There's no question that distractions caused by low income can hamper an employee's ability to perform at work. These expenses are real and cost your business dearly.
As a boss, you can try out the latest leadership methodology or implement incentive programs. You can present an employee of the month award or a gift certificate to a restaurant. You can sit down with your team once a week to discuss their goals and progress.
But no management technique in the world is going to change the fact that your team has student loans, medical bills they can't afford and overdue rent. It's not just people below the poverty line. They are your employees, and because they are strong, independent and driven, they don't tell you about their financial problems. Too often, leaders focus first on creative ways to incentivize their employees while ignoring the simple act of paying more. Evidence abounds regarding the power to raise wages.
Related: Become a servant leader in 4 steps
At the start of 2015, McDonald's increased the hourly rate of its lowest paid employees by almost a dollar. Since then, customer service has improved and the company's stock price has risen more than 25%. Aetna increased its lowest paid salaries by an average of 11% in April 2015, and net income that year increased by 17%. When Henry Ford introduced his famous $5-a-day wage in 1914, productivity increased and absenteeism decreased.
Allowing your employees to live a modest, middle-class lifestyle will have a positive impact on your company's financial performance.
At my company, Gravity Payments, getting our team members to a living wage by raising everyone's salary to $70,000 or more has been amazing for our business. We've seen profits double, customer churn drop, and employee turnover cut in half. I operated for years without realizing the opportunity I had in front of me. Allowing your employees to live a modest middle-class lifestyle will have a positive impact on your company's financial performance.
Although you can get by paying employees a certain amount, that doesn't mean it's amount is optimal for success. No law says you can't invest more in your employees. Wages as a percentage of the economy are at an all-time high, according to the Federal Reserve Bank of St. Louis. Employee disengagement remains stagnant at around two-thirds of the U.S. workforce, according to a January 2016 Gallup poll. The Gallup Organization reported that employee disengagement costs our economy half a trillion dollars a year. There are levels of productivity and engagement that can be unlocked by paying your team members above what the market dictates.
Right now, your team has a surplus of potential energy that could be used to benefit your business. Compensating your employees more might just be your biggest investment opportunity in 2017.
Related: 7 ways to create a sense of family in the office
This article originally appeared in the April 2017 issue of SUCCESS magazine.
