The Advisor’s Corner

For a couple of decades, I’ve struggled with a societal issue — and recently, I was pleasantly surprised to see it discussed in the book The Good Jobs Strategy, written by MIT Professor Zeynep Ton. Most of what I read related to new jobs that will be created by the plethora of technology businesses. Although that’s a great thought, for some time now I’ve been worrying about young people who aren’t destined for college and aren’t interested in or knowledgeable about technology.

As I reflected back to the 1960s and ’70s, I thought of communities like Warren, Michigan (where several of my relatives lived). The city was filled with neighborhoods where at least one parent — and often both — worked at one of the Big 3 auto plants. They could afford a nice house with a garage, two cars, maybe a boat and/or a travel trailer, and possibly a cottage in northern Michigan. Many of these jobs were unskilled manual labor, and today those jobs have been replaced by automation. For example, an automaker’s body shop typically encompasses 40 percent of an assembly plant, and it’s where the actual body of the vehicle is built. In today’s body shops,  you’ll see robots assembling the sheet metal parts and welding them together. There are actually very few workers, and the ones who are there are mostly highly skilled and responsible for keeping the robots maintained and functioning. Across America, there are many similar manufacturing facilities in a wide variety of industries.

So my question is, where are the jobs for the children and grandchildren of the auto workers?

At the same time, many of my current clients are complaining that they can’t get workers. Many of their unfilled jobs are entry level, with minimum skills required. I think Ton may be identifying a solution to match these two groups. She labels it the “good job strategy.”

Editorial Comment: Ton’s book is focused on fewer than 10 companies and features a variety of anecdotal stories. It doesn’t include the same type of rigorous surveying and data-gathering done by Jim Collins, Daniel Pink, Adam Grant, or Simon Sinek. Despite the limited research, however, she still provides a clear path forward for employers who want to adopt what she calls the good job strategy. The examples Ton bases her findings on are primarily retail, but as I read her recommendations, I believe they would apply similarly to many industries employing relatively unskilled workers.

So what is a good job? Among other things, it would pay enough to support a family (like those in Warren, Michigan, in the 1960s and ’70s); provide a stable and predictable work schedule (and, therefore, a more certain income); offer training;  arrange for good benefits including health care; and make available opportunities for advancement.

Another Editorial Comment: Twenty-five years ago, Robert Kiyosaki, in his famous book Rich Dad Poor Dad — which is still the No. 1 personal finance book of all time — made the statement that history proves that great civilizations collapse when the gap between the haves and have-nots is too great. He goes on to say that, sadly, America is on that same course because we haven’t learned from history. (Wow, this is coming from a very well-known, successful capitalist!)

Ton expresses her observations with the following cycle: High labor budgets produce a good quality and quantity of labor; in turn, that results in good operational execution, yielding high sales and profits — which then enables great companies to experience high labor budgets.

Based upon her studies and those of other researchers, Ton offers four operational recommendations that she believes increase great companies’ profits to allow them to provide good jobs:

1) Offer Fewer Products/Services,

2) Standardize and Empower,

3) Cross-Train, and

4) Operate with Slack.

Here are just a few comments on each:

Offer Less — Ton makes a very compelling case to offer fewer products/services. Her reasoning reminded me of Islands of Profit in a Sea of Red Ink — Why 40% of Your Business is Unprofitable and How to Fix It, by Jonathan Byrnes.

Standardize and Empower — These two approaches seem mutually exclusive, but Ton provides some very compelling examples of companies, like Toyota,  that have successfully deployed both.

Cross-Train — This one is obvious, but often overlooked.

Operate with Slack – This recommendation suggests a bias toward overstaffing vs. understaffing. I can personally relate to this one, since Plante Moran very successfully adopted this approach. It is almost imperative in a growing company, which I believe most of you want to be.

In conclusion, this is a very complex, multifaceted business issue. If it was easy, I wouldn’t be posting this blog. But I’d like to appeal to all of you great employers to get the book, read it with an open mind, and implement the concepts in your company.