The Human Factor

Brian Elliott

CEO, Work Forward & Publisher, Flex Index

Frontline workers are humans with the same drives and needs as office workers.

Sounds fundamental, right? Unfortunately, I've been in settings where senior leaders debate this – focusing instead on "they'll leave for a dime an hour." Let's take "power" out of the equation – there's profit in understanding all your workers as humans.

The Neiman Marcus Success Story: Flexibility Meets Accountability

I'm thrilled to share this case study (also published by MIT Sloan Management Review). It's a story I've wanted to tell for years, and I'm grateful to CPO Erik Severson for his amazing work — and for sharing the story.

"We wanted a culture of accountability and results. We gave employees more flexibility and empowerment and, in return, got much higher engagement and higher performance." - — Geoffroy van Raemdonck, Neiman Marcus Group CEO

Neiman Marcus Group achieved industry-leading retention in frontline employees, higher productivity, and profit – making investors very happy last year. The secret sauce? Allowing flexibility – including for frontline workers – while holding people accountable for results.

The Results Speak for Themselves:

• 75% annual retention rate in store associates and 78% in operations (in industries that often see 80% turnover)

• Higher productivity and quality metrics in stores and operations

• Radical improvements in employee net promoter scores: up 34 percentage points from 2020 to 2022

• High engagement and retention of headquarters staff – even through an acquisition

Erik learned at Gap the power of applying programs like ROWE – results-only work environments – versus traditional monitoring. He faced the challenge of leaders relying on visual cues of "hard work."

"Some leaders instinctively believe that you had to reward people who put in the hours, even if some were poor performers. Those leaders ultimately admitted they passed employees along, as long as they showed up."

How They Made It Work:

NMG focused on "freedom about when, where, and how you do your work" with "the right to hold you totally accountable for results." They did away with the annual performance review and moved to quarterly reviews of progress against goals and professional development – and mutual goal setting for the next quarter.

Investments were made to enable flexibility in the frontline. Store associates and operations had more control over locations and departments, schedule flexibility and shift-swapping. They built tooling for associates to manage customer relationships and managers to tackle planning activities from home.

There’s a lot more to the story, including what it took to reinvent their performance management processes, the metrics they used to measure progress and results, and how they invested in guardrails.

The Research Backs This Up

While compensation matters, research shows that frontline and office workers share the same core values. Harvard's Ethan Bernstein found people quit primarily to:

• Escape dead-end or toxic environments

• Rebalance work and life

• Use their skills more effectively

• Progress in their careers

Sound familiar? These are the same reasons office workers leave.

Research led by BCG's Debbie Lovich discovered that employees who enjoy their jobs are 49% less likely to be looking elsewhere. When 45% of your workforce is looking around, that's a huge potential impact.

And as Wharton's Peter Capelli points out, the cost of turnover isn't just the administrative cost of hiring someone new – it's often a multiple of the position's compensation due to lost productivity.

Flexibility Isn't Just for Office Workers

One factor that consistently emerges in research is flexibility – something we discuss endlessly for office workers but often overlook for frontline staff.

For frontline employees, flexibility might mean control over their schedule, the ability to swap shifts for personal needs, and options to complete certain tasks (like training) from home

This isn't just an office worker phenomenon – it's a fundamental need in balancing careers and home lives for everyone.

The Power Dynamic Is Shifting

We're witnessing ongoing shifts in the labor-management power balance. Frontline workers have gained leverage post-pandemic and largely maintained it despite the softening job market for office workers. We've seen this manifest in unionization efforts at Amazon and Starbucks, and work stoppages like those affecting two-thirds of Park City ski resort runs during peak season.

That balance in the short term is now up in the air: Trump administration restrictions on immigration and deportations balanced against the rising threat of a recession driven by a trade war create massive uncertainty.

But long-term demographic trends favor labor power on the frontline: low population growth and aging populations decrease supply while increasing demand, especially for caregiving.

What's Next for Forward-Thinking Leaders?

Organizations that build and remain true to people-centric approaches will reap benefits as the power dynamic pendulum continues to swing. The most advanced companies are taking the next step – treating work as a product to be continuously improved.

The question isn't whether your frontline workers will respond to being treated like humans with agency and purpose – it's whether your organization will be among the first to profit from this reality.

A great place to start: who are your best frontline managers? Those with the highest retention rates and engagement scores are your role models and champions. Find out how your best frontline managers operate day-to-day. What does their start and end of shift look like? How do they interact with and communicate with associates? The answers might reveal your path forward.