Page 16 - 2019 Delegate Assembly Conference

FROM PLANNING TO ACTION
Preparing for Minimum Wage
Increases
Speakers: Ed Durkee, President and CEO, Goodwill
Central Coast (Salinas, CA); Daryl Campbell, President
and CEO, Seattle Goodwill Industries, Inc. (WA); and
Denise Ost, President and CEO, Goodwill Industries of
San Joaquin Valley (Stockton, CA)
As more U.S. states, counties and cities move
to raise their minimum wage rates above the
federally mandated $7.25 an hour, the ensuing
impact has challenged Goodwill's social
enterprise model, where more than 50 percent
of a local Goodwill’s revenue goes to labor.
But, with careful planning, strong collaboration
with local boards and a willingness to keep
laser-sharp focus on core competencies, some
Goodwill organizations have developed sound
policies to absorb the impacts and improve
their operations given the permanently changed
environment.
Ed Durkee, president and CEO of Goodwill
Central Coast, contends that the collective
impact of mandated minimum wage increases
is greater on the Goodwill network than just
about any other entity in the public or private
sector. He said it requires a strategic response,
not a tactical one.
“Our response has to be different. Even if we
don’t have to do this, we should," he said.
“We’re seeing that impact on our employees’
lives is immense. And we can do it, which is
the message today.”
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Embracing a New Operating Model
In the face of a second minimum wage hike,
ineffective production processes and finances that
were out of equilibrium, Goodwill Industries of San
Joaquin Valley President and CEO Denise Ost knew
that she had to make changes in the fundamental
ways her Goodwill did business. She implemented
the Kaizen process to remake her material handling
areas. She communicated to her board that their
relationship must be a business partnership. She
signed her directors up for GII listservs and began
investing in staff development. And she adopted
Durkee’s five-year projection model, replacing
the organization’s 14-year use of the J.D. Robbins
system.
She also remade her retail stores on the front
and back ends, with changes like replacing the
Dandex cart with a roll cart and modifying her
merchandising displays. The result: by the end of
2018, her Goodwill was posting a $596,000 profit.
“I stayed accountable to my mentor, my board
of directors and my staff,” Ost said. “Don’t try to
be good at everything – just be excellent at one
thing.”
Weathering the Perfect Storm
When the City of Seattle adopted a $15/hour
minimum wage in 2015, it was the first of many
hurdles for Seattle Goodwill Industries. The
organization at that time was also managing paid
family medical leave, a downturn in customer
traffic at retail stores, less money being spent per
transaction and decreased productivity of retail
store staff because of competitiveness in the
local labor market. Initially, the Goodwill tried to
absorb the net annual $13 million increase with
price increases and donation rotations. Then, they
focused on fixing the retail business.
“We had a few different problems to solve, but
revenue was not one of them,” Campbell said. “Our
wage and benefits expense was the problem.”
With the expense side identified as the issue to
fix, Campbell and his team developed a four-year
plan that made tough choices: delivering the same