Instead of worrying about how to pay your staff minimum wage, you should worry about how to create great jobs, Zeynep Ton argues in her book The Good Jobs Strategy that I previously reviewed.

Ton made her points with a series of case studies. I talked about QuikTrip, a US convenience store chain, last time. This time it is worth highlighting her analysis of Mercadona, the Spanish supermarket chain.

Ton found out about Mercadona when she approached Zara, the highly successful fashion chain, to ask them how they managed their staff. “We simply copy Mercadona”, was the reply. Ton found that Mercadona had not always had a good job strategy. The successful strategy was the result of a deliberate choice of its chief executive Juan Roig.

Roig produced a nine-point model that success was built on. Broadly, it goes:

  1. Everyone is reliable. This means the company can rely on people to perform a task. If they can’t, the company will examine what obstacles impede them and how to overcome them.
  2. Anything that does not provide value to customers is not done. The company will constantly look for opportunities to reduce waste in its products and processes.
  3. Every company is an assembly line. The assembly line goes all the way from raw materials to the checkout. We’ll do whatever it takes to make the entire line work better.
  4. Have a scientific mind. Process and product improvement involves generating hypotheses, conducting experiments, collecting data, reviewing the results and then implementing change.
  5. Do it right first time.
  6. Everything can be improved.
  7. The company has to prescribe. We do not view ourselves as a retailer that offers all products to all customers. Rather, we have a responsibility to choose the best products for our customers. Store employees who become experts use their knowledge to recommend the highest-quality, most affordable or safest products to customers.
  8. Abide by the law.
  9. Convince, don’t defeat. Policies cannot be implemented by forcing an idea or task onto others. Explain the reasoning behind the policy, convincing colleagues rather than defeating them. Gaining consensus is preferable to winning the argument.

In Spain, Mercadona is winning the battle with the deep discounters. It pays new full time employees twice the minimum wage and 85% of its staff are full time. In 2012 it had 74,000 employees and a staff turnover rate of 3.4%.
Ton gives Mercadona as an example of how retailers can build success on the back of creating good jobs. To do this you need to master four operational disciplines:

  • Offer less
  • Standardise and empower
  • Cross-train
  • Operate with slack.

“We all have it in our power to help spread the good jobs strategy. In return, companies can increase their profits and growth in ways that create good jobs for people. The good jobs strategy is difficult but it is possible, profitable and very much worth the effort.”

Ton’s book, and the research that underpins her findings, will help you to develop your business and beat your competitors. It flies in the face of prevailing wisdom. You cannot afford to ignore the four great retail case studies that she uses to bring her ideas to life.