HEB, Costco, Trader Joe’s, and QuikTrip all made Glassdoor’s 2017 “Best Places to Work: Employees’ Choice” list, released in early December. These retailers pay better than many others and that counts for a lot in a low-wage industry like retail. But they also score higher on culture. What is it about their cultures that makes them such good places to work?
Over the past year, we hosted current or former leaders from each of these retailers at MIT’s Sloan School of Management, and all four talked about a corporate culture of setting high expectations and creating conditions that encourage employees to innovate. This drives improvement and customer satisfaction — and makes employees happy and eager to work hard.
For Craig Boyan, HEB’s president and COO , creating a culture of “restless dissatisfaction” drives customer service, employee engagement, and innovation. He likens his company’s culture to a favorite teacher — not necessarily the nicest but the one that set the bar high and pushes you to do better than you ever thought you could.
Every year, HEB gives its employees — whom it calls partners — a raise and then challenges them to earn it with innovative ideas. And every year, those partners come through; so the investment pays off. But this only works because HEB creates the right environment for engagement and empowerment, starting from the top. Craig himself spends considerable time thinking about how to make all employees, from partners to truck drivers, proud and engaged in making the company better.
For Boyan, the key is giving real power to store managers and partners. “Our store leaders run their business the way they know best, and each store and each department in each store is always looking to improve and evolve how we do things,” he said. “The key is pushing decision making to those who know best — partners in our stores — and having great leaders and partners to be constantly learning and working to evolve our business.”
This includes using the right kind of incentives. Finding that individual incentives created unhelpful peer-to-peer competition, HEB put more emphasis on those connected with team and store success. For example, it provides regional sales data to spur store-to-store competition.
For Costco founder Jim Sinegal, retailing is fundamentally a people business, which means it has to get the people part right. So Costco hires good people, teaches and pays them well, and gives them opportunities to advance. In return, Costco gets better productivity.
When Sinegal spoke in our class, he noted two pillars of Costco’s culture: First, it sets the highest standards for its employees. Second, it encourages employees to take ownership of their work.
Todd Miner, the meat manager of Costco’s warehouse in Waltham, Massachusetts, who also spoke in our class, is a perfect example of Costco’s culture. He started at Costco 12 years ago as a butcher and was promoted several times. He is now one of the three meat managers who set up the meat shop when a new store opens.
We noticed that Miner spoke as if the meat area were his own business. He described working day and night to make sure everything was perfect for an inspection. Even the floor drains were pristine. They thought they had nailed it — and in most companies, they probably would have. The Costco inspection team was impressed, but pointed out that a different kind of lightbulb would make the meat display look even better. For Miner and his team, the message was not that they could never win, but that there was always a new way to shine. They agreed with their CEO that high expectations and empowerment make employees more proud of their work and make customers more satisfied.
Costco pays its employees well, but as Sinegal said, you get what you pay for: Good pay means good things for the business. There is always a temptation to cut labor costs, which make up 70% of Costco’s budget, but as far as Sinegal is concerned, that is fool’s gold.
QuikTrip’s CEO, Chet Cadieux, highlighted two corporate values: be the best and — even then — never be satisfied. These values create a culture of high expectations and continuous improvement that starts with a rigorous hiring and training process and extends to job design and performance management. Tools like the Daily Activity Worksheet allow every store employee to know what he or she needs to do and when. Employees are also empowered to do what is best for the customer — from ordering merchandise to refilling a cup for free when a child spills a drink. And QuikTrip provides plenty of data to help employees understand and improve performance, from 360-degree performance reviews to open employee access to performance data from all stores to a rigorous mystery shoppers program.
Doug Rauch, Trader Joe’s former president, also mentioned the importance of empowering employees to do what’s right for the customers and for the company. Having employees’ voices matter, he said, is important to keeping them engaged.
Almost half of the companies on Glassdoor’s “Best Places to Work” list are tech companies, many with free food, on-site massages, or quirky Silicon Valley perks like game rooms and helicopter rides. But HEB, Costco, QuikTrip, and Trader Joe’s show that employees don’t need ping-pong tables to feel valued. They want employers who set high expectations and help employees meet them. They want a chance to come to work and make a real difference for the company and for the customers they serve face to face. Retailers who can provide this will create value for their employees, customers, and investors in 2017 and beyond.
Zeynep Ton is an adjunct associate professor in the operations management group at MIT’s Sloan School of Management and is a fellow at the Martin Prosperity Institute. She is the author of The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits. Follow her on Twitter at @zeynepton.
Sarah Kalloch is a research affiliate at MIT Sloan School of Management, where she works on spreading Zeynep Ton’s “good jobs” strategy for designing and managing companies’ operations in a way that satisfies employees, customers, and investors simultaneously. She previously worked in international development at Oxfam America and Physicians for Human Rights.
Article originally appeared on HBR