As labor approaches 60% of hospital costs, many organizations are looking to decrease these costs to meet budgetary targets. These organizations are at a crossroads. Do they follow the strategy path toward good jobs or bad jobs?
Zeynep Ton, a professor at the MIT Sloan School of Management, studied service industries to better understand the two labor strategies companies use to make money. In her book The Good Jobs Strategy she describes the “bad jobs” strategy as one that succeeds at the expense of employees. These jobs offer low wages, scant benefits, and erratic work schedules. They are designed to make it hard for employees to perform well or find meaning or dignity in their work. Companies that follow this strategy will do anything to keep prices low.
Ton also describes a “good jobs” strategy where jobs provide decent pay, benefits and stable work schedules. Employees can perform well and find meaning and dignity in their work. Despite spending more on labor than their competitors in order to have a well-trained, motivated staff, these companies generate profits equal to, or exceeding those of companies following the “bad job” strategy. In addition, they are also able to compete on price.
Following the path of the “bad jobs” strategy in retail delivers shoddy products and services. Although inconvenient and frustrating, the end results are mostly manageable. In addition, many consumers may overlook such service and product shortcomings to obtain the lowest price.
In the healthcare industry, delivering poor services may lead to chronic illness, increased morbidity, or even death.