For businesses in just about every industry, there is seemingly always a push-pull between the need to pay workers what they're worth and protect the company's bottom line. It's something managers and other decision-makers must be constantly vigilant about because there's a fine line between paying people properly and overpaying them for the work they do.
However, some experts believe that when it comes to these issues, companies should err on the side of paying more, because there are a number of tangential benefits associated with doing so. Read on to learn more about what these benefits are, and how they can help your company get an edge on the competition:
1) Higher pay motivates them to work harder
It should come as no surprise that people prefer to be paid more for their work, but what you might not realize is that when you keep salaries somewhat restricted, that's actually de-motivational for workers, according to a 2020 study from the University of California at Berkeley. When people think they're not being paid properly, they certainly aren't as likely to feel as though they should work any harder than the bare minimum. However, the opposite is also true: When workers feel like they're getting a strong wage, they're far more likely to go the extra mile.
2) You will do a better job of attracting and retaining talent
Along similar lines, if you offer even your best workers only minimal pay, they may also be more likely to jump ship and take their talents and efforts elsewhere, either to your direct competition or out of the industry entirely, according to Inc., magazine. In addition, it will become increasingly difficult to replace those workers with highly qualified new hires. Higher pay (along with better benefits) not only keeps your employees motivated and happy, but makes it easier to attract better candidates when you need to.
3) You won't have to hire as many people
Furthermore, there's a simple equation behind better pay because of how it correlates to more motivated employees, Inc., added. For instance, if you have 10 unmotivated employees who are only operating at 80% of their maximum efficiency, you're effectively paying 10 people to do the work of eight. But if you have 10 people working at (or even above) that predicted maximum capacity, you're unlocking serious operational efficiency and reducing the need to hire more people in the future.
4) It promotes the long-term health of your company
Finally, with all of the above in mind, you may want to think of the extra money you're paying workers as an investment in your future, according to Just Business. When you continually motivate workers, you can take on more orders or partners, and keep those great employees around for longer periods of time, reducing the risk of "brain drain." That, in turn, keeps you in a position to move forward, grow and improve.