There are several ways low wages can negatively impact productivity. First, employees who are paid less may also be invested less in their jobs and the company. Second, if paying lower salaries results in a high turnover, your company will always have trained employees.
FREMONT, CA: Paying employees a higher salary to foster your business sounds like it's counter-intuitive. After all, if you paid less money to your employees, wouldn't there be more money left for the company?
Low Wages Don't Save money
Salary is the leading cause of employee turnover. If employees feel that they are not getting paid enough and can find higher paid work elsewhere, they will quit and move on. Employee turnover costs companies a considerable amount of money. The cost of replacing and training new staff exceeds the amount of money saved by offering lower salaries.
Low Salaries Mean Loss of Enthusiasm and Low Productivity
There are several ways low wages can negatively impact productivity. First, employees who are paid less may also be invested less in their jobs and the company. Second, if paying lower salaries results in a high turnover, your company will always have trained employees.
The longer an employee is at work, the more efficient and knowledgeable they will be. Turnover can prevent you from ever having employees who reach that level of skill in their position. Plus, an employee who spends his time looking for a new job will not devote as much time to his current career.
High Salaries Attract High Talent
Talented employees know what their value is. If your company doesn't offer a competitive salary, you won't attract the top talent that your company wants. If your company isn't willing to offer these stellar candidates what they are worth, then your competition is going to take place. Offering more money can not only attract top talent to your company, but it can also make your current staff more productive and dedicated to their work.
High Salary Boosts Productivity
Employees should not be seen as an expense. Instead, they are one of your company's assets. Employees will be more invested in their jobs and the company they work for if they feel valued. Higher pay is a way to show employees that they are valued. Companies can also demand a higher quality of work and higher productivity levels in exchange for higher salaries.
What Goes Around, Comes Around
The extra money paid to employees doesn't just stay with the employees. That money, in turn, is going to benefit the community you're doing business in. Employees who have more money are going to spend more money. The businesses they spend their money on will then have more money, which will eventually make their way back to more business for your company.
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