book.chapter Operational decision strategies

To implement the good jobs strategy, companies must focus on operations that enhance employee productivity, cut costs, and prioritize their workforce's role in success. This involves four interconnected operational choices, which must be applied collectively, not separately. Limit choices, enhance focus In the retail industry, the prevailing belief is that offering a wider array of products and frequent promotions is the key to success. However, retailers who adopt the good jobs strategy take a different approach by intentionally limiting their product range to focus on quality. This strategy, which might seem unconventional at first, often leads to reduced costs and higher customer satisfaction. Costco serves as a prime example of this approach. Despite its minimalistic store design and limited payment options, costco offers a restricted selection of brands for its products, fostering over three million dedicated customers. The traditional retail mindset of "more is better" can lead to several challenges, including increased stock-outs, complex inventory management, higher inventory holding costs, and escalated supply chain expenses. This complexity can degrade customer service and confuse customers rather than providing them with value. Research indicates that too many choices can overwhelm consumers, leading to dissatisfaction or indecision. By offering fewer options, companies can meet customer needs more effectively without sacrificing sales. This approach requires companies to be meticulous in selecting their offerings, ensuring they align with customer desires. Acting as a customer advocate, retailers can research and curate a focused product range, reassuring customers that they don't need to make hasty purchases during sales. Limiting promotions can also simplify business operations and reduce costs. Frequent sales and deals, while potentially boosting short-term sales, add complexity and operational challenges. By offering fewer products and limiting promotions, retailers can enhance operational efficiency, improve employee understanding of customer needs, and foster a sense of job security among their workforce. This strategy demonstrates that less can indeed be more, provided that the offerings closely match what customers truly want. Empower through standardization Standardization is a key component in streamlining business operations, ensuring consistency in customer experiences, and reducing costs. By establishing clear standards for routine tasks, employees can focus on executing these tasks efficiently rather than spending time figuring out how to perform them. This approach not only enhances productivity but also facilitates better training for employees, as standardized tasks are easier to teach. For instance, in retail environments where tasks are not standardized, new employees may struggle to adapt, negatively impacting labor productivity. On the other hand, standardization can sometimes lead to a rigid adherence to procedures, which may not always align with the needs of individual customers, potentially resulting in decreased customer satisfaction. This is where empowerment plays a crucial role. Empowerment allows employees to use their judgment to meet customer needs effectively, making decisions on the spot without needing managerial approval. This approach is particularly beneficial in service industries, where customer needs and preferences can vary widely. However, empowerment requires a high level of trust in employees' decision-making abilities and a significant investment in attracting and training high-quality staff. The challenge for businesses is to find the right balance between standardization and empowerment. This involves identifying which tasks should be standardized and which should be left to the discretion of empowered employees. Successful companies, such as ups, costco, and quiktrip, have managed to strike this balance by standardizing routine operational tasks while allowing flexibility for employees to address unique customer needs. Achieving this balance requires hiring competent and confident employees, continuously investing in their training, monitoring performance through universally understood metrics, and providing incentives for continuous improvement. By combining standardization with empowerment, companies can maintain control over quality while fostering an environment that encourages innovation and adaptability. Enhance mobility with cross-training Businesses often face the challenge of fluctuating customer demand, which can be influenced by various factors such as weather, local customs, or external events. To manage this variability, businesses typically adopt one of two strategies: offering incentives to attract customers during off-peak times or adjusting their workforce to meet the changing demand. The latter approach, which involves cross-training employees to perform multiple roles, is increasingly recognized as the more effective strategy. Cross-training allows employees to switch between customer service and back-office tasks as needed, enhancing flexibility and efficiency without the need to frequently adjust staffing levels. This approach not only improves labor productivity by keeping employees engaged in useful tasks during quieter periods but also enables businesses to enhance customer service and sales without increasing their headcount. Furthermore, cross-training benefits employees by providing them with greater job security, job satisfaction, and opportunities for development, which in turn can lead to higher morale, fewer mistakes, and greater pride in their work. This positive impact on employees can also benefit the company by making it a more attractive place to work, aiding in talent recruitment, and signaling a commitment to employee development. The concept of cross-training is not limited to retail environments but is also practiced in manufacturing settings, such as toyota's assembly lines, where it contributes to flexibility, employee engagement, and a better understanding of the production process. Overall, cross-training is advantageous for employees, employers, and investors alike, and its broader adoption could lead to significant societal benefits by promoting better job opportunities and business practices that are more profitable, productive, and innovative. Innovate with operational flexibility Overstaffing might seem counterproductive, but it can actually enhance operational efficiency. When employees aren't constantly rushing, they make fewer mistakes, leading to long-term cost savings. A well-staffed operation allows workers to establish efficient work patterns instead of constantly reacting to tasks, which fosters a more productive environment. Additionally, employees have the opportunity to contemplate improvements and suggest ways to reduce waste, contributing to ongoing enhancements that can significantly impact the business. Calculating the costs of understaffing can be challenging due to intangible expenses that are often overlooked in cost-benefit analyses. In industries where understaffing costs are exorbitant, such as airlines, healthcare, and education, companies hire extra staff for contingencies to avoid the high costs associated with service disruptions. Smart businesses understand that the costs of understaffing outweigh those of overstaffing. By combining standardization with employee empowerment and cross-training, these companies can better predict workloads and encourage continuous improvement. For instance, zara, the spanish clothing retailer, exemplifies this approach by using daily feedback from store employees to quickly adapt their product offerings and store displays, leading to increased revenues and a highly responsive supply chain. Empowerment and employee involvement are crucial, but they must be supported by a system that allows for the implementation of improvements. Trust between managers and employees is essential for this process to succeed. Companies that commit to no lay-offs and encourage employee suggestions without the fear of job loss create an environment where efficiency and competitiveness can flourish. Operating with slack not only benefits employees by allowing them a balanced work-life and the ability to contribute ideas, but it also benefits customers through better service and employers by fostering a workplace where hiring decisions are not made in haste and good ideas from staff are encouraged and utilized.