Talent Management Column

Good Jobs at Mike's Carwash

Good Jobs at Mike's Carwash | Human Resource Executive Online Better hiring practices and employee management can make significant differences in turnover, retention and engagement -- even in industries that have historically been seen as offering low-wage, high-turnover, dead-end jobs.

Monday, November 9, 2009
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In addition to the immediate story about the hardships of this latest Great Recession, the long-term and more important story to me is about the decline of good jobs for hourly employees -- jobs that pay reasonably well, are secure and offer prospects for advancement. 

The assumption we often make is that there are some jobs that simply have to be bad because they are low skilled. Therefore they end up being low-wage, high-turnover positions with no prospects for improvement. 

The last few years, I've been a judge of the Winning Workplaces*/Wall Street Journal best-employer competition. All these companies do well financially and do good by their employees, but I'm most impressed by those that do it in contexts that we usually think of as being bad jobs. 

And one of the worst of those has always been car washes, jobs where, as Bruce Springsteen put it, "all it ever does is rain," where workers quit as soon as they can find something better. 

That brings me to Mike's Carwash, headquartered in Fort Wayne, Ind., one of the winners this year. This isn't a Mom and Pop operation. It has more than 200 full-time employees, 37 locations and more than $50 million in revenue every year. 

Here are some amazing things about jobs at Mike's:

* Annual turnover of hourly employees is about 10 percent, average tenure is eight years and half the vacancies in the company are filled from within. In big corporations in the United States, in contrast, the percentage of vacancies filled from within -- a good marker for promotion prospects, is fewer than 33 percent.

* Mike's offers healthcare benefits, tuition-reimbursement programs, paid vacation, profit sharing and a 401(k) retirement plan to hourly employees.

* Entry-level employees get up to 90 hours of training, individual employee-development plans to prepare for promotion opportunities and are taught to understand the company's financial books, which are open to employees.

So how do they do it? 

This isn't some unique, high-margin "car spa" operation. It's a regular car wash competing with other low-wage, high-turnover car washes. Car washes start as low as $6.40.

They do it through better management -- especially better management of employees -- that leads to greater productivity and better overall performance. 

The hourly jobs at a car wash may not require a lot of education, but there is still more than enough discretion about how employees interact with customers to drive the overall customer experience. And Mike's competes, in part, by offering a safe, friendly and generally pleasant experience. So managing employees matters a lot.

Read this description of their efforts to reduce turnover, which is especially costly when you are doing a lot of training: 

"We analyzed the reasons people left, exit surveys, information that was uncovered and documented in interviews, as well as scores on pre-employment testing. It became apparent that our managers needed more training in the area of applicant screening, interviewing and hiring practices. We developed a program called Hire the Best. This program consisted of a full day of training for our managers, follow-up training in their workplace, the identification of 12 behavioral red flags that can be uncovered in the selection process, and new pre-employment testing benchmarks." 

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Better hiring led to a 25-percent reduction in turnover, which saved a ton of money and, among other things, allows them to make investments in training pay off. 

The company basically takes jobs that we think of as requiring little from employees and upgrades them to include teamwork and the skills associated with customer interaction. It holds local managers accountable for a variety of human resource metrics, including training outcomes, as well as outcomes from secret shoppers, customer-satisfaction surveys and other performance measures.

Mike's took jobs that are dead-end, bottom-of-the barrel positions elsewhere and turned them into decent, secure positions that offer the promise of promotion and a lifetime career. 

If it can be done in a car wash, it can be done anywhere. 

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School.

* Winning Workplaces does a lot of investigating of contestants, including interviews with employees, to make sure that the practices the company reports are real.


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