Sharing Daily Discoveries About Personal Finance And Business Topics

Spending More Money On Employees To Make More Money

financial planning

I was watching various videos recently that talked about the different approach when it came to employee and wages of a company. Specifically, it was comparing how Walmart paid its employees extremely less compared to Costco who paid its employees more. The point of this was how Costco as a business has continued to grow whereas Walmart often mentions things like the economy stops them from paying people more.

The interesting points were things such as considering turnover rates and how much that costs a business. For example, the process of trying to hire and train a new employee costs more than if you try to keep them around for this scenario. This holds true even for a consumer in many ways when you think about it. Think of a situation like a cell phone service prover where it could literally cost them maybe $1000 worth of advertisement to get the consumer to notice them and then sign up. Then by being say inconsiderate and not giving people like a free voicemail whereas many would they could essentially lose people over like a $3/month feature. Like in that case it may make more sense to do more to keep them.

I even have a funny example of this before where I worked for a company and hands down I was one of its key people they relied on and had the numbers to back it up. I read company memos on how it was a corporate policy of sort to only give X amount of people certain wage increases due to budget. So therefore, even if say 100% of the staff were impeccable and deserved full raises or recognition managers were told not to do so.

Sure enough when it came time to learn about how they were going to reward me they came up with what seemed to be template responses while trying to justify a cheap wage increase. This didn’t work too well for them as my situation was kind of special since there was too much factual documentation of the work and results I have achieved that were extremely beyond my role requirements.

I eventually did stop working for the company and the interesting thing was people were telling me how they were specifically spending all this money and energy to find a replacement of me in every way. Example, the assumption of if they found another person of a similar ethnicity that they would get the same results. It ultimately didn’t work out too well as the department reported record losses as well. So like in that example too, it would have probably been better if they invested more into the employee they already had as opposed to having to spend more after trying to get someone new.

Something to think about the next time you are thinking on the best way to grow your business when it comes to the people you surround yourself too.




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