Invest in your employees. It can be good for your business.
It sounds like a no-brainer – the higher you pay your employees, the lower your profits will be. Well, actually, this isn't true. In fact, sharing your wealth with the people who helped you create it can be very good for your business.
By paying your people more, they will be able to buy the products and services they need. In addition, the companies selling these products and services to the average American will have more room to grow. If the average American, who is the primary engine of economic growth, receives higher salaries and wages, then there is no doubt that the US economy will prosper beyond our wildest dreams.
The Sad Reality
Unfortunately, this is not the case. A lot of America's biggest companies are obsessed with increasing their profit margins even if it means depriving America's middle class of their purchasing power. What they do not realize is that their obsession may be hurting their ability to bring in even more profit.
These companies are so engrossed in minimizing their costs (a lot of them consider their employees as "costs") and achieving record profit margins that they tend to forget that their employees are also among their current and prospective customers. They tend to forget that the lower their employees' wages and salaries, the less they can afford to buy the products and services they are offering. Instead of investing in their people, a lot of companies choose to maximize their profits. No wonder the US economy is the way it is now.
How to Ensure Better Profits for Your Company
Instead of focusing on creating higher profit margins, you should consider the following suggestions to take your business to the next level:
Invest more in your people. You can get better profits by investing more in your employees. By paying higher wages, you can expect your employees to do a great job and provide better service since they wouldn't be worrying about where they would get the money to pay their bills. Remember, excellent customer service fosters customer loyalty and improves productivity, but lousy service can ruin your business. You should also provide additional training and healthcare benefits to your employees since these can further improve productivity at work.
Consider offering less. While this may seem counterproductive, it actually makes a lot of sense, especially for retail businesses. By maintaining fewer items in your inventory, you can avoid the "phantom inventory" phenomena (the discrepancy between the inventory balance and physical availability of goods at a storage location). Your employees will know where everything is and you will avoid out-of-stock incidents.
Hire more people. Instead of employing fewer people and demanding that they work at more than 100% capacity, you should consider hiring more people to avoid serious problems down the line. By employing more people and empowering them to fix small problems when they see them, you can expect to get problems fixed before they get blown out of proportion.
Now you can see why paying your employees more can positively affect your profits and be good for your business.