More service-industry businesses are coming to realize that treating non-management workers with dignity and respect is going to win longterm. For example, here’s a restaurant that’s eliminate tipping in exchange for giving workers dependable schedule, living wage and benefits.
“He wanted to give employees health care coverage while also increasing efficiency to make it through the long run. Employees living off of tips and working ever-changing schedules were top on the list of inefficiencies.”
I was talking with a reporter earlier this week pursuing a theory that most of the on-demand economy startups would work only if they used contractors to keep pay and benefits low. While I’ve definitely encountered some pitches where margin comes primarily from making depressing assumptions about labor costs, many use contract and part-time labor not to avoid payroll taxes and benefits, but to avoid fixed costs – ie to keep customer SLA consistent through peak and slow times. It’s Labor as a Service – you can dial the knob up or down based on customer demand. For example, the on-demand parking startups surely have peak hours.
At Homebrew we’ve backed two on-demand startups, both of whom have made investing in their 1099s part of their core values. Shyp looks to pay a fair wage, provide mobility paths into full and part-time employment with benefits, have given company equity to certain of their warehouse job classes, and so on. That’s why it doesn’t surprise me that TechCrunch’s Josh Constine encountered a happy Shyp team member who, along with the rest of his bandmates, works for the company when they’re not touring.
Similarly, Managed by Q, out of NYC, provides their Operators health benefits and open career paths to become team leads, new Operator trainers, and so on. Q is a modern office management service which allows companies to schedule cleaning, maintenance, supplies, etc through an iPad, and their Operators are the folks who deliver some of these services to clients.
It’s not just the ‘right thing to do’ – these founders believe it’s how they’ll attract and retain talented employees. In a world where we focus on pixel-perfect design for you app, how can you not deliver ‘pixel-perfect’ service quality when the workers delivering your services interact with customers?
And, just in case the world doesn’t move as fast as Shyp and Q do, we also invested in Even, which helps part-time workers with steady employment, but uneven week-to-week schedules, stabilize their take home pay.
Employment footprints are changing quickly, driven by the shift from Industrial Capitalism to Technology Capitalism. There will be dislocations, disruptions and new types of skills required from people. Homebrew thinks some of the most exciting companies will be built on top of helping manage this transition effectively and humanely.