Why most employers aren’t like Starbucks and Costco

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    Why most employers aren’t like Starbucks and Costco

    This article points out the facts as to companies that pay their employees low wages and benefits have poor customer service levels.
    You get what you pay for.
    Pay employes shit wages and crappy benefits, you employ unmotivated shit employees that provide shitty customer service.

    If those unnmotivated shit employees that provide shitty customer service don't like their shit wages and crappy benefits they can always go to work at some other company that pays employees shit wages and crappy benefits and provide shitty customer service there.
    Free market job market forces combined with trickle down economics work well in some cases as to ensuring shitty customer service and high rates of employee turn over.


    By Rick Newman

    Being a coffee clerk may not be a dream job, but Starbucks (SBUX) has added some kick to its line positions with a new program that covers college tuition for employees who meet certain conditions. And Starbucks, like Costco (COST), Whole Foods (WFM) and a handful of other enlightened employers, offers starting pay well above minimum wage, along with other benefits it probably doesn’t have to.

    Firms that offer employees above-market pay and perks usually contend it makes good business sense to treat workers well, since it boosts morale, discourages turnover and improves the company’s image. So why don’t more companies do it? The answer involves a combination of pragmatism, short-sightedness and sensitivity to Wall Street concerns.

    Companies basically fall into two categories in terms of the pay and perks they offer their workers: Those that view their workforce as a cost and those that consider employees an investment. It won’t be surprising to hear the overwhelming majority of companies take the cost approach. “The number of companies who treat employees as an investment is pretty slim,” says Lee Dyer, a professor at Cornell University’s ILR School. “When a company like Starbucks invests in its people, the reason it gets so much attention is because it’s such an anomaly.”

    Common traits
    The few companies that do make a point of treating workers better than average have a few things in common. First, they typically distinguish themselves in the marketplace through quality, service or some attribute other than low prices. That makes it important to have loyal, personable employees who make a good impression on customers and maintain quality control throughout the ranks. Starbucks, for instance, clearly doesn’t woo customers through discounts. Instead, it emphasizes a pleasant experience in its stores, which tend to draw businesspeople and others willing to pay $4 or more for a cup of coffee. “If you’re in the business of touching customers every day, you want a workforce that’s loyal and in a positive mood,” says Mike Van Ham, a principal with Buck Consultants.

    Hiring talented employees, even at the entry level, requires the kind of fairly sophisticated hiring operation many companies don’t have, either because they’re too small or they’ve never invested in it. It helps if the firm has centralized control of all its outlets, which is difficult at chains such as McDonald’s (MCD) or Subway, which franchise most of their stores. And most companies that feel strongly about high-quality employees have a founder who’s passionate about the issue and remains influential at the firm. That certainly pertains to Howard Schultz of Starbucks, John Mackey of Whole Foods and Jeff Brotman and Jim Sinegal, the co-founders of Costco. A knack for wringing good PR from employee programs — which some have accused Starbucks of doing with its new college benefit — doesn’t hurt, either.
    There have been dozens of studies showing the investment approach to employees can pay for itself, and then some — but only if it fits with the company’s culture and is institutionalized among managers at all levels. For starters, offering better compensation than competitors draws better job applicants.

    “It’s a way to pick out the best workers from the undifferentiated masses,” says Mark Pauly, a professor at the University of Pennsylvania’s Wharton School. “You want to avoid the workers who will shirk and keep the ones who won’t.” A well-known 2006 study by Wayne F. Cascio comparing Costco’s business practices to those of Sam’s Club — which aggressively works to keep wages and labor costs as low as possible — found “Costco’s productive workforce more than offset its higher costs.
    Last edited by Bowden; 06-20-2014 at 02:51 PM.
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