Salaries are an often-overlooked aspect of respect for people. We all know that money alone doesn’t make employees happy, nor does it make a lousy job or a lousy work environment rewarding. Money is considered a hygiene factor. But salaries are nevertheless important, and it’s high domestic wages that are usually blamed for the need to ship jobs overseas. However, Sophie Quinton on the Atlantic Cities website tells the story of several retail companies that are not only thriving in the US with its high salaries, they’re thriving while paying front line employees significantly more than minimum wage.

The average American cashier makes $20,230 a year, which in a single-earner household would leave a family of four living under the poverty line. But if he works the cash registers at QuikTrip, it’s an entirely different story. The convenience store and gas station chain offers entry-level employees an annual salary of around $40,000, plus benefits. Those high wages didn’t stop QuikTrip from prospering in a hostile economic climate. While other low-cost retailers spent the recession laying off staff and shuttering stores, QuikTrip expanded to its current 645 locations across 11 states.

Zaynep Ton of MIT’s Sloan School of Management points out that retailers such as QuikTrip, CostCo, and Trader Joe’s don’t view employees as a cost to be minimized:

They start with the mentality of seeing employees as assets to be maximized," she says. As a result, their stores boast better operational efficiency and customer service, and those result in better sales. QuikTrip sales per labor hour are two-thirds higher than the average convenience store chain, Ton found, and sales per square foot are over fifty percent higher.

These companies make trade-offs to compensate for their higher personnel expenses. Trader Joe's streamlines operations by limiting its product selection and seldom puts items on sale. Costco feels only slightly more luxurious than a warehouse, with products stacked on pallets. But (in my opinion, at least) consumers get a higher quality of service from friendlier, better-trained people than they do at, say, Wal-Mart.

Even if you’re not in retail – and especially if you’re not in discount retail – these companies provide a valuable lesson. Paying people a decent salary is an important form of respect. If you want to get the most out of these assets, it makes sense to show respect through decent pay.

I’ve been in many high-end sporting goods companies that don’t invest in front line staff – particularly customer service or warranty. These jobs are typically low paid, and people in these roles are often not well-integrated into the company: they’re seldom included at the start of the product development cycle, and their opinions generally aren’t solicited during the creation of marketing campaigns. Not surprisingly, turnover in these departments is high. And that’s a real loss to the companies, because these are the people with the most contact with customers.

Better wages (and better integration into the product and marketing functions) will yield surprising benefits. If it works at QuikTrip, imagine what it could do for you.

12 Comments