Success Secrets and Stories
To share management leadership concepts that actually work.
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Success Secrets and Stories
How Industry Leaders Create Exceptional Frontline Managers
What makes a company's frontline management truly exceptional in today’s competitive landscape? Join us on "Success Secrets and Stories" as we reveal the key strategies that set industry leaders like In-N-Out Burger, Chick-fil-A, Trader Joe's, H-E-B, and Costco apart in fostering responsible organizational cultures. Our co-host Greg Powell, a seasoned HR expert, shares insights from Jake Warfel’s compelling LinkedIn article, highlighting how these companies effectively combat staff shortages and employee turnover. We'll explore the long-term perspectives and everyday actions that translate company values into high employee satisfaction and low turnover rates, even in the most competitive industries.
Discover the profound impact of frontline leaders through real-world examples from Costco, H-E-B, and Trader Joe's. Learn how Costco's principle of "doing the right thing" guided their response to a product mislabeling issue and how H-E-B's commitment to community service shone during Hurricane Harvey. John also delves into the concept of psychological ownership, illustrating how pride in one's role can drive exceptional performance, with examples from NASA and Trader Joe's. We’ll examine why competitive compensation and internal promotions are critical for reducing turnover and fostering growth. This episode is packed with actionable insights and stories that showcase the power of embedding these principles to shape a thriving organizational culture.
Presented by John Wandolowski and Greg Powell
Well, hello and welcome to the podcast Success Secrets and Stories. I'm your host, john Wanoloski, and I'm here with my co-host and friend, greg Powell. Greg, hey, everybody. Yeah, so in this podcast we're going to talk about frontline management concepts and how they work by developing an organizational culture and, in my opinion, the developing a responsible culture or an MBR kind of culture. And I've looked at different articles as we've gone through this podcast and I find a lot of very good information on LinkedIn, and this is an article from LinkedIn on July 11th of 2023. And it was done by Jake Warfel, and he is a senior manager at Bain Company. He has his graduate degree from Stanford and I was impressed with the article. It was insightful and there's a lot of elements of the MBR process that are intertwined in what he was talking about. We have Greg, and Greg has that experience in the human resource world. I think he found more in it than I did. Greg, why don't you start us off with a description of frontline leaders?
Speaker 1:Thanks, john, absolutely. Let's be real honest here. Frontline jobs can suck. Imagine this You're between difficult customers, the physical demands of the job, you're going to get limited pay and these roles are considered entry-level for a reason. There are positions that many aspire to start in, but they want to move beyond very quickly. But five companies have found a way to make frontline work great. Found a way to make frontline work great In an Outburger, chick-fil-a, trader Joe's, heb and Costco, calling them the frontline leaders. So they hold 36 Glassdoor Best Practices and Best Places to Work awards from the past 10 years. They've earned reputations as exceptional homes or frontline talent.
Speaker 2:And not a lot of companies can get on the glass doors, best places to work, and I think just that word entry-level almost forces sometimes HR people to think that they can get the lowest end of the pay scale rather than the entry-level of pay scale. Those words mean a lot in terms of what the job means and sometimes entry level is a barrier itself.
Speaker 1:So what makes the hair stand up on the back of my neck are two issues staff shortages and employee turnover. Throughout my HR career, those are things that are just haunting me still. But these workplaces that we're going to be talking about have even solved two challenges in the front line industries, and that is how to handle staff shortages and employee turnover. The front line leaders dominate recruiting right. They're just right out there where the ideal employee is when opening new stores, in-n-out and Trader Joe's can receive over 1,000 applications for just a dozen positions. Chick-fil-a accepts 0.2% of new franchise requests. So we all know how hot Chick-fil-A is, but you just can't get one at the drop of a dime. Heb applicants even resort to Reddit to find different ways to get into the company. And meanwhile US frontline job openings really are at an all-time high, and when employees join the frontline leaders, they stay Frontline leader. Employee turnover rates fall 50% to 80% below industry benchmarks. Turnover rates fall 50 to 80 percent below industry benchmarks In sectors where turnover costs as much as $6,000 per employee and outweigh profits by 40 percent. This ability to retain talent is a big deal. So how are frontline leaders creating such great places to work? What can those of us not in frontline industries. Learn from them.
Speaker 1:We talk about these companies. So, for instance, in-n-out Burger has been on the Glassdoor Best Places to Work Awards nine out of ten times. Nine times, essentially in a row. They were founded in 1948 and went into the privately held. But when you think of In-N-Out Burger, who are they competing against? They're competing against McDonald's, five Guys, carl Jr's, burger King.
