Pay the most you can afford. Minimising payroll is perhaps the dumbest thing a company can do. Don’t try to screw new employees down to the lowest they will accept. The pennies saved will cost you hundreds of times more in lost productivity. Think that engenders loyalty and passion? You should be welcoming them not defeating them.
We encourage our clients to:
🌸 make the best offer they can afford. Pay above the market if possible.
🌸 open the books so everybody knows what the company can afford to pay and still be healthy.
🌸 have open adult discussions about what everybody should be paid, given the finances.
🌸 share the profits: about 20 to 40% of profit should go to the workers not the owners.
🌸 share with everyone based on group performance not individual, if you truly want teamwork. The wider the group assessed for their share, the better, if you want collaboration.
The first step to get people to engage, produce, and collaborate is to pay them for it. The results (of this combined with the rest of Open Management) are spectacular: doubling or tripling performance and profit. The owners get more not less. The employees get more too. Much more. And the employer can afford to offer more to recruit the best.
I’m not making this up. We’ve proved it in the field, multiple times.