Exploitation Pyramid: Greed Kills From the Bottom-Up
Successful home goods retailer destroys self by cutting pay to people on bottom
A certain US-based home goods retailer is standing on the edge of collapse after a cost-cutting measure. (The business has not been named in this article to avoid providing free advertisement.)
The company has thousands of SKUs in its warehouse. The warehouse’s picker team was highly skilled at their jobs, exceptionally accurate and fast. Customer complaints regarding the packing and delivery of products were rare.
After a secluded meetings about profits, the higher-ups decided that the pickers were being paid too much money through the company’s incentive program that provided bonuses for accuracy and exceeding quota. As a result of this meeting, pickers no longer were to receive incentive pay, and instead were required to achieve a higher minimum quota. The attendants of the higher-up meeting had decided that the excellent work the pickers had trained themselves to do was the new minimum standard.
Pickers were angered by the pay cut that made the job financially unsustainable. The incentives had been crucial for supplementing the low base pay into a living wage. The position now paid poorly. Adding insult to injury, all inherently-excellent work that exceeded the quota was now uncompensated.
They were also angered that their internal motivation (to work quickly and accurately to obtain a financial bonus) had evaporated, and angered because an offensive value judgment had been made: the pickers’ motivation (and ability) to work exceptionally had been officially re-equated, redefined as “mediocre” by some people in a boardroom.
The pickers worked to meet their quotas as before, but they were no longer driven by an inner heat to excel past those numbers. The higher-ups responded by punishing the top pickers with write-ups. They knew the pickers could perform at exceptionally high standards, and attempted to coerce those workers to do so for free. The higher-ups threatened the pickers with decreased hours or termination if they refused to comply, believing that the pickers considered the jobs were worth preserving despite ever-increasing emotional and financial costs.
Those top workers declined to sign the write-ups and instead walked out of the warehouse and arrived at the doors of the company’s direct competitor, where they were immediately hired. The remaining top performers followed suit over the next week or two.
As this transpired, the company was unable to attract the same caliber of quality workers who had been motivated to excel. Instead of attracting and retaining the best workers, the company hired people who were not motivated to exceed, but instead to meet the minimal quotas.
Deliveries became delayed because of the short staffing and, especially, the loss of all of the best workers. Customers were dissatisfied because they received incorrect products after longer waits. The sales team had never experienced anything like this frequency and intensity of customer complaints before and greatly disliked the high emotional labor workload paired with zero pay increase.
The sales team complained to the higher-ups about the pickers. The higher-ups lectured the pickers about how anyone could do their job, as it was “entry level.” The higher-ups concluded by informing the pickers that they would be replaced by temp laborers. The higher-ups demeaned the pickers by saying the temp workers, at least, would be grateful for the work.
After a few months it was clear that the temp workers had few of the skills required to do the job excellently. The number of pick errors had increased drastically, and customers were abandoning the company in record numbers. Workers in sales continued to quit, as their complaints about the increase in uncompensated emotional labor had not been fixed. The company lost millions in business and has laid off half of its staff to avoid bankruptcy.
This scenario is what happens when a company decides to remove profits from the bottom of the human exploitation pyramid and topples itself. It is interesting to note that had the higher-ups held their profit discussions openly rather than in a secluded fashion, one of the pickers or sales workers in attendance could have explained how mandating that pickers donate their ever-striving-for-excellent physical- and mental labor isn’t sustainable. But companies who engage in exploitative practices must hold exploitation-derived profit discussions privately, lest the people being exploited interfere with exploitation efforts.
Smart organizations use consensus decision-making and invite those most affected by the decision to be part of the decision making process. Smart organizations also do whatever they can to support authentic motivation of its workers. Valuing cooperation, autonomy, and information-sharing are integral components for operating successfully in the new regenerative economy.