If a person needs to be paid $5,000 a month, he will know. You pay him $4750, he will know and he will feel cheated. He will not go that extra mile or work that extra hour. Some how, he will find a way to punish you – mentally, physically or financially – for paying him unfairly. It is a matter of time till he just jumps sides at the first available option – you lose all your efforts of training them. Worse still, he will go to a competitor.
If some one needs to be paid $5,000 pay him $5,750. You will get much more
than what it costs you. This person will now stretch and justify the confidence.
Myopic Managers seldom understand this trick. They are cutting costs and feel proud of having shaved that few hundred dollars. Little do they realise that a motivated and charged up employee contributes 25%-100% more than a normal employee. In fact, the ration may go up in multiples, compared to a morose employee who comes to work each day feeling cheated and spends his mental energies looking for better opportunities.
People are an investment, not costs. I would have a fewer people who work at 120% efficiency than a bunch of blokes working at 70% efficiency.
The old adage – “if you pay peanuts, you get monkeys” – still holds true. In fact if a manager prides about paying the lowest salaries, they better be sacked. After all they are doing disservice to the company and killing the innovation and larger game plan by saving a few bucks.
- A higher pay, does well to a man’s ego and confidence. Anything that does that is a sure shot way to get phenomenally better result.
- Better still, they become unemployable as most players in the market cannot afford to pay her that.