New Year, New Attitudes? Maybe.

One of the most misused phrases in the corporate lexicon is "Human Resources". When was the last time that you felt that HR really cared about its "resources"?

Typically, it seems, we're just round pegs that have to be stuffed into whatever convenient square hole is handy, with as much force as necessary. And the number of holes keeps shrinking -- think Musical Chairs with a pink-slip "prize".

But maybe -- just maybe -- attitudes are starting to change. I've been thinking a lot about an end-of-the-year New York Times Magazine article, "Thinking Outside the (Big) Box", by Adam Davidson. In it, Davidson explains that "the most coldhearted, money-hungry capitalists ought to realize that increasing their work force, and paying them and treating them better, will often yield happier customers, more engaged workers and — surprisingly — larger corporate profits."

This is not the argument of some wild-eyed lefty mainstream-media pundit, but rather that of MIT Sloan School business professor Zeynep Ton and her colleagues (For more details, see Ton's Jan-Feb 2012 Harvard Business Review article, "Why 'Good Jobs' Are Good for Retailers"; preview available here; full article requires payment or subscriber registration).

As Ton argues, most retailers (and other businesses) count employees first as a cost. Reducing costs = improving productivity, which = greater profitability and high stock price. So it's simple: when in doubt, cut staff and/or pay.

But, Ton goes on, that's the wrong way to look at employees. Better-paid employees, with better training, are more invested in the business where they work, more willing in helping customers find what they are looking for, more interested in increasing overall sales. Ton writes,

In my analysis of data from 1999 through 2002 from more than 250 stores of Borders, a major bookstore chain at the time, I found that a one-standard-deviation increase in labor levels at a store increased profit margins by 10% over the course of a year. Research by Marshall Fisher, Serguei Netessine, and Jayanth Krishnan supports my findings: Their analysis of 17 months of data from a large retailer shows that for every $1 increase in payroll, a store could see a $4 to $28 increase in monthly sales.

Ton allows that the connection between increased staffing and higher profits is not a purely linear one. But, as Davidson notes, "Costco pays its workers about $21 an hour; Walmart is just about $13. Yet Costco’s stock performance has thoroughly walloped Walmart’s for a decade."

I think most of us have had the experience of leaving a big store in frustration, without buying anything, because we haven't been able to find what we were looking for, and there was no one there to help us.

Here's a personal example (I know, I know: statistically significant national sample of One. But bear with me, please): There are two hardware stores in my neighborhood, roughly equidistant from my house. One is a small neighborhood store; the other is a big-box. When do I go to the big box? Virtually never. 

I know that Small Hardware does not carry as many items as Big Box. I know that Small Hardware's prices are a little higher. If I were a contractor building a whole house, I would probably care. But I'm not. I'm usually at the hardware store for a few nails or some picture-hanging wire, a little wood glue or a smaller pair of needle-nose pliers. Small Hardware's salespeople know exactly where every item is, will walk me over to the correct spot (as opposed to saying, "Aisle 3, about halfway down, on the left, I think"), and will talk over the relative merits of pliers A versus pliers B. They also understand homeowners' small jobs well enough to ask, "Do you have the X that you'll need, too?" They have saved me time, money, and frustration again and again.

Henry Ford figured some of this stuff out 100 years ago, with his $5-a-day wage for factory employees. Maybe it's time to go back to the future....