thing but it's a system it's a system with two interdependent elements one is investment in people pays schedules career path standards the other is work that's productive and motivating with simplification empowerment cross trining and operating with slack I want to make this system which I call the good job system the norm not the exception so to do that um I started a nonprofit called the good jobs Institute and I've been working with my former MBA students and and together we have now worked with more than 30 companies whose lead leaders wanted to adopt the system to win with their customers and we have seen small and large companies in different Industries do it a huge part of their success was their leaders ability to imagine the workings of their own good job system and have the courage to adopt it let me give you an example in 2017 John ferner became the CEO of Sam club which is Walmart's membership based model that competes with Costco now at the time Sam's Club was struggling and way behind Costco in terms of Labor productivity member satisfaction sales employee turnover John was Sam's Club's 14th CEO in 34 years imagine the performance pressure right to show results in a in a short amount of time one of the earliest changes that John wanted to make was to Race pay $5 to $7 an hour from a basis of $15 an hour for workers who cut meat who worked in Bakery who led teams but John got push back HR said don't do it last time you raised fate it didn't reduce turnover Finance said don't do it it's not in the budget there was no way for John to be able to prove with numbers that higher pay and higher pay alone without the rest of the system would pay off but he was certain that Sam's Club couldn't be a great company if they didn't raise pay you see to be loved by their customers their members they had to have a motivated capable team that can set up for Success that was impossible without reducing turnover and reducing turnover wasn't possible without raising pay because people were leaving for jobs that paid a couple more dollars an hour so just like Jim Sagal John could connect the dots between pay turnover productive work and competitiveness so he and his team took a leap of faith they raised pay and they did the hard bottom up work to improve productivity and jobs but when they announced the first pay raises some employees cried you know for workers like Janet a couple more dollars an hour is the difference between working one or two jobs it's the difference between getting enough sleep or not having a stable schedule is the difference between spending time with your son or not and for Sam's Club within the first two years labor productivity measured as units sold per hour increased 16% employee turnover dropped 25% for hourly workers even more for managers sales increased 25% without opening new stores this type of performance Improvement fueled more investment in people and record membership growth the one struggling chain is now a growth engine for its parent company Walmart which too is on a good job's journey and John fer got promoted to be the CEO of Walmart USA now I'm talking a lot about retail but it's not just retail at good jobs Institute we've seen similar results higher productivity lower turnover more love from customers and higher sales at restaurants call centers even at a pest control company the success of these courageous early adopters I hope will make it a lot easier for others to make a beted on their people you know when we think about high performance organizations our first instinct is often to fix the people right but it turns out what really needs fixing is their work and their pay the problem was never Janet the problem was the system that Janet was stuck in and if we see need jobs like hers not as deadend jobs but as good jobs that can provide dignity respect and a decent living we would have more engaged and productive workers we would have more competitive companies a stronger economy and a growing rather than a shrinking middle class tens of millions of essential workers would have hope instead of desperation and that will be a blessing for all of us thank you