Keeping to the Bare Minimum Wage

I spoke to an employer last week who was quick to tell me that they don’t pay more than the minimum wage.  If someone goes off sick then they only pay Statutory Sick Pay.  He was quick to justify this… “Like any small employer, every penny counts and we cannot afford to pay out anything more than the absolute minimum we can get away with”.  I came away from the conversation feeling very sorry for his employees – and with concerns about the sustainability and growth of his business.

The question is not whether an employer can afford to pay more than the absolute minimum, but whether they can afford not to.

 Keeping Low

Of course, there are obvious benefits of keeping the wage bill as low as possible.  It is the largest outgoing for most employers.  Rightly, they will do everything they can to control it and prevent it from spiralling uncontrollably.

You want to feel you have not wasted that money and have preserved it to spend on other things which will grow your business.

It is also true that pay is not a “motivator”.  You can pay a high salary without seeing reward in terms of performance by the employee on the receiving end.  But money (or perceived lack of it) is a de-motivator.  If an employee feels they are not getting a fair deal, they will have no incentive to go the extra mile for your business.

“Give and Ye Shall Receive”

It is a fact in life that you get back what you give out – if you project love and generosity, then that is what will come back to you.  If you “give” to your employees (in terms of money, and in terms of valuing their contribution in other ways) then they will repay you with loyalty, with support to you and your customers, with performance beyond your expectations.

If you stick to paying out the very minimum, then there is no incentive for your employees to work hard or to put in more than basic performance.  There is a saying I have heard many times in the work place:  “if you pay peanuts, you get monkeys”.

The danger  – if they are a high performer – is that they will “mark time” with you until a better opportunity comes along.  Even worse, if you have a poor performer, is the danger that they may stay with you as they cannot get another role. In that case, they will never be really happy at work and they will only ever perform at the level  at which you value them (ie. the minimum). They will become more and more disillusioned and their performance (already low) is likely to spiral downwards over time as they tick away the days until they can take their pension.

Spreading the Germs

If you only pay the minimum amount possible when someone is off sick, then they will hurry to come into work as soon as they can.  This sounds like a good thing and is the reason why some employers only pay Statutory Sick Pay.  But what if the person has something contagious (even a stinking cold) and comes into work because they need the money?  They pass their germs on to others they work with and, before you know it, the whole team is sick.

And what is the quality of the work someone produces when they are feeling below par?  There is a strong likelihood that their work will be slow and may be full of mistakes.  In the long run, this could cost more than paying them whilst they are off sick and not contributing at all.

Spreading the Love

Again, we come back to the value you put on your employees.  There is a reason why the wage bill is generally the highest bill you face each month.  If you get it right, it is because the people are the highest performing asset you have and will make your business grow and prosper.

If you think this article is useful and you would like more advice on dealing with this  -or any other people-related issue in your business – please join our mailing list, or contact us for further guidance.