The True Cost of Underpaying Employees
Most interesting (or appalling per Matt) was the fact that his father doubled his income in the same field after getting laid off. Matt’s point was that the company was taking advantage of his dad by paying him 1/2 of what he was worth.
The True Cost of Underpaying Employees
Matt then went on to discuss what he does to retain talent at his company – paying above market wages, constant re-training, internal job changing, paid sabbaticals, etc.
It is way more expensive in the short run to offer high wages and so many perks, but far cheaper in the long run. You retain your best and most productive talent; you avoid the enormous expense of recruiting and re-training new talent; and you get the culture benefits that such perks provide.
We constantly see people trying to keep their overhead low by offering below market wages and it fails time and again. They either get what they pay for, or they lose their talent all too soon.
Why Above Market Wages Pay Off
At JVM, we make sure we always pay above market wage and we aggressively engage in a form of compliant profit sharing to make sure everyone at JVM shares in our success. It is the only way to run a successful business.
If you want to be successful, pay good people a lot.
