by Geri Stengel
President of Ventureneer

We’ve heard a lot lately about banks and brokerages giving big bonuses to retain the best and brightest. It’s an article of faith that if you want good help, you pay well and give perks to keep employees happy and loyal.

42-23470955At least you do if the employees are executives. Somehow that belief doesn’t trickle down to the bottom-rung workers who — until now — have been regarded as a cost rather than a resource.

I say “until now” because a new study shows that better treatment of low-level and line workers increases profits in companies large and small, in all sectors, and around the globe.

“Do Unto Others … ” isn’t just the right thing to do, it’s the profitable thing to do.

The results of the six-year study surprised even its authors, Jody Heymann and Magda Berrera of McGill University in Canada. They expected to find that, yes, you could provide bottom-rung employees with benefits and still be profitable. Instead they found that you should provide such benefits because doing so increases profits.

The benefits that proved useful to both employer and employees fell into five categories, some of which are more suitable to large corporations and some of which can be implemented by even the smallest business.

1. Support employee health
– Sick employees can’t come in to work; if they do, they are less efficient and make others sick. Absenteeism costs money.

2. Train and provide career opportunities – When companies offered training and promoted from within, they experienced lower turnover, greater efficiency, and easier recruitment. The employees who were promoted tended to be better managers because they knew what the jobs below them required. Support for such things as learning English as a second language led to greater efficiency as workers communicated better. Everyone works harder when advancement is possible.

3. Offer incentives – Incentives may be higher pay, profit-sharing or more autonomy in their work. A small, socially responsible baking company (they donate to nonprofits and are environmentally conscious) instituted a stock-option program. In one year, the research found, sales increased by 74 percent and stock options increased in value by 40 percent.

4. Engage line workers and act on their recommendations – Offer rewards for spotting errors or good suggestions. Employee suggestions can save far more than the award program costs. The lower-level worker sees things, important things, that never come to the attention of the executive office.

5. Ensure that companies and communities grow together – A community with good schools can provide better workers: Support schools. A reputation for paying fair wages may minimize negative community reaction to new stores or factories.

The report’s conclusion is, to me, riveting given the recent financial market debacles:

“When it comes to evaluating firms, Wall Street had gotten in the habit of rewarding companies that cut wages, jobs, and benefits to employees, and punishing those that make such long-term investments … As practices on Wall Street and in firms are being rethought, along with the role of the public sector in rendering the investment process more transparent, one of the areas needing a new approach is the evaluation of and reporting on long term investments in employees.”


Geri Stengel is founder and President of Ventureneer, an online education and peer support service

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