Speaker 1:Next one on the list is Chick-fil-A. Yes, I do like Chick-fil-A. Nothing wrong with those waffle fries, right? Yeah, john too. And so they've been on that list three times. And here's a company that's got 2,900 locations. But if you like King's or Zaxby's or Kentucky Fried Chicken, the Colonel, right, they compete with them, but they're at the top. How about Trader Joe's out of Monrovia, california, 560 stores? They're competing against groups like Subway I'm sorry Safeway, and Bonds Whole Foods I'm sure you're familiar with Whole Foods of Syria from England. H-e-b. This company has been on this list of best places to work 10 times out of 10 times Out of San Antonio, texas, and you know some of the stores. They compete with Kroger, walmart, aldi and then finally, costco Eight out of 10 times Glassdoor Best Places to Work awards. This group's out of Washington and they compete against Walmart, sam's, club, bj's, etc.
Speaker 2:So in his article he talks about what he thought was interesting in terms of looking at culture, and he spent four years as a frontline employee on an on-campus gym. Years later, in his MBA program, he spent six months researching frontline leaders alongside Stanford's most experts on organizational culture. Their research revealed five actions that these companies take that differentiate their employees' experience. So the first characteristic, the first item item, was taking a long-term perspective. Chain extension is provocatively controlled to maintain culture and or service quality. Willingness to forego short-term profitability for the benefit of other objectives, and I'm going to try to put that into English they're trying to look at how to keep that organization together and it's not for a five-year or a 10-year mentality. They're trying to find a way that their approach, their culture, can be sustained.
Speaker 2:Translating values into action. The day-to-day decision-making clearly reflects the company's status. Stated values Leaders words are born out through, create, through concrete actions that are visible by the employee. A little bit of that is lead by example and they're expecting the people to be worth their word Whenever they, whenever they're giving recommendations or giving directives, that they would find that there's a trust that's developed between the employee and management. And talking about trust is really the next category, empowerment through psychological ownership, and really that's a lot of what MBR is based on is trying to develop that sense of responsibility.
Speaker 2:From his article, employees are made to feel their work has impact. Feedback from frontline workers is sought after, valued and implemented so that ownership means that they're involved. They're going to take the time to tell management that there's an issue. An interesting application of this is that they have a quality control approach. That I saw in Detroit on the assembly line when they wanted to try to get the quality to the next level. They could pull a lever and it was basically to bring them to an error and that employee on the line now had the ability to stop all traffic to make sure that that quality issue was being addressed. That's ownership, and they did a very good job by using that tool as improving ownership.
Speaker 1:Yeah, greg. So let's talk a little bit about compensation above market. So both hourly pay and other benefits exceed those offered by competitors. What does this really mean? If you want the best talent that will perform the best in the workplace, you need to pay them above the standard compensation, whether that's in base pay, whether that's in some sort of equity piece, whether that's in benefits, but what we used to call total compensation has to be above market if you want to attract and retain this kind of talent.
Speaker 2:And then promo from within kind of talent and then promo from within. The majority of companies manage and reach their positions through internal promotions. Now I'm just going to be honest. There's a little bit more structure that he put into his article on each one of these points, and I'm just going to we're just going to run down the line because I thought he did a very good job of supporting it. Those are some of the impressions that I got from the five actions that Greg and I had talked about, but in detail, number one is taking the long-term perspective.
Speaker 2:The frontline leaders have insulated themselves from short-term financial pressures. Most are private, family-owned and family. The author went into a little bit more detail. Frontline leaders insulate themselves from short-term pressures, from short-term pressures. Most of these companies that he looked at were private, family-owned and family-operated businesses that basically carry no debt and that also makes it a little bit easier to align to long-term goals.
Speaker 2:But the long view is critical. You know, anything in terms of short-term profits really can erode culture. You don't really want to have layoffs. You want to improve your financials but not at the expense of the employee base, since the you know group culture is rooted in the set of values that you're trying to develop in these organizations, for that long-term perspective that really can threaten the culture. They have to be consistent. Therefore, frontline leaders have chosen to moderate growth and refuse employee layoffs, and I've seen that, especially during the pandemic. They're trying to hold on to staff because there's an investment and a trust between those people that are working for the organizations. Chick-fil-a's founder Truett Cathy explained the most common reason companies fail is their desire to grow faster than they can manage. So frontline leaders have to make a commitment to the long-term game.
Speaker 1:Greg, why don't you take the next one? Thanks, John, and let me lead off with something that's an interesting quote that's been attributed to Peter Drucker. I'm not sure if he said it or not, but that quote is culture eats strategy for breakfast. Think about that for a moment, All right. Number two is translate values into actions. Do the right thing is Costco's defining motto.
