May 25, 2011
QuikTrip Becomes Focus of Harvard Business School Case Study
BOSTON -- In a new case study on QuikTrip, Harvard Business School (HBS) professor Zeynep Ton goes behind the scenes to discover how the Tulsa, Okla.-based convenience chain manages to outperform its competitors while maintaining a loyal workforce of 10,000-plus employees.
What she found is that QuikTrip workers enjoy above-average wages, job security (the chain has never had layoffs), and benefits including health insurance, performance bonuses and paid vacation.
The QuikTrip case -- taught in the school's MBA course, "Coordinating and Managing Supply Chains" -- offers a blueprint on how retailers can combine the best of both worlds. In her report, Ton said the key is making the right operating decisions. "You can invest in your people and offer low prices," she said. "And guess what? You'll have a service advantage, too."
For QuikTrip, that advantage is evident to customers in easy-to-navigate stores with organized shelves, clean bathrooms and parking lots, along with quick, friendly service, she said. As a result, its 2010 in-store profit was almost double that of the top quartile of competitors.
Since its founding in 1958 by Chester Cadieux and Burt B. Holmes, QuikTrip has opened more than 500 stores in 11 metropolitan areas; 33 more are planned to open this year.
Ton said QuikTrip systematically makes operating decisions that are good for employees, customers and profits. One principle is simplicity. Instead of customizing stores according to market, QuikTrip uses the same store layout everywhere, along with limited product variety.
"The reduced complexity that results from these decisions leads to higher employee productivity and fewer errors," said Ton. "This standardization of stores and products also provides flexibility: QuikTrip can easily transfer employees and managers from one store to another."
The company also makes decisions that increase costs in the short term, but offer long-run benefits. For example, it invests in "relief employees," people who do not report to a specific store but are able to fill in for workers who get sick, take a vacation or have an emergency. These people ensure that the stores are never understaffed. QuikTrip also cross-trains employees for multiple functions, making it possible to shift employees as need dictates.
"Instead of constantly changing the quantity of employees in response to workflow," Ton observed in the report, "QuikTrip changes what employees do."
A daily activities worksheet lists tasks for each shift; managers can assign jobs to each employee, but more often than not the staffers are trusted to complete the work at their own pace. "The store is staffed knowing how long it takes to perform the various tasks," Ton said, explaining that employees frequently initiate a team-based, mutually accountable approach. "It's not uncommon for them to step up for each other if there's a sick child at home or another family issue."
Conversely, workers who aren't doing their part hear about it sooner rather than later, whether it's from a manager or coworkers. "Slow movers are not meant to work at QuikTrip," said Ton.
If an employee's performance isn't up to par, a manager investigates to find out how he or she can help (QuikTrip offers a variety of employee support programs). But if there are no real barriers and a worker's performance continues to suffer, the employee is cut loose.
The Harvard Business School report also highlighted QuikTrip's use of process improvement; the strong values held by its leadership; as well as its growth strategy for the future, particularly in North Carolina -- the next area the chain has targeted for expansion.
To read Ton's full report, click here.
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