Pay your staff what they’re worth
Wednesday, May 30, 2018
How do you calculate what to pay your staff? Anticipated revenues? Operating costs?
What the market will bear? What the industry standard says this job is worth or what your state says is the legal minimum wage? Or something else?
Why not pay your staff what you think their job is worth? How much does the success of your business depend on the successful functioning of this person?
When you take advantage of someone and pay them the minimum expected or legally allowed, regardless of their value, guess what? You’ll get the minimum expected work out of that employee in reciprocity as retribution.
I remember a scene from the movie "Scrooge" when he’s just bought out a company. A young clerk asks if he’ll still have a job with the new company, and Scrooge replies by asking him his current salary. And then he tells the clerk that he can keep his job for half that amount.
That’s not just a book or movie character who does that. Plenty of companies operate with that same mentality: "Be grateful you have any job at any wage and expect to be paid as little as the company can get away with."
But is that ethical or even good business sense?
I know of some healthcare companies running senior living homes who charge their residents thousands of dollars per month for room, meals and help with the activities of daily living. Despite charging the resident $4,000 or $5,000 or more per month for these services, these companies pay their nursing assistants — the ones who do the brunt of the work — minimum wage.
Why? Because they can. These are the staff members who perform the services that the retirement home is mostly charging for yet they are the least compensated — and the least satisfied with their jobs. And they prove it with high call-in rates and high turnover which, of course, costs the business money.
The executives’ reasoning is that these staff are being paid the "industry standard." What if the industry standard is obscenely low?
If the company is charging $5,000 percent month times 100 residents, for example, this company really can’t afford to pay their staff above the industry standard? Perhaps if they paid their staff better, they would get better quality staff instead of the high turnover that is currently the norm in this industry.
I recently overheard a contractor complaining about the company that he was doing a job for. He said that company’s management treated its employees terribly, and he was sorry for any employee stuck working for them.
He said he "got back" at that company by overcharging for parts and labor. Not to say that shortchanging one set of people by shortchanging another is ethical, but it frequently is the logical consequence of perceived injustices.
Another employee who felt they were underpaid added to his income by taking home company supplies. Another staffer felt justified in clocking in early and late (with plausible reasons to the boss) to get overtime pay to make up for her lack of raise.
Taking longer lunch breaks, taking extra rest breaks, goofing off on the job, doing personal work on the computer instead of company work, talking to friends on the phone….all these are ways in which people can compensate for what they believe is not getting paid what they’re worth.
I have spoken with executives who point to these unethical behaviors of staff as a reason for not paying them more. But they overlook that the low wages were the reason they recruited poor staff to begin with.
If they had offered a truly competitive wage, not the minimum mandated by law or suggested by the industry, they would have a pool of really qualified candidates to choose from.
Imagine that the industry standard for cashiering in your locale is $11 per hour. What if you offered $16 per hour instead, because you’ve decided that a cashier is integral to your success?
That person has to be trusted with the company’s money, handle transactions efficiently and accurately, conduct returns, perform superior customer service, smile and make every customer feel important and special — all of which are part of a very unique and uncommon skill set that is not easy to find.
If you offered a higher than average salary for this critical position, do you think you would have a large applicant pool from which to select those who most closely match your company’s ethics and values? You might get applicants who are eager to invest their time and energy in your company’s success and be with your company for the long-term, not a three-month gig before they’re on to their next underpaid job.
So before automatically setting a wage based on the lowest denominator, think critically and honestly about the value of that job and pay accordingly. You’ll get more than your money’s worth out of that employee.
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