Taking care of customers by taking care of employees, Part 2

A few months ago I shared on the blog some details about fast-food giant McDonald's recent improvements in both same store sales, customer satisfaction, and customer service, (think shorter wait times in the drive thru), that were largely attributed by McDonald's CEO to a series of comprehensive hourly wage increases for thousands of front-line staff.

For a quick refresher on that story, here is part of what I wrote back in March:

What if there was another, simpler way to improve customer service that didn't involve 'engagement' at all, but did impact those employees that are on the front-line working with and helping customers every day? You'd be interested in something like that, wouldn't you? What if it was as simple as cutting a check? Well, make that several thousand checks.

Check this excerpt from a recent Fortune piece - McDonald's Says its Wage Hikes Are Improving Service:

The hamburger chain in April announced it would raise the average hourly rate for workers at the U.S. restaurants it owns to $9.90 from $9.01 starting July 2015, with average wages climbing above $10 per hour by the end of 2016. The company also said it would allow those employees to earn up to five days of paid vacation every year following one year of employment.

McDonald’s CEO Steve Easterbrook, who took the helm in 2015, has since moved swiftly, closing hundreds of weak stores, bringing back all-day breakfast, and simplifying the chain’s menu, reducing bottlenecks in serving customers quickly.But improving the customer experience hinges on workers being on board with all these changes, hence the raises.

“It has done what we expected it to—90 day turnover rates are down, our survey scores are up—we have more staff in restaurants,” McDonald’s U.S. president Mike Andres told analysts at a UBS conference on Wednesday. “So far we’re pleased with it—it was a significant investment obviously but it’s working well.”

In October, McDonald’s reported its first quarter of comparable sales gains in two years. The company built on that growth with a huge 5.7% increase in the following quarter.

Wow, is it that simple? A general 10% across the board wage increase and sales and customer service both rise enough to offset the costs of the increased wages? That's it? Man, what took them so long to sort that out?

That was McDonald's story back in March, and if you read the entirety of the piece, you will see that I acknowledge that there were probably some other, and possibly significant factors at play that likely also contributed to the uptick in sales and improvement in customer metrics. But there can be little doubt that the wage increase had an effect as well, and I would argue, the most pronounced effect. 

Let's fast forward to earlier this week where Business Insider shared some details of another massive retailer taking a page from the McDonald's (as well as the Costco) playbook of increasing wages and improving training, and perhaps most importantly, concentrating on employee scheduling, (and not just to 'optimize' staffing levels) - none other than Walmart. What have been some of the effects of wage increases and overall heightened investments in people at America's largest retailer?

From the Business Insider piece: 

Walmart is becoming a better place to shop because it started paying employees more.

For many years, the company was plagued by widespread complaints about poor customer service at its stores.

That was until last year when Walmart, under pressure from investors following several quarters of same-store sales declines, decided to invest billions of dollars in wage increases and training for workers.

Specifically, Walmart committed to investing $2.7 billion over two years in higher wages, scheduling improvements, and employee training, following in the footsteps of companies like Costco.

Walmart's efforts so far have translated into a pay raise of about 16% to $13.69 per hour for non-managerial full-time employees, The New York Times reports.

In the meantime, widespread issues in Walmart stores such as empty shelves and cleanliness have significantly improved.Three out of four Walmart stores now meet the company's own customer service standards, according to the Times. A couple years ago, just 16% of its stores met those goals.

It turns out that paying people more may have made them better employees.

The piece goes on to mention, (like in the McDonald's situation), some possible other reasons for the improved results, and some alternative motivations for Walmart to make these investments in their workforce, but as in the McDonald's case, Walmart's leaders see a clear line between taking better care of employees and taking better care of customers, (and driving better top and bottom line results).

I think after these two cases, you get the idea of where I am going with this. I will end this piece with the same couple of thoughts I used to end the March piece on McDonald's:

Sometimes, maybe most of the time, we tend to over think what it takes to keep people (reasonably) happy, and give them a situation where they feel good about the work they are doing, and the customers that they are serving. 

You might not be able (nor necessarily should you), give everyone on the staff a 10% bump. But there probably is some other, simple, reachable change you can make that would serve the same purpose. It's out there. You can find it.

