Abstract for: When Does Paying More Pay Off?
Can well-paying and satisfying jobs accompany, or lead to, profitability in low-cost service sector? While the value of human resource practices that promote employee satisfaction are established in skilled jobs, extensions to low skilled work in service industry remains uncertain. Building on qualitative data from a large set of cases, mostly in retail, we map out the systemic feedback mechanisms that could enable good jobs in services. A dynamic simulation model of these mechanisms is then built to assess the viability and boundary conditions of good jobs. In a strategy space defined by two dimensions of task richness and compensation, two distinct local profitability peaks emerge: one with low compensation and task richness, representing employee cost minimization, and the good jobs peak with high compensation and task richness. Simulations establish the conditions under which each peak dominates, and the challenges of moving to the good jobs peak due to temporal tradeoffs.