Interesting piece in today's NYT:
http://www.nytimes.com/2016/10/16/u...and-higher-sales-it-paid-its-people-more.html
The basic argument is that if you pay higher wages you can get better results.
It's always baffled me that companies will put minimum wage staff in direct customer contact and expect to build and maintain a top-class customer experience.
What do others think?
Interesting piece in today's NYT:
http://www.nytimes.com/2016/10/16/u...and-higher-sales-it-paid-its-people-more.html
The basic argument is that if you pay higher wages you can get better results.
It's always baffled me that companies will put minimum wage staff in direct customer contact and expect to build and maintain a top-class customer experience.
What do others think?
If a firm is making profit then the level of wages paid is a contributing factor to that, no different to machinery, premises or intellectual property. If the firm is making a loss, wages could be a contributing factor.
So when a firm is making profit the level of wages paid is a contributing factor, but if a firm is making a loss, wages could be a contributing factor?
Yes, obviously, unless the business has no actual employees and therefore no wages.
But if the business does have employees and is making a profit, clearly those wages contribute to the profit making.
On the otherhand, if the business is making a loss, it does not necessarily mean that the wages are the primary cause. A spike in energy costs for example could be the cause of the losses.
You can't have it both ways - a sudden drop in energy costs could just as easily be the cause of the profits.
You can't have profits without the energy used to power the lights, machines, computers etc either.Of course you can. You cant have profits in the first instance without labour. So if energy prices fall, it, with a combination of labour, can be the factors contributing to profits.
I think it's a decision for a particular organisation to make, given its circumstances, profitability and strategy. It seems to have been the correct choice for Walmart, however Walmart have received bad press for low wages for years. Would it be the correct choice for all other organisations? I highly doubt it.
The labour market could also be a contributing factor - if there is competition for labour, then not raising wages could see the organisation lose staff. The danger with an across-the-board increase in wages though is that poorly performing staff benefit and those who have better skills and work ethic will still not be compensated enough and will leave.
Labour laws are probably also a contributing factor - if it is very difficult to let staff go (as in the case of large organisations in Ireland), expecting improved output just because you pay people more is probably not going to work.
Of course you can. You cant have profits in the first instance without labour. So if energy prices fall, it, with a combination of labour, can be the factors contributing to profits.
Why not?
I don't think anyone's suggesting that blindly increasing everyone's wages will much of a positive impact.
Of course, this is exactly the way those at the top like to see themselves: executive pay needs to be high to act as an incentive. I’ve always thought it amusing that those same people will argue that those lower down should have minimal wages and increases, due to the need to “be competitive”. Talk about cognitive dissonance…..
My own view is that especially for companies that have a large workforce interacting directly with customers, as in the Walmart case, paying minimal wages and treating them badly is likely to have a very negative impact on sales and profitability.
At a macro level too, having high percentages of the population on low wages will inevitably have negative consequences for consumer spending.
You can't have profits without the energy used to power the lights, machines, computers etc either.
And if they rise that, with a combination of labour costs, and all other input costs, contributes to the loss.
You can't have it both ways.
If you are correct, then surely you can't have losses in the first instance without labour also...
Its like ye have an impulsive reaction to pick holes in anything I say.
Of course you cant have losses without labour, where did I say otherwise?
Of course training, facilities, Terms and Conditions etc all feed into the desirability of the overall "Package" to prospective employees. If the headline pay is low bit there is a defined pension, paid sick leave, long holidays, a short working week, flexi-time, total job security, a low stress working environment, free city center parking etc the overall package can still be attractive.
A business or organisation should pay enough to get and keep a suitable number of suitable people to fill the roles they need. If they don't pay enough they don't get and keep suitable people and therefore labour as an input cost will not perform properly. If they pay too much then they get labour to perform at a suitable level but it will still cost them money as the pay levels are higher than the possible return on that labour to the organisation.
The level of wages are a factor whether the firm makes a profit or loss. Get the wages too high and you will lose money (and jobs!), get wages too low and your staff will leave. It's a balance and it requires knowledge and appreciation of supply and demand for the labour you require.
I see staff as the key part of the business but that's the nature of the business I'm in.So you see staff in terms of an inout cost to a business, the same as any other (e.g. utility charges)?
I'd agree absolutely that for any particular role there is a going rate for the job. You have three choices: pay below, at or above the going rate (by "pay" I'm including total package, by the way, and also using it as a shorthand for being a good employer in terms of conditions and access to training etc.). I'm suggesting that particularly for roles that are customer facing (not necessarily sales, they could be support), you are likely to see better results in terms of sales and profit by being at the upper rather than lower end of that scale. This is unlike other costs: I can't think of a reason why paying more for electricity or rent would be of any benefit for example.
The Walmart experience would seem to provide some evidence for this. It’s also something I’ve paid attention to in my own business, and so far it seems to be working.
You firstly argued that when a firm is making profit the level of wages paid is a contributing factor, but if a firm is making a loss, wages could be a contributing factor.
Yes, what dont you understand about that? Or rather, what about it is rattling your cage?
Are you saying that the wages in all loss making businesses are the contributing factor in all cases?
Are you suggesting that Transdev Irelands reported €700,000 loss for the previous financial year was down to wages, only for a 18% increase in wages to be settled on?
Transdevs loss wouldn't have had anything to do with capital outlays for future expansion by any chance?
Can you outline a scenario where a profitable company, that pays wages, where the labour attached to those wages is not a contributing factor in the profits?
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