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The importance of world-class efficiency as wages increase

 23 August 2021     Donald Cooper 

Most of the business news I’ve read recently is about the challenge of attracting staff and how wages are increasing. Wage increases for front-line workers have been suppressed for many years, and they’re fed up.

Before the COVID-19 pandemic, 44% of American workers were making an average of US$10.22 an hour (Canadian numbers are more difficult to find – see note below). I challenge any business owner or manager to survive for a week on that kind of salary. On top of that, very few of these low-wage workers are in jobs with any opportunity for promotion, let alone an actual career. It has been a matter of ‘start at the bottom…and stay there!’

In addition, working conditions were often miserable. Frito Lay workers in Kansas walked off the job last month to protest low pay and 84-hour work weeks.

When the air conditioning broke down at a Burger King in Nebraska and the temperature in the kitchen rose to 90 degrees, the franchise owner did nothing to fix it so the staff changed the letters on the franchise’s roadside sign to read “We All Quit…Sorry For The Inconvenience” and walked off the job.

For the past 18 months, the Government of Canada has paid a lot of people a lot of money to do nothing. So, now, here’s your reality for the foreseeable future; good people will be even harder to find and wages will be going up – a lot. And it is for this is the reason you must focus, more than ever, on achieving world-class operational efficiency in every area of your business, including getting higher prices for your products and services. Most people don’t think of price increases as an efficiency improvement but getting paid more for delivering the same amount of product or service is definitely more efficient.

When it comes to employee efficiency, in most cases you are far better to have 10% or 15% fewer employees who are of higher quality, more motivated and more productive – and paid 10% or 15% more. Look for talent, not for bodies. Pay more and expect more. That’s the secret. ‘Pay more and expect less’ will kill you!

Then, how will you improve your processes and systems, your clarity and communication, your equipment, software and training to work smarter? How will you strengthen and improve your business culture, benefits and career opportunities to increase engagement and reduce staff turnover? Staff turnover is inefficient and a huge expense.

How will you reward performance and how will you deal with non-performance? What will you do to make it fun, rewarding and energizing to work on your team? Remember, the best people have to work for someone – it’s just that you have to deserve them.

Or, are you so tired, burned out, cynical and disorganized you struggle to energize and organize your team? If that’s the case, perhaps we should chat about ‘possibilities’.

Maybe it’s not just a matter of improving current processes. Maybe it’s a matter of inventing entirely new processes that increase efficiency and give you a competitive edge. Recently, I wrote about a Chinese construction company which built a 57-story skyscraper in just 19 days by perfecting a process for creating modular components in an offsite location and installing them, on-site, at the rate of three stories a day. What’s the ‘next best’ way of doing what you do? Will you create ‘the next’ – or be its victim?

Editor’s Note: The average retail worker’s hourly wage in Canada was C$11.98 during the first half of 2018 – the latest year for which data is available – according to Statistics Canada. 

Here’s something else to think about:

My friend, Elaine Froese, the Canadian consultant who helps farm families plan generational transitions ( once remarked: “If you’re a business owner or manager, is your refusal to ‘let go’ crushing the dreams, passion and development of your next generation managers – and dooming the future of your business?”

I have two Biz Coaching ‘spaces’ available for Fall 2021. If you would like to receive our Info Sheet on how this six-month one-on-one coaching program can help your business and your bottom line, e-mail me at [email protected].

Do loyalty programs work? According to several surveys, 77% of Canadians say they’re more likely to buy from businesses that have a good loyalty program. The average Canadian is a member of 13 loyalty programs, but actively participate in only seven of them.

Online shopping returns. On average, 30% of online purchases are returned, compared to only 10% of purchases from ‘brick & mortar’ merchants.

Lots to think about. That’s it for this week. Stay safe. Live brilliantly!

Cocoon by Sealy
This HGO article was written by:
Donald Cooper
Donald Cooper

Donald Cooper has been both a world-class manufacturer and an award-winning retailer. Now, as a business speaker and coach he helps business owners and managers throughout the world to rethink, refocus and re-energize their business to create compelling customer value, clarity of purpose and long-term profitability.

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Home Goods and its accompanying newsletter - HGO This Week - covers the furniture, bedding, appliances, consumer electronics, accessories, lamps and lighting and floor coverings product sectors of the big ticket home goods market in Canada. HGO is also a forum for the dissemination of market research and hard-hitting articles on best practices for Canadian retailers.

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