TULSA, Okla. -- Companies are accustomed to thinking of their highest-level employees as "talent," and fighting to hire and reward people who will help grow the company. Retailers such as Trader Joe's and QuikTrip are proving that lower-level employees can be assets whose skills improve the bottom-line as well, said a report in The Atlantic.
The average American cashier makes $20,230 a year. But convenience retailer Tulsa, Okla.-based QuikTrip Inc. offers entry-level employees an annual salary of around $40,000, plus benefits. Those high wages do not stop QuikTrip from prospering in a hostile economic climate, the report said.
While other low-cost retailers spent the recession laying off staff and shuttering stores, QuikTrip expanded to its current 645 locations across 11 states.
Many employers believe that one of the best ways to raise their profit margin is to cut labor costs. But companies like QuikTrip, the grocery-store chain Trader Joe's and Costco Wholesale are proving that the decision to offer low wages is a choice, not an economic necessity. All three are low-cost retailers, a sector that is traditionally known for relying on part-time, low-paid employees. Yet these companies have all found that the act of valuing workers can pay off in the form of increased sales and productivity.
"Retailers start with this philosophy of seeing employees as a cost to be minimized," Zeynep Ton of MIT's Sloan School of Management told the publication. QuikTrip, Trader Joe's and Costco operate on a different model, she said. "They start with the mentality of seeing employees as assets to be maximized."
As a result, their stores boast better operational efficiency and customer service, and those result in better sales, said the report. QuikTrip sales per labor hour are two-thirds higher than the average convenience store chain, Ton found, and sales per square foot are more than 50% higher.
QuikTrip trains entry-level hires for two weeks before they start work, and they learn everything from how to order merchandise to how to clean the bathroom. It promotes most store managers from within, giving employees a reason to do well.
"They can see that if you work hard, if you're smart, the opportunity to grow within the company is very, very good," company spokesperson Mike Thornbrugh told The Atlantic.
There are also tradeoffs, said the report. Businesses that spend more on their workers have to cut costs elsewhere.
Click here to read the full report.
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