February 5th, 2014
To Whom It May Concern:
I write for an investment newsletter called Dividend Focus. In the February 2014 issue, I offered readers my favorable view of Target stock as an investment.
Beyond recognizing solid fundamentals and financial health, I also believe that there is a moral aspect to investing. I was able to point out to readers that Target was doing some things very well, including giving away 5% of profits each year as an ongoing commitment. However, one of my main areas of focus, regarding the moral aspect of any investment, is in how companies treat their workers. An article last year by business insider (http://www.businessinsider.com/profits-high-wages-low-7-2013) highlighted the fact that corporate profit margins were at all-time highs, but wages as a percentage of GDP was at an all-time low. However, those two things are not, and should not be considered, mutually exclusive.
As a Christian, it is my personal belief that God cares deeply for the “least among us”. Further, I believe that one of the best tests of how we manage the resources and authority entrusted to us by God, is in how we view and treat those under our care. I believe that the more power and authority we are given, the greater is our responsibility to look out for those with less power. It should be a great source of pride to any company executive to know that the people lowest on the company totem pole are able to provide for themselves and their families, and to have a sense of pride and self-worth in their jobs and their company.
I believe that Target is doing some things very well in regard to caring for its hourly employees. However, I also believe that there is some room for improvement. Please allow me to explain further.
In my opinion, one of Target's biggest selling points seems to be that you are fundamentally different from other discount retailers. If Target is truly set apart, in a good way, from other large discount retailers, then why does Target pay its employees about the same? I don't mean to be abrasive. But I couldn't get this question out of my mind. Some businesses seem to stand for profits at almost any cost. What does Target stand for?
I have noticed that there are retailers which have been able to pay hourly employees extremely well, yet continue to thrive. Examples include ALDI, QuickTrip, Costco, Home Depot, and Trader Joe's. I'm not saying Target could double their pay for hourly employees and still having a thriving business. I don't know if that’s possible or not, and I am not trying to tell you how to run your business. I understand that discount retailers operate with extremely low net profit margins. However, I am simply asking that you take some time to think outside of the box on this one. I believe that God blesses those who bless others. If you would simply form an executive team to explore the following question, "Are we doing all we can to take care of our hourly employees?" it may be very beneficial for your company.
I worked at a grocery store in high school. I never intended that job to lead to a long term career. But almost 20 years later, I can go into local grocery stores and see several of the same people I worked with back then. Some people choose retail as a long term career. I happen to think it's a perfectly noble career choice, and it may be the best option many of us have. Honestly, I would probably be better off today if I had displayed such loyalty and devotion to a single path or company. My point is, those people who choose retail as a long term career need and deserve to be able to provide a decent life for themselves and their families.
Maybe Target could reward loyalty and devotion among employees by granting them stock awards that rise exponentially with years of service. Maybe Target could set a career path for hourly employees that involves them rising through the ranks without a college degree. College degrees are a dime a dozen these days anyway. Hard workers aren't. While I tend to think it’s possible, maybe Target really can't afford to reward everyone with across the board pay increases. But maybe Target can find ways to reward loyalty, devotion, and hard work. Maybe Target can find ways to increase opportunity for the least among you. Maybe Target can enable and empower those employees who are willing to work hard to realize their dreams.
I know that Target cares about its image. To a large degree, Target's image is its business. What does your current average pay for hourly employees do for your image? What does it say about the values of your organization? Tough questions, I know. But I think they are worth asking.
Thank you so much for working so hard to build and manage a great company. Truly, investors, employees, and customers have already been greatly rewarded through all of your hard work.
However, there is one thing I want to point out above all else. It’s natural for businesses to scratch, claw, fight, and do every last thing possible to continue to create more value for customers and investors. However, it's all too easy to neglect doing the same for employees. Employees deserve the absolute best from their managers, just like investors and customers! Thank you for taking the time to consider that today!
Seriously, I know that your time is valuable. Thank you so much for taking the time to read my letter, and to consider my views.
Founder, Wisdom’s Reward, LLC
P.S. I am enclosing as a gift, a copy of Joel Manby’s book Love Works. Joel is the CEO of Herschend Family Entertainment. I think that he has some very interesting views that could benefit most anyone in various types of leadership positions. His views are especially poignant regarding the treatment of employees. I hope someone there will enjoy reading this wonderful book!