Just don't call it "employee engagement" and you will be fine.  

Have a great day, and if you hit up a McDonald's or a Walmart today, let me know how it goes.

PODCAST - Steve on the Infor Reinventing Retail Show

Wanted to share the information for a guest appearance I did recently with the really fun and interesting crew at the Infor Reinventing Retail podcast.

On the show, we talked about some of the trends, challenges, and opportunities that modern HCM technologies offer to retail organizations. From tools to better improve recruiting, scheduling, and making sure every HR and workplace technology is optimized for mobile today’s leading retailers know that investments in workforce management solutions that take advantage of these technologies are key when it comes to modernizing their businesses.

In this episode of the Reinventing Retail podcast, I talked about what role modern technologies are playing in today’s retail landscape, and how they’re set to change the global retail landscape moving forward.

You can listen to the show on the Infor Reinventing Retail Podcast show page here, or using the widget player below, (email and RSS subscribers will need to click through)

And you can learn more about Infor's modern workforce management solutions for modern retailers here.

Thanks to the Infor Reinventing Retail Podcast for having me on the show!

Have a great week!

Every business is a talent business, retail edition

Over coffee this morning I caught an interview with Macys CEO Terry Lundgren who was a guest on CNBC discussing the retailer's latest quarterly results, (which were surprisingly positive for a company that like many in the retail industry has been struggling of late).

During the interview about the positive results and momentum that seem to have buoyed the company in the 2nd quarter of 2016, one of the CNBC reporters questioned Lundgren about the key drivers of this shift and hopeful turnaround in Macys business. Here's the question, (paraphrased a little), and then Lundgren's response, which I found really interesting.

Reporter: :What is the most important thing you are doing to change the business, is it inventory management, is it physical changes to the stores, or is it the increased investment in digital and e-commerce?"

Lundgren: "I think the biggest single thing that we did was that we decided to invest in people and putting more people back on the sales floor in advance of the performance of the business. So it was a bet so to speak. In a retail business like ours with so many stores, the biggest expense you have is your salesforce on your floors. So investing millions and millions of dollars back into that part of the business before the business turned around was the biggest bet that we placed in the beginning of the 2nd quarter. That to me, because I am watching what we call our 'Magic Scores', which are our customer service scores every single month now improving and going in the right direction. And I think that investment in people has had the biggest positive impact."

There is a popular saying, I think that even has been repeated on this blog from time to time, that 'Every company is a tech company', alluding to the fact that transformative and disruptive technology-driven change has redefined business, markets, competition, service delivery, communication, and pretty much everything else. And while I do believe that sentiment is largely true, and the most successful companies will be the ones that can adapt to and exploit new technologies the fastest, we can't ever let the 'talent' part of the popular Culture--Strategy--Talent triangle go wanting.

Is was surprising and refreshing to hear the CEO of huge organization attribute smart investments in talent as the primary driver of what he and Macys hopes to be a sustained turnaround in business fortunes.

It's never all about new technology. It's never all about the best business strategy. And it's never all about assembling the best talent. It is all about finding the balance between all three, and knowing, as seems to be the case with Macys, when to shift investments and attention to shore up the side of the triangle that may be lacking, and the one that has the greatest opportunity to impact customers and results. 

Every business a tech business today. Sure.

But even if you don't buy that, you have to agree that every business ,truly, at the end of the day, is a talent business.

VIDEO: 56 seconds to drive home the importance of manager engagement

If you have not yet seen the 'Target manager fires up the employees on Black Friday' clip (it made the rounds pretty widely this week), then take literally one minute and check out the short video (embedded below, Email and RSS subscribers will have to click through).

The manager (Note: I could not verify 100% that he actually is the store manager, but from the content itself and the fact that no one else tried to stop him, I am going to assume he is in store leadership in some capacity), from a Target in Maryland, prepared his fellow employees for the start of the Black Friday 'battle' with a speech that echoed the stirring "This is Sparta" speech from the movie 300.

"Whatever comes through those gates, you will stand your ground with a smile on your face. They come here with bargains in their heads and fire in their eyes and we shall give those bargains to them."

Pretty cool stuff, if a little bit goofy. But the short speech illustrates, I think, a fantastic point about one of the topics that can be overly dwelled upon - employee engagement.

