How the Best Companies Win on People and Performance

One of the most deeply held assumptions in business is this: labor is a cost to be minimized in order to drive profitability.

It’s also one of the most expensive mistakes a company can make.

I’ve spent 20+ years working with organizations, retail, manufacturing, finance, running large-scale operations transformations and here’s what I’ve come to believe: you can have the best leaders, the best intentions, and all the right skills. But if you’re working inside a system that is inefficient and uncompetitive, it is going to be incredibly hard to make people flourish. The system will beat the intention every time.

That’s what drew me so powerfully to the work of Professor Zeynep Ton. What she’s built isn’t just a theory. There are companies actively leading it, right now, and winning. Not despite investing in their people, because of it.

What highlights this more than anything is that this isn’t just a human problem. It’s a systems problem. And there’s a way out.

Zeynep Ton is a professor at the MIT Sloan School of Management, founder of the Good Jobs Institute, and author of The Case for Good Jobs. She didn’t come to this work from HR. She came from operations and that matters.

Early in her research, she was studying retail supply chains. What she found shocked her.

Rotten tomatoes sitting in back rooms while shelves ran empty. Expired milk on shelves. Inventory data so poor that companies were losing sales, driving up costs, and bleeding money, all while believing they were running lean.

She started asking: why? Why is frontline performance consistently this poor?

The answer wasn’t laziness. It wasn’t lack of effort.

It was the system.

In every company she studied, stores with higher employee turnover had more operational failures and the root cause was Mindset: Labor is a cost to be minimized. That mindset creates a vicious cycle – pay below-living wages, run understaffed, demand maximum output. Meanwhile, performance collapses and the employees are blamed.

What is more, 45% of the American workforce, 50 million people, earn a median of $19,750 a year from their primary employer. When someone is working two jobs, skipping sleep, and worried about putting food on the table, you cannot expect them to show up with the focus, energy, and ownership that drives operational excellence.

I’ve seen this firsthand. I asked a manufacturer once whether they’d measured financial stress among their workers. They had and they knew, but had done nothing about it. Not because they didn’t care, but because they didn’t believe they could change it and still win.

Zeynep has spent two decades proving that belief wrong.

The Good Jobs System: Why You Can’t Cherry-Pick

What Zeynep documented across companies like Costco, Trader Joe’s, QuickTrip, and Mercadona isn’t a wellness program. It’s not a pay raise initiative. It’s a fully integrated system — and she’s clear: you cannot pick and choose. Every element depends on the others.

The system has two connected pillars:

• Investment in people, pay, schedules, career paths, and high expectations
• Highly productive and motivating work, the operational engine that makes that investment sustainable and competitive

Four operational levers drive that second pillar. Together, they create the conditions for high productivity, strong customer satisfaction, and low employee turnover.

1. Focus and Simplify

Costco calls it “intelligent loss of sales.” They deliberately give up variety, categories, and SKUs where they can’t lead on price. What’s left is a clear value proposition: highest quality merchandise at the lowest possible price.

Fewer products means frontline workers can become experts. Expertise creates pride. Pride creates motivation. And a simplified operation means smoother workloads, less variability, and fewer breakdowns in execution.

Compare Trader Joe’s with about 4,000 SKUs to a typical supermarket carrying 40,000. The Trader Joe’s employee can answer your question with confidence. They’re a genuine resource for the customer, not just someone stacking shelves.

When sales are down, this is what most companies do instead, they add. More SKUs. More promotions. More membership types. Each addition makes the system more complex, which drives up turnover, which makes execution worse. Sam’s Club was carrying 10,000 SKUs before their transformation. They started with 3,500.

2. Standardize and Empower

This is the Toyota Production System applied to service. Standardize the routine, involve people in building those standards and then empower them to make decisions – for customers, for operations, for continuous improvement.

Empowerment isn’t just about customer experience. It’s about trust. When employees are experienced, when they know their domain deeply, when they have stability you can trust their judgment and when you push trust to the edge, you’re building real competitive advantage in a world that’s moving faster than any head office can keep up with.

3. Cross-Train

Cross-training is transformational.

When a Trader Joe’s cashier line gets long, someone shelving merchandise rings the bell and opens a register. No queue, no waiting. When there are fewer customers, that same person is doing something productive. There’s no idle time, no surge problem.

