Smart companies treat employees well

[manning]

Perhaps the Disney board should give this consideration


Smart companies treat employees well

Sentinel Staff Writer
Posted October 10, 2004

What's Your Corporate IQ? How the Smartest Companies Learn, Transform, Lead, by Jim Underwood (Dearborn Trade, 256 pages, $22).

At first glance some readers may find it hard to believe the bold assertion by Underwood, a business professor at Dallas Baptist University, that Costco Wholesale "consistently gets better results" than its much larger competitor, Sam's Wholesale Club.

But Underwood, who also wrote the best-selling More Than a Pink Cadillac, an in-depth look at Mary Kay, provides the whys and wherefores of that remark later in his conventional-wisdom-challenging book.

Calling Costco "one of the ten smartest companies in America," Underwood cites an article, "The Only Company Wal-Mart Fears," in the Nov. 24, 2003, edition of Fortune that notes that Sam's Club has 71 percent more locations than Costco, yet as of Aug. 31, 2003, 5 percent fewer sales. The article also notes that the average Costco warehouse generates almost double the revenue of a Sam's warehouse.

Underwood lets Richard Galanti, chief financial officer of Costco Wholesale Corp., explain how the company achieves its stellar results: "We take what some might think is a pretty radical approach. Corporate America has really developed a downsized, efficiency, and cost-cutting mind-set, particularly when it comes to controlling labor and benefits expenses.

"Some companies control these expenses by figuring out how 'little' they must pay their employees and how much of the health care cost they can pass on to their employees. While we agree with the idea of cost efficiency, we believe the rest of that stuff is mostly about sacrificing the well-being of your employees in order to increase profits; we don't buy that. We believe you can do both."

Underwood wholeheartedly agrees that well-paid employees with the best benefits, caring management and unimpeachable ethics are a sure-fire formula for generating higher profits. He quotes Galanti again: "Our turnover is one-third that of the retail industry as a whole; that automatically reduces costs. I think that's a no-brainer. We get a lot of pressure from the Wall Street analysts. They seem to think we pay our people too well and that our profits would go up if we didn't. In the short term maybe, but longer term, we believe our strategy for hiring and retaining the best employees will help us to maximize earnings."

The average Costco full-time clerk or checker, Underwood writes, makes more than $41,000 a year after four years, and the company pays 90 percent of the cost of health, dental and vision insurance.

He writes that the nine other companies on his list of the 10 "smartest companies" in America hold similar beliefs about the importance of taking care of employees.

"They have little interest in sacrificing the well-being of their employees for the sake of profit. In fact, they all believe that profits will be increased if a company goes out of its way to treat every member of the team with the ultimate in respect and care, including compensation," Underwood writes.

The other companies on Underwood's list are: Dell Computer; Luxottica Retail, parent of Sunglass Hut, Watch Station and Lenscrafters Associates; Southwest Airlines; Agilent Technologies; Mary Kay; Microsoft; Kingston Technology; Fidelity Investments; and A.G. Edwards.

Cecil Johnson

Fort Worth Star-Telegram


WDSearcher, since you work at Disney what is your opinion on this?

 

[OnWithTheShow]

I am unclear why a Slantinel staff writer took a article by a Fort Worth Star Telegram writer and slapped their name on the top.

Anyway, it's pretty sad that corporations need a book to tell them this.

 

[exDS vet]

Disney should take a note, but they won't. The one thing about Disney that has always disturbed me is how they can manage to do so many things wrong. For this post, I will talk about Disney Store in particular.

I have never seen a more poorly managed company than Disney Store. What started out with such promise has turned into a black eye for the company and it's all the company's fault. TWDC invented an entirely new concept in retail back in 1987. For several years, the concept worked very well. By 1995, the company had Disney Stores in shopping malls all over the country and in various international locations as well.

As stores like the Warner Brothers store and others began to emerge with concepts of their own, Disney quickly began to fall behind. Then Disney began to license their product and characters to other retailers and the market began to become saturated with Disney product that was very similar to what was available at Disney Store. This also included The Walt Disney Classics Collection which became available in specialty stores almost everywhere.

By the mid 1990's there was very little originality in the Disney Stores. After Paul Pressler left the company to go to Disneyland, things began falling apart. It got to the point where most of the decisions made by upper management were the wrong ones. At the store level, managers were required to wear their "company hats" and support all decisions (good or bad) made by the company. Managers were not allowed to give feedback or voice their own opinions. Anyone who did so was branded a trouble maker and not a team player.

