Costco knows how to motivate lower-level employees: The company promotes from within 98 percent of the time. That practice pays.
“The fact that people are happy working at Costco translates into profit,” says author Jody Heymann. The retailer is profitable “because the shopping experience is so good,” she says. “It’s all about the quality of service. The quality is determined by the greeters, people who do checkout, [people who] stock shelves.”
Workers in lower-level jobs often are the public face of the company, Heymann says. Giving them clear career tracks—training and advancement opportunities—boosts their productivity and leads to better customer service. At Costco, the existence of career tracks means people who manage the floor have worked on the floor and know the business.
Another advantage: Career tracks for lower-level employees help employers attract and retain better workers, says Heymann, author of Profit at the Bottom of the Ladder: Creating value by Investing in Your Workforce(Harvard Business Press, 2010).
The call center operated by Xerox Europe in Dublin also employs many lower-level workers. Typically, call centers have high turnover rates, due mainly to low wages and the frustration of dealing with unhappy customers.
However, employees are staying longer at Xerox Europe’s call center because of career tracks, according to Heymann. “The company couldn’t do much to change the fundamental nature of the job, but people know if they stick it out there is a big payout.”
Xerox Europe’s managers rate the skills of lower-level employees and are willing to provide training to fill skills gaps. They also offer job openings first to existing employees; those who have taken training have the best chance to advance. All job postings are accessible online, and employees can browse listings at an on-site Internet café.
Advancement doesn’t necessarily mean moving up to a supervisory position. It can mean a transfer to a department that requires higher skill levels. For example, one of Xerox Europe’s service departments mostly hires employees who have gained experience in other departments.
Health care is another industry plagued by high turnover. Entry-level workers “jump ship for 25 cents [more] per hour. It doesn’t help anybody over the long term,” says Eleni Papadakis, executive director of the Washington Workforce Training and Education Coordinating Board, a state advisory body. It’s especially detrimental to patients, she notes, who do better with consistent care.
The board helps administer a pilot program in Washington state that trains low-wage home-care aides through apprenticeships. The pilot started with 250 workers and is scheduled to expand in January 2012, according to Charissa Raynor, executive director of the Service Employees International Union Healthcare NW Training Partnership. The program is a boon to employees as well as to employers, she says.
“It’s a paradigm shift for workers. Often, they don’t consider themselves professionals, but they come to see they are indeed professionals. It’s interesting to watch. We weave that into the training. We talk about professionalism, about career pathways.”
The value of establishing career tracks for lower-level workers might be evident to corporate leaders when there is a tight labor market. But what about when unemployment is high?
Employers are concerned that the labor market will become tight again as the economy recovers, Papadakis says. More important, during a recession “employers have less margin of error to work with.” They must be sure the people they have are motivated and have precisely the right skills.
Start with a manageable number of employees in a career-track program, advises Amanda Olive, the HR division’s classification, salary and policy manager at the North Carolina Department of Transportation. “Look at the resources you have,” she adds.
When her department was beginning its program, there were about 13,000 employees and only about 50 HR managers. It would have been too difficult to roll out career tracks for everyone. Instead, the HR professionals began with a “manageable subset” of about 1,000 transportation supervisors and about 150 law enforcement agents.
“A pilot is always a good way to get a snapshot view,” Olive says.
Plotting a Course
In the Washington state home-care apprenticeship program, basic training for home-care aides requires 75 hours. Advanced training takes an additional 70 hours. Apprentices who complete the program become certified home-care aides.
“The registered apprenticeship program has just recently gotten some traction in the health care industry,” Raynor says. “It allows the workers to have an advanced skill set.”
For aides trying to balance work, family and education, “time is the currency,” Raynor adds. The program’s format—a combination of online and workplace learning—is sensitive to people’s time pressures. “We do whatever we can do to make this time-efficient,” Raynor says. One critical factor: The program is competency-based. “Training does not duplicate competencies they already have,” she explains.
Online learning is important. But, Papadakis says, “We don’t want to suggest that we’re just putting learning online. Often, these are people who have been out of school for a long time. We want them to get as much of their education and training on-site as possible.” The program offers professional development and support through peer mentoring for the employees, who usually are isolated from colleagues because of the nature of their jobs.
At the North Carolina Department of Transportation, lower-level employees have had to cope with stagnant pay for years because of the depressed economy. Having defined career tracks helps employees identify what positions they want to work toward and gives them hope for a better future.
“We wanted ways employees could develop themselves so when the opportunities came up, they would be available,” says Amanda Olive, the HR division’s classification, salary and policy manager. Now, “we have more well-rounded, better employees that we can utilize in an expanded capacity.”
Training is voluntary, Olive emphasizes. Each interested employee sits down with his or her supervisor and a career coach to put together a plan based on the employee’s interest and the needs of the department.
Employees take classes to prepare them to lead and motivate, and meet several times with the coach annually. “At the end of the year, you see where you are, you see what additional training you want,” Olive says.
Getting Managers on Board
While workers appreciate the opportunity to move up, managers and supervisors may not relish losing their employees to higher-level jobs. But most managers in high-turnover industries are realistic, says Heymann. They know that anything they can do to retain employees becomes a benefit to the organization as a whole.
At Costco, most managers have been promoted to their current jobs. Sixty-eight percent of warehouse managers started out as hourly employees, for instance, so they know firsthand the motivational power of career tracks.
You may lose a percentage of people who move on to higher-level jobs, but you have everybody doing better work. “You have an immediate payoff,” Heymann says.
To get reluctant supervisors enthused about career tracks for lower-level workers, Olive recommends thoroughly educating them about the program. “We traveled across the state. We trained them on the benefits of the program, on why we were doing it,” she says.
“We did a lot more than give out handouts,” Olive continues. “We did role-playing. We did scenarios: ‘This is a smooth situation, and this is what it’s like when an employee and supervisor are coming from different angles.’ ” Career coaches also can act as mediators to bring together the needs of the department and the employee.
Make sure managers are involved early, advises Papadakis. “When we work with employers, we ask them to have conversations with managers, especially before developing the curriculum. So often, someone from above says, ‘We’re going to have this training,’ and supervisors and managers who are responsible at the end of the day are a little bitter.”
Instead of resisting, supervisors who are included early become coaches to employees, says Papadakis. “Employees do better in terms of learning but also in terms of promotion because they are viewed highly by their supervisors.”
Heymann says HR professionals in other companies can learn from the career track strategies of Costco and Xerox Europe: “They see the big picture. What stands out is their willingness to provide advancement opportunities for their least-advantaged workers.”
Managers at both companies understand what skills are necessary for advanced positions. They test and measure these skills themselves and provide their own training—Xerox, through a formal training center; Costco, generally through on-the-job training.
Regardless of the method, Heymann says, employees are better able to handle current positions, more motivated and more likely to stay with the company.
The author is a freelance writer in Arlington, Va., and author of Next-Generation Wellness at Work (Praeger, 2009).