Tag Archives: part-time employment

Bottom-line Ideology Bites

The news-magazine show Sunday Morning had a fascinating piece this week on a new approach to debt collection. The story reported on a collection company that refuses to employ the typical tactics–harassing phone calls, threats and the like. Instead, the collectors work respectfully with the debtors, helping them to renegotiate what they owe and manage their finances more prudently. The founder’s basic premise: people would pay their bills if they had the money, and hounding them is unlikely to give them the means to pay.

According to the company’s owner, his firm is twice as profitable as those using the more traditional tactics.

Respect for people–what a concept!

Respect for the worth of one’s employees can also boost profits, no matter how counter-intuitive some “hard headed” businesses might find that simple premise.

I’ve written before about the difference between the approach of Costco and Sam’s Club to  their workers. Costco pays its workers, on average, twice as much per hour as Sam’s Club, and provides them with health insurance to boot. Yet it is far more profitable.

There is a self-defeating belief among some businesspeople to the effect that a healthy bottom line depends on cutting costs wherever possible, especially personnel costs. There is plenty of evidence to the contrary: employee turnover and disaffection can cost more than skimpy payrolls can save. That is a lesson that even Walmart appears to be learning. The company recently announced that some 35,000 part-time workers will be returned to full-time status–entitling them, not so coincidentally, to heath coverage as required by  the Affordable Care Act.

As Forbes reported, Walmart’s unwillingness to pay most of its workers a living wage has left the company without enough full-time workers to properly run a retail outlet. The result has been that the company has placed dead last among department and discount stores in the Customer Satisfaction Index for the last six years.

Furthermore, again according to Forbes, Walmart sales have been “sinking dramatically”–a state of affairs that even Walmart has concluded is the result of its relentless effort to avoid paying decent wages and offering health insurance.

This was a lesson learned by Home Depot in the early 2000s, when its CEO cut full-time staffing in hopes that the savings would boost the bottom line. It worked–briefly. Then customer service declined, and with it, same-store sales. Home Depot reversed course–and profits rose.

As the Forbes columnist noted,

Who  would have guessed that a well-staffed store filled with competent and reasonably paid employees might actually have an impact on the success of a company?