By the time Bob Bell (from the Gap) came to TDS, most of the damage had been done, but under his leadership things did manage to go from bad to worse. I can remember being at a meeting where many managers got to question Bell for about 30 minutes. He was great at evading the questions and changing the subject. He should have been in politics.

Bell introduced "Project GO", an in-store productivity initiative that was a huge disaster from the word ....GO! He also created the "new concept" stores that had a Gap feeling to them. That also bombed. Later, the other new concepts failed as well.

As the company continued to submerge, product began to go away and the warning signs, just like the sale signs were quite visible. Rumors were constant about stores closing. Many stores were closed and cast members who were told that they would be placed in new stores were left outside of the gates with no jobs and only memories of the stores that they loved.

Many long-time cast members were referred to as "dinosaurs". Most district managers knew that they would not be keeping these people but gave them false impressions anyway. These people included Regional Directors like Grace Douglas and district managers like Mary Glesener and many others. These were people who got out of dodge after they had caused all of the damage that they could.

To most people, the demise of Disney Store has been a bad thing. I doubt that Disney feels that way entirely. After all, they were able to get their name out there for over 17 years. At one point they had over 700 stores worldwide. They created huge exposure for the Brand, and were able to use their success to license their product to numerous companies which has secured them huge royalties for years, if not decades to come.

So hurray for Disney Consumer Products. They were able to create a brand and market it to the masses. They also tarnished an enduring symbol of family entertainment, and values by stepping on the people who helped to create the success (the Cast Members) and those who have and will continue to maintain it, the guests.

 

[WDSearcher]

Originally posted by manning
WDSearcher, since you work at Disney what is your opinion on this?

Well ... I've been working at Disney for over 15 years, and I'd like to think I wouldn't still be here if they weren't treating me well!

I've been a line worker (hourly with OT) and am now salaried management. And through all of those 15+ years, I have been consistently pleased with my relationship with the Walt Disney Company. Have there been times I thought the Company "did me wrong?" No, not really. But then again, I came to Disney from the non-profit sector where overtime pay was a pipedream and benefits were an anomoly. So for me to come to a place that paid me for overtime, gave me full medical and dental benefits, provided me with a pension (now a 401k), and even provided me with clothing to wear was better than good. Had I come from a company with comparable benefits, I might not have been as bowled over. But for me -- loved it! Still do, always have.

As management, I have a great deal of flexibility in my job, and an incredibly supportive team. If I need a few hours off one day for a volunteer project, no problem. If I need to come in late, leave early, take a longer lunch because friends are in town ... that's fine. As long as my work is done and people know how to reach me, I have a lot of freedom. That's not true in every department, of course, and it probably helps that I don't work directly in the parks, but I can find very little to argue with or criticize in my job. Even when I was hourly and everyone else would be grousing about higher healthcare or fewer hours, I was still fine with it all. But ... I also don't have a family to provide for, so less of a pull there too.

I look around at the complaints some of my WDW compatriots have (and in my area there are actually very few complaints -- we were shocked to discover there was a morale problem, and didn't know we had one until Roy Disney told us!) and they all seem to be trivial. Almost like people are reaching for something to complain about. Even when I was hourly, people would complain that we didn't make enough. OK -- more money is always better. But for the work I was doing and the skill level I had at that time, I was being paid plenty. And I still am. Or the complaint was that we had to pay more for healthcare. It'd be nice not to, but find me a company Disney's size where people aren't paying more for healthcare these days.

I like the people I work for and with, and have fun every single day I come to work. I have amassed a large number of vacation hours simply because I'd rather come to work than go on vacation. I enjoy it. I love my job and the fact that I can tell people I work for Disney. I like getting friends and family into the parks for free, and I like watching things like "IllumiNations" and saying to people, "I work for the company that does that."

Do I think everything Disney does is right? No. I can find just as much fault with the company as the next guy. But I can't in any way fault them for the way they've treated me as an employee.

 

[KNWVIKING]

I'm curious if you have any idea how Disney's hourly compensation compares with the local competition, ie SW & USF/IOA ?

 

[WDSearcher]

Based on info I have, it's comparable. During job fairs, Universal will often boast that they pay more than Disney, but then you discover that the benefit package isn't quite as good. It's still good benefits, but what they save on that, they put into hourly salaries, so it's kind of a wash. Whenever someone working at entry-level salary wants to try and get management's goat, they'll proclaim loudly, "I could make more money working for McDonalds!" I've never heard anyone here force a point by saying, "I could make more money working for Universal!"

I believe Disney performers are paid better, simply because Disney operates under Actor's Equity, whereas US/IOA and SW do not.