But it goes beyond productivity. Task variety increases motivation and decades of organizational research confirm this. Cross-training breaks silos. It develops people and every company Zeynep has studied, e.g., Costco, QuickTrip, Mercadona, promotes almost entirely from within for operational roles. Cross-training makes that ladder real.

4. Operate with Slack

This is the most counterintuitive and the most powerful.

“Lean and mean is efficient.” That phrase should be retired. It’s not efficient, it’s expensive.

Think about manufacturing OEE. You never run a machine at 100% capacity, you know it’ll break down under sustained load. Now look at the calendars of every leader in your company. Count the empty space, there isn’t any and, if there’s no slack in leadership, there’s certainly none on the front lines.

When managers are understaffed, they stop leading, they start doing. They stop developing people, they stop thinking about improvement, they fight fires and the fires never stop coming.

Slack is what allows managers to manage. It’s what allows employees to improve. It’s what gives people time to think. Take that away, and you’ve hollowed out the system.

Here’s where I think we’re at a genuinely dangerous moment: AI is now enabling 20-30% of work to be automated. Most companies are taking that gain and loading people up with even more work. They’re not giving people their time back. They’re filling up the pipeline.

That’s the wrong choice.

The People Investment That Makes It Work

None of the operational levers above matter without stable, capable, motivated people.

Pay is not enough on its own. But its absence guarantees failure. Zeynep’s research is unambiguous: insufficient pay guarantees high turnover and guarantees that employees can’t focus. The question companies like Costco ask isn’t “what’s the market rate?” It’s “is this enough for our employees to live well and take care of their families?”

Costco’s average hourly pay is now over $32. QuickTrip’s store managers, managing 10 to 15 people in a convenience store, earn well over $100,000. These aren’t charities. Their stock performance reflects a system that works.

Beyond pay: stable schedules so people can plan their lives. Clear career paths that turn jobs into careers and high expectations, which Zeynep frames beautifully not as pressure, but as a gift.

People want to do their best work. Most organizations design systems that make that impossible, then wonder why engagement is low.

What AI Gets Wrong — and What the Best Companies Get Right

Amazon Go set out to run stores without people. No staff, pure technology. But it did not work. Behind the scenes, a large team in India was manually processing the video data. They didn’t eliminate labor. They just moved it somewhere less visible.

QuickTrip is using similar camera technology. But they’re not removing people. They’re removing the work of scanning products so their frontline team can actually talk to customers. To build relationships. To make someone’s day a little better.

Same technology, but a completely different philosophy.

I talk to CEOs every week. Many of them are watching the announcements of workforce reductions of 10%, 20%, 50% and feeling pressure to follow. The logic is seductive: AI creates efficiency, efficiency means fewer people, fewer people means lower costs.

But there are two things that math doesn’t capture. First: the long-term effect of a layoff on the people who remain. Research from Adam Grant puts it at four and a half years. You can’t undo that with a town hall meeting. Second: if you believe your only path forward is headcount reduction, you’ve already surrendered your growth thesis. If you truly believed in your company’s potential, you’d use that freed-up capacity to serve new markets, deepen customer relationships, and build something competitors can’t copy.

A Different Way to Compete

I started Happiness Squad to democratize flourishing, to help people live with more joy, health, love, and meaning and along the way, I realized something: you can have the best leaders, the best intentions, the best culture programs. However, if the operational system is broken, none of it lands.

Zeynep’s work, and the companies she’s documented, shows that there is another path. Not just for the workers, but for the business. Lower attrition. Higher productivity. Better customer experience. Stronger investor returns. A frontline workforce of 200,000 people, each one contributing daily improvements instead of just showing up and surviving.

That’s what it looks like when you treat people as the only asset that appreciates over time.

The companies doing this are building a competitive distance that will be very hard for others to close. The question is whether leaders have the courage to choose it.

If this resonates, go deeper and listen to the full conversation with Zeynep Ton on The Flourishing Edge podcast covering the Good Jobs System in detail, including the Sam’s Club transformation, the Toyota Production System parallels, and what separates companies that use AI to flourish from those using it to cut.

Learn more about ZEYNEP TON on LinkedIn.

Listen to the podcast with Ashish and ZEYNEP TON below, You can also listen on Apple Podcasts.

Access and subscribe to all of the episodes of the Flourishing Edge Podcast here.

Make Flourishing Your Competitive Edge.