You, me, everyone else has written, seen presentations, and talked about employee engagement for years. And thanks to our friends at Gallup, (no comment on whether or not we should care about Gallup, just making a point), we are reminded, annually, that NOTHING WE EVER DO impacts overall engagement levels all that much.

And yet we continue to debate, discuss, even obsess about engagement.

But in all this copious amounts of words and attention paid to engagement we don't seem to think or talk or consider manager engagement all that much. And not managers as just another employee too whose engagement or lack thereof gets tallied up by Gallup or whomever runs your survey.

But manager engagement as it directly impacts, influences, and even helps change engagement levels of their teams - often, as is the case in this Target store, the front line staff that is the last mile in customer experience and satisfaction, well it seems to me we don't think about that much (or enough anyway).

This little one minute pep talk from the Target manager is a great example of the how one person's high engagement has the potential to have a multiplier effect on the team. He may have swung one or two or maybe even ten of the employees to get charged up to perform at a high level, to take care of the customers, and to even get engaged themselves.

Managers have the ability to influence a disproportionate number of staff every day. We should talk about manager engagement as much as we talk about employee engagement I think.

Have a great weekend! 

If we're all so original, why are there so many Starbucks?

Most of us like to think we are kind of cool, interesting, hip, unique, and not at all as boring and predictable as the next person. This kind of attitude is perhaps more prevalent in the USA, where the ideas of rugged individualism, conquering the great untamed land and staking your own claim are still a part of the national psyche. We don't like to conform. We don't want to be told what to do. And we often chafe at what we sometimes perceive as artificial or arbitrary rules, policies, or regulations.

So why in this nation of free-thinking, freedom loving, don't you dare tell me what to do, think, feel, say, or buy kinds of people do we have so much sameness? Every town has a McDonalds and Starbucks, (usually more than one), you can score a $5 dollar Subway footlong everywhere, and in town after town a seemingly limitless string of non-descript strip malls remind you that even though you may be thousands of miles from home you have not gone very far.

A recent post on the Psychology Today Ulterior Motives blog titled 'Why We Love Independence, Individuality, and Starbucks' offers some ideas as to this apparent paradox - why we will sometimes travel across the globe only to seek out a cup of joe from Starbucks that we can easily get in our home towns. After reviewing some recent studies on the topics of mobility, choice, and familairity, the author offers the following observations to attempt to explain the seemingly contradiction:

The independent lifestyle that we often lead in the United States creates great freedom. But that freedom comes at the cost of our connection to community. When we move from place to place, we disrupt our connections to family and friends. We also force ourselves to adapt to a new house and a new environment.

In those times, we tend to attach ourselves to things that are familiar as an anchor. There are lots of things that we might use for that anchor. One of them is the places we shop. Shopping at a familiar chain store after moving provides a sense of balance to counteract the chaotic feelings we might have as we try to re-root ourselves in a new home.

Ok, that makes some sense. If you have relocated, left most all of your familiar surroundings and friends behind, then seeking out the relative sameness of chain stores, shops, or restaurants does certainly provide a level of comfort, and anchor of sorts as the piece describes. You may not know anyone in your new town, or at your new company, but that grande mocha with whipped cream will taste exactly the same as the one you used to get every morning on your way to your old job. And that is, mostly, a good thing. It's assuring, it's safe, maybe it is even control when everything else around you seems out of control. Starbucks and McDonalds are on every corner because we want them there, not really because there aren't better places in every town to get coffee and hamburgers.

So what's the hook back to work, or human resources, or anything at all relevant to the folks that might read this post?

Probably not much of one. Perhaps only that it might explain a little bit of why those unique, remarkable, and innovative corporate cultures we hear so much about (Zappos, Google, Netflix, etc.), seem to be the outliers, no matter how much they are discussed and analyzed. For all their notoriety and acclaim, the vast majority of us never get to work for those companies, the ones that are the corporate versions of that incredible hole in the wall local diner that makes the best handmade burgers and fries. 

Most of us tend to spend out time at the corporate equivalent of the Starbucks. Good. Quality. Solid. And exactly the same wherever you go. And that is the experience we bring with us as we move through the world.