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Quality Jobs

The multi-faceted value creation initiative

Introduction

While there is no standard definition, a quality job is broadly defined as one that meets an employee's basic needs by paying a living wage, providing comprehensive benefits, reliable schedules, the ability for engagement, as well as equal opportunities in career development. Treating employees as assets, not liabilities, is crucial to maximizing profitability and operational efficiencies.

Myth:

Higher wages and company benefits negatively impact share prices

Increasing wages, offering benefits and other balance-sheet expenditures by corporations is often met with skepticism from investors who tend to view cutting labor costs as one of the quickest ways to maximize short-term earnings.

Fact:

Offering “quality” employment can improve company shareholder value

Over the long-term there’s evidence that exactly the opposite is true as poor job quality often results in higher turnover, operational inefficiencies and customer service problems each of which can result in higher costs and lower financial returns for many companies. 

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$3400

A disengaged employee costs:
$3,400 for every $10,000 earned
37% higher absenteeism
18% lower productivity
15% lower profitability

Source: Gallop, 2021

There is significant value creation opportunities by investing in employees. Studies show that reducing employee turnover by 70%, can increase productivity by 20%.

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Good company culture results in greater customer service

Higher paid staff help create a culture of hard work which often results in greater customer service and loyalty. Higher employee engagement (median difference between top and bottom quartile) is correlated with strong sales (+20%) and profitability +(21%). Even more importantly, about 70% fewer in safety incidents and about a 40% drop in absenteeism.

50%

50% reduction in employee turnover can increase productivity by 20%

Source: 1HBR, November 2017
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20%
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The vicious cyle

Professor Zeynep Ton, MIT professor and founder of The Good Jobs Institute, has extensively researched the concept of creating a virtuous cycle versus a vicious cycle at length in her book, The Good Jobs Strategy. Ton argues that if you provide your employees with living wages and make a high investment in them over the long-term it will lead to operational superiority as well as higher sales and profits. If effectively implemented, a Quality Jobs strategy dispels the myth that higher wages always lead to lower returns.

50% reduction in employee turnover can increase productivity by 20%

Source: 1HBR, November 2017
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Vicious cycle or virtuous cycle?

That is why investments under the QJ initiative seek to invest in companies which promotes workforce engagement, recognizes importance of all employees, and facilitates an adaptable business to meet market demands. In short, the rationale is that treating employees as assets, not liabilities, is crucial to maximizing profitability and operational efficiencies.

Virtuous Cycle

Quality Jobs

Vicious Cycle

Low Quality Jobs
Source: The Good Jobs Strategy, Zeynep Ton, 2014

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