Speaker 1:So in 2015, the company learned that they had this silk short-sleeved men's shirt 100% silk, right? No, it really wasn't actually 100% silk. And while this mishap could have gone easily unnoticed by customers and maybe they could have snuck it by doing the right thing, management concept made management act. Costco informed every member who had purchased a shirt of the mistake and awarded them a refund. Doing the right thing, leading by example, a culture of doing that sort of thing. And, like Costco, the frontline leaders pride themselves in living their values, and employees take notice of that. And in fact, we've talked lately about how companies are contributing back to the community. We had a situation with HEB where they responded to Hurricane Harvey, launching dozens of mobile kitchens and relief units across Texas. That remains core to how employees view the grocery store's value of service today. They didn't just talk about it. They actually did it. They put it in action.
Speaker 2:I saw a recent piece on the TV where they were talking about just that effect. That's happening in Texas, where stores are helping out with disaster relief. It's amazing that they create that kind of community interface, that community involvement.
Speaker 1:And John, good employees, the best employees, want to work for companies like that. Yeah, they do that right, they commit to that. Yeah, when employees see a value being backed up by action again some of that NBR stuff management by responsibility it can define a culture. So, for example, every Costco employee that they spoke to completely unprompted, brought up, do the right thing. So that's part of the vernacular, that model. The first interviewee even explained how the model helped him deal with a difficult customer that very morning. So it's a litmus, it's a filter, it's something that helps folks do their job better, provide employees with an irreplaceable source of collective purpose. John.
Speaker 2:Yeah. The next one is empowering through psychological ownership and this one is MBR 101. It's that line that Dr Durst talked about, taking responsibility, whether you like the results or not, and owning it is an essence of what this article also highlights. And he came up with some very interesting examples, like in 1962, jfk asked a NASA janitor what his role is and his reply was I'm helping put a man on the moon, mr President. And like that you can't find a better example of owning it than this janitor and the frontline employees having a higher sense of ownership. That's what you're expecting to go throughout the organization. You want that ownership and you can tell that NASA they did.
Speaker 2:Another example is like at Trader Joe's, where they expect the employees to do the taste test and then make recommendations to customers to determine how the area should be laid out. And it's interesting because they're trying to bring the employee in to be part of the process. It also signals that their work matters and it motivates them to do well. And the author of this article had somebody from Trader Joe make a very interesting quote. I'm in charge of the freezer section and that's my section. I choose how it looks, how it's restocked and how it's advertised, it's my work baby. So, greg, maybe you can take the next one on compensation Sure thing, John.
Speaker 1:Let's take a deeper dive on compensation above market. So, as we previously mentioned, stat turnover plagues frontline industries. It just does Double digits across the board. Aside from the business expense, turnover can also rapidly erode workplace culture because you're taking people out, bringing new people in before they get acclimated and adjusted, and you're expected to perform on the line. The frontline leader solution pay more. It's that simple, Not just in wages but benefits, and even consider profit sharing. Leading compensation is a key reason the frontline leaders attract and retain top talent, and that was explained by Trader Joe's founder, Joe Collum. He said time and again. I'm asked why no one has successfully replicated Trader Joe's. The answer is that no one has been willing to pay the wages and benefits and thereby attract and keep the quality of people who work at Trader Joe's. John.
Speaker 2:Yeah, and to compliment that, promoting from within is another element of proving that, of making it compensation-based. And it's interesting that compensation and the concept of promoting from within, which is the next point, they made the point that decent pay isn't enough, even at the frontline leaders' entry-level wages can hardly support a family, and bagging groceries get old. Eventually Employees need a path for growth. If the author applied at In-N-Out today, he would be eligible for precisely one job, a level one associate, the first in line in the store levels. It's also because the company had a strict approach in terms of promoting from within. In-n-out's refusal to consider master degree holding candidates for a potato fryer's job underscores its commitment to fostering upper mobility within its staff.
Speaker 2:Frontline leaders share the commitment and they have favor of internal promotions at every level. Offering employees internal career paths for the long haul is the secret to longevity of any organization. An interesting example of that was a company that I'm familiar with in support services, in basically housekeeping support services. Jamie Henry, the CEO of the organization, talked about how all of her management team was advanced internally. All of her management team was advanced internally and she only internally advances the team members, giving them opportunities for education, giving them opportunities for training on site. In the organization itself there's a real commitment in terms of trying to bring that staff to the next level, and they all gain from it at the same time. The culture is wonderful in her organization too. Greg, I think you had the next one.
