

Pay your employees more - bicknergseng
http://www.newyorker.com/talk/financial/2012/03/26/120326ta_talk_surowiecki

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georgemcbay
The headline here on HN is a bit misleading, the article is really about
spending more on your employees in the aggregate (eg. by hiring more of them,
spending more on training, etc) than paying individual employees more.

In any case, I know this doesn't count as data but there is a growing number
of establishments (retail stores, coffee shops, etc) I just don't go to
anymore because I know the lines are going to be overly long due to
understaffing.

It is not okay to make customers wait 10+ minutes in line so you can save a
handful of multiples of 8 bucks an hour. And if you do this you may well save
a tiny bit of money in the short term, but eventually the customers will just
go elsewhere and those customers are unlikely to come back for a long time
even after you fix the problem.

(tl;dr -- FU, Vons stores in San Diego).

ps. I realize having to wait 10-ish minutes in line for fresh produce and
other groceries is the epitome of a first world problem, but I still reserve
the right to point it out as a failing business strategy.

~~~
jfoutz
No, they come right out and say the four case study retail companies pay their
employees more: "They pay their employees more; they have more full-time
workers and more salespeople on the floor; and they invest more in training
them."

~~~
georgemcbay
I'm not saying they said _nothing_ about paying employees more, but that
clearly isn't the focus of the article, thus the headline is still very
misleading.

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binxbolling
I don't understand the misleading title. What employees are paid was certainly
a small part of the article, but how many employees you have seems to have
been the major focus. So how does "Pay your employees more" capture the
article's content at all?

~~~
sophacles
Well, pedantically, employees is an aggregate term, and higher salary costs
(either by higher individual wages or more individual wages) meets the
conditions.

Less pedantically: the focus was on more, better trained employees, and more
experienced employees. In the later two situations, this generally translates
to individuals being better paid -- experienced workers demand higher wages,
as to better trained ones. Further, a large number of the faiure examples
given were about firing the higher cost employees (experienced, trained ones,
and full-time ones) in favor of cheaper ones, again implying that the per-
employee wages were dropped as well.

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wtvanhest
This is a classic correlation vs cause... head fake we always see.

All else equal a company should pay its employees a salary which helps them
live a meaningful life. But the article doesn't support the title in any way.

Take best buy for example. Does paying their employees more save them from
bankruptcy? Of course not.

~~~
dinkumthinkum
This statement just seems weird to me. So do you think a company should make
profits that make it exist in a "meaningful way?"

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sardonicbryan
I think in the cases cited in the OP, investing in more employees is probably
strongly correlated with knowing how to deploy additional employees at high
ROI.

A smartly run business is probably better equipped to get incremental revenue
out of more people/investment.

------
inopinatus
A better construction of this recommendation is to pay your employees enough
to take the question of pay off the table. It's simply because people who feel
even slightly underpaid become unresponsive to every other form of motivation.

However, it's just a specific example of following the classic talent-based
management formula:

* Hire good people,

* Give them goals and the resources they need, and

* Get the hell out of their way.

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aptwebapps
In other words, managing by metrics is problematic and there's no substitute
for using your brain. It's interesting to juxtapose this with the thread from
the other day about The Well Intentioned Commisar:

<http://news.ycombinator.com/item?id=3688198>

Centrally planned governments don't have a monopoly on stupidity.

~~~
guard-of-terra
A corporation is centrally planned.

------
bennyfreshness
It comes down to product.

If your product is in high demand and you have incredible mind share (as the
mentioned brands do), revenue will follow. With more revenue you can afford to
ramp up your customer service.

This article seems to claim that revenue is directly correlated to payroll
costs. So spending more on payroll will somehow magically increase revenue?
Then everyone would be doing it. There is a delicate balance.

Lastly, Circuit City failed because they couldn't innovate as fast as other
competitors, namely Best Buy, not because they tried, as a last ditch effort,
to save money by hiring temp workers.

------
guard-of-terra
On the other side, if one dollar apples are so bad that you can't bring
yourself to eat them, then ten dollar apple is infinitely better as long as
you're still eager to buy it.

------
veguss
You get what you paid for applies to everything including salaries.

~~~
jpdoctor
> _You get what you paid for applies to everything including salaries._

Hmmm. Lehman's CEO was not exactly underpaid. Nor Freddie Mac. Nor Fannie Mae.
Nor GM. Nor Enron. Nor Worldcom. Nor Rich McGinn in his Lucent days.

And that's just the first people that spring to mind in 60 seconds.

~~~
sophacles
I'm not sure if you are being snarky or missing forrests for trees (or the
other way around). It's probably a complicated multi-variable situation. If I
buy a polished turd for 70% again as much as a regular turd, I stil have a
turd, albeit a lovingly polished one. The one widely applicable truism is not
cancelled out by another: "a fool and his money are soon parted".

Another way of looking: those places all got exactly what they paid for:
someone good at manipulating a given set of rules and following strategies to
the T, and who brings a fancy name to the table. Too bad they didn't also
focus on the "changes behavior when the rules and the strategy don't make
sense" too.

