Increasing Productivity and Cutting Costs? When Critical Employees Cannot Afford to Work Their Jobs7/13/2018 Phrases like “income inequality” and “economic disparity” have grown in popularity as average people struggle to meet the increasing costs and growing number of expenses associated with their modern lifestyles. Even before the Great Recession finally hit in 2008, lower and average income people were already relying on debt to sustain their standards of living. Afterwards, they saw their incomes and wealth plummet. Businesses were forced to make due with less or face bankruptcy, which meant employees who retained their jobs had to do more and/or watch their incomes shrink. As the economy recovered, the wealth of those who still owned homes and investments began to skyrocket. Although business is booming, wage growth has remained moderate as employers perpetually seek productivity increases and payroll cuts, which means employees are still being asked to do more for less. Arguments calling on businesses to ease the workloads and financial burdens of employees are, however, made in vain. To the businessman and capitalists of occupations, even if said person considers himself an ethical, moral, and/or religious individual whose business philosophy reflects those beliefs, payroll policies are purely financial decisions. The need to retain the smallest number of workers to do only essential work determines the wages of workers. Those workers who do not accept these terms of employment can go elsewhere. In most middle- to high-income jobs, of course, the quality of the worker matters; henceforth, the reason why these jobs offer higher incomes and benefits. Skill retention is a huge driver of high wages for businesses, particularly those with high-profit margins, that rely on skilled and professional employees. Unfortunately, technological advances, automation, and other means of increasing productivity over the years have transformed many high-skilled careers into low-skilled jobs. This trend has spawned a reliance on low-income and temporary workers.
From the business perspective, “how low can you go” is the payroll mantra. The answer depends on how willing customers are to forgive quality issues. Businesses with generous refund policies, picky clients, and high prices likely have a very small tolerance before their cuts start to threaten the survival of their business. Looking at the fast food industry, for example, few workers can expect to rise above their near-minimum wage incomes. To simply minimize quality control issues associated with low-skilled workers, fast food businesses rely on automation, pre-made products, centrally dictated assembly-line production systems, heavily structured training procedures, and layers of supervisors and trainers. Businessman attempting to run a company like a McDonald’s can, of course, expect to provide products and services with the quality of a fast food joint. While low-quality food and numerous order errors are expected by customers, fast food workers struggle to use new technology and make allegedly complex menu items. Businesses with ill-defined jobs and complex tasks can, therefore, expect to falter when using the labor practices of fast food. A business seeking to increase the professionalism of its employees while suppressing wages and cutting hours can only expect to do so by paying a sufficient number of core employees to train and supervise temporary, seasonal, and low-performing employees. This means employees doing mission critical tasks need to be retained. Businesses need to entice their “heavy lifters,” who get the most work done, their “taskmasters,” who organize and motivate others, and their “standard bearers” who maintain the standards of the business, to stay. Not only do they need to retain these critical employees, they need enough of them to compensate for the fallacies of new, low-preforming, and error-prone workers. Failing to recognize worker performance is not equal and relying on weaker workers can transform minor tasks into costly errors and lead to a massive number of errors. For business leaders, who embrace the need to solve problems, raise standards, and treat their workers as respected, professional members of a team by retaining quality workers, the interests of their workers matter. Fulfilling the needs of employees who take care of the company is the only way to effectively increase productivity and cut costs. Addressing the emotional and social needs of all employees can do a lot to motivate employees and increase productivity, but the financial needs of core employees must, ultimately, be met first. The minimum living wage is the wage someone needs to make in order to sustain a modern lifestyle and, therefore, the true cost of a person’s labor. Those making below the local minimum living wage are running personal budget deficits, which they can only sustain for so long. Regrettably, this means, even if they enjoy working at a particular company or doing a particular job, they cannot afford to work their job. Because financial interests are measured in incomes, both wages and hours matter, thus employer efforts to cut the incomes of critical team members in any way force them to seek employment elsewhere, which can easily harm the business, productivity, and profits in unanticipated ways.
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April 2020
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