Speaker 1:Thanks, john. So I'm going to give you a few statistics and see if I can put them in perspective for you. Results of the successful organizations was compared to their respective industry competitors. So I've got four different categories. I'm going to walk you through, give you an example, kind of a flavor, of who was in the top two and who kind of trailed a little bit. So when you looked at translate values to action, companies like In-N-Out and Chick-fil-A were in the top two out of about 10 companies. They were above Kentucky Fried Chicken, mcdonald's, burger King and Subway.
Speaker 1:When you think about empower through psychological ownership, again the best of interests I have in this company, in-n-out Burger, chick-fil-a were way above companies like Sonic, kentucky Fried Chicken, subway, et cetera. Competitive compensation, meaning above market In-N-Out, chick-fil-a. And again you look down the list and you might see Sonic, burger, wendy's, pizza Hut. And finally promote from within. As John was just talking about Companies that do that. Those frontliners are In-N-Out, chick-fil-a, taco Bell, burger King, arby's, wendy's fall way, way low. So these successful front-run incomes we're talking about lead these categories for a reason they're being very deliberate about how they translate the values to action empowering through psychological ownership, being above market, quality pay for quality employees and promoting from within John.
Speaker 2:So his next category is implications, implications of these five actions that are basically not random. They're connected to how frontline leaders have an unwavering devotion to their people unwavering devotion to their people. And again, chick-fil-a's founder Truett Cathy summed it up plainly the most important people in the business are our employees. Some people will say it's our customer, but if you create the right atmosphere where our employees enjoy their jobs and they have the opportunity for growth, they will get a kick out of their work. Then they'll feel that it will spill over to the customer, which is more than obvious by their results. Truett's insight reveals the frontline leader's commitment to the employee is more than just an effort to make their jobs better. It's a strategy. By prioritizing the exceptional employees' experience, these companies have also aimed to deliver exceptional customer experience. Her wisdom holds the whole idea of frontline leaders. To sit on top of the industry's customer satisfaction ranking is based on that. Naturally, this is a high level of satisfaction. That translates to customer loyalty, where we once again find frontline leaders ahead of their peers.
Speaker 2:Just to make it a little bit easier, he created something called the frontline flywheel and, being an old mechanic, I love the idea of the flywheel because it's a synergy of that force. When it starts to get started and starts to gain some momentum, it starts to create an action on its own. There's three key components called the company, the employee and the customer. So, if you try to break it down, the employee experience improves the environment for the company and for the employees. The happy employees create customer satisfaction. That customer satisfaction on the flywheel ends up being brand loyalty and share of the wallet and that benefits the company and the flywheel keeps going and going and going. That kind of synergy is what you're looking for and going. That kind of synergy is what you're looking for and you really get that from the point of all these other examples of working on the employee and making sure that they're engaged. So, in conclusion, of course this does not imply that the business should ignore their customers, but a relentless focus on customers that neglects employees forgets that the latter is essential in delighting the former.
Speaker 2:The flywheel relationship is particularly powerful in the frontline industries, as employees play a pivotal part in the customer's experience. However, lessons apply to companies and teams of all sizes. The flywheel explains why a professional service firm might focus on creating a differential culture to deliver strong client outcomes, or why a product leader might empower their engineers to dream up the next innovative solution to customers' pain points. Employees express a powerful level at any manager's disposal. It takes famously unattractive jobs to make them great, and frontline leaders have built in some of these industries' most enduring brands and customer bases. What might a better employee experience unlock for your team, and how can that frontline leader show you where to start? Well, that's basically taking ownership of what you have in your department, owning that experience and empowering the team. So, in terms of the last point and conclusion, the employee's experience is a powerful lever at any manager's disposal. By taking a famously unattractive job and making them great, the frontline leaders have built in some of their industry's most enduring brands and customer bases.
Speaker 2:I think this article does a very good job of talking about frontline and how it sets it up in terms of goals, expectations and needs. I love the idea of the flywheel. Greg and I talked about how we thought that this would be a very good piece of the next step of MBR. So we're talking about how it's being applied. So, if you like what you've heard, my book is available on Amazoncom and barnes and mobile. It's build your leadership toolbox success secrets and stories. The podcast is on what you're listening to, thank you, and also available in other popular formats. Dr durst's books and his MBR program is available on successgrowthacademycom. If you're looking. In terms of contacting us, we have a couple of ways. We have buy us a cup of coffee and you can leave us a note, or you can email me at wandos75.jw at gmailcom and Greg.
Speaker 1:I can be reached at gpowell374 at gmailcom.
Speaker 2:And the music is brought to you by my grandson. So we want to hear from you. We have a couple of ways to get get in contact. Love to hear what you think. Well, thanks, Greg.
Speaker 1:Thanks, john. As always, next time yeah.