Facing a skill shortage? It may be time to consider Zeynep Ton’s “good jobs” strategy.

February 29, 2024

As businesses try to solve skills shortages by focusing on upskilling programs, they look for efficient and effective ways of finding workers who have in-demand skills. 

However, when pursued by itself, that approach may miss something important. Many jobs remain unfilled simply because they’re bad jobs—low pay, low job security, unstable schedules, no room for growth. Though companies may know this, they may see offering bad jobs as inevitable or necessary for keeping costs down.

For more than a decade, Zeynep Ton, MIT Professor of Practice at the Sloan School of Management, has been researching how companies succeed when they simultaneously offer good jobs and improve their operations.

While upskilling matters, leaders in business and education may stumble if they assume that skills shortages are caused solely “on the supply side (too few workers),” Ton argued in Harvard Business Review at the height of the pandemic.  This assumption “misses the more important problem on the demand side (too few good jobs).”

Across two books and roughly a dozen articles, Ton has shown that businesses—even in historically low-paying industries, like retail and food service—are more likely to succeed if they offer good jobs—jobs that have good wages, stable schedules, job security, and clear career paths.

Ton has called her approach “the good jobs strategy,” which outlines actions companies can take to improve their operations, lower costs, and lift profits while—and by—offering employees better jobs.

The good jobs strategy is based on the “expectation that well-paid, well-trained, well-motivated employees will generate even more than they cost,” writes Ton in her 2014 book The Good Jobs Strategy. “What makes them worth more than they cost is operational excellence.”

The basic principle of Ton’s good jobs strategy is easy enough to describe: businesses need to focus on both improving operations and investing in employees. But what does that look like in practice?

In The Good Jobs Strategy, Ton provides evidence that retailers succeed most when they make four “operational choices,” all of which need to be adopted together. While Ton discusses retail here, it’s easy enough to imagine how her advice could apply to other industries:

• “Offer less”—Less range in products, fewer promotional sales, fewer hours of operation.
• “Standardize and empower”—Create standards for employees but empower them to act flexibly.
• “Cross-train”—Train employees to do a variety of tasks so they can work where they’re needed.
• “Operate with slack”—The best companies tend to “err on the side of overstaffing their stores,” writes Ton, giving employees time to train and improve operations.

According to Ton, these operational choices enable retailers to (a) reduce costs, (b) serve customers better, (c) adapt to fluctuations in task demand, and (d) succeed at continuous improvement.

Ton’s strategy suggests that talent challenges can be reframed as also operational challenges. To invest in employees, businesses must improve their operations; and to improve operations, businesses must invest in employees.

Ton’s research is as relevant now as ever given that, even four years after the pandemic shocked labor markets, businesses are still fiercely competing for employees in many places. According to data from the United States released this February, there were 9.5 million job openings but only 6.5 million unemployed persons looking for work.

Offering bad jobs to reduce costs may simply not work anymore. “Companies using this approach”—which sees employees as a cost to minimize—“operate in a vicious cycle,” writes Ton in her most recent book The Case for Good Jobs. “Their high turnover causes poor operational execution, poor customer service, and low productivity.” In the end, bad jobs may be bad for business.

But Ton’s research could have social impacts beyond helping individual companies and their employees. She has written persuasively that creating more good jobs can grow economies while advancing economic and racial justice. Sustainable development across the world requires access to decent work, and Ton’s research may suggest a path forward.

In addition to research and teaching, Ton serves as co-founder and president of a nonprofit called the Good Jobs Institute, which advises leaders on developing a good jobs strategy for their organizations. Ton and the nonprofit she leads were also recently featured in MIT News. 

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