I disagree. Paying people a significant amount over a prevailing wage all but guarantees a drastic reduction in turnover and training costs. The company is also going to benefit as the depth of the collective knowledge and experience of the firm grows over the years.
Variations on this same strategy have worked just fine for Google, Genentech, and Ford Motor Company - whose founder Henry Ford created this innovation in using wages to improve employee conditions and then to improve retention and productivity.
I agree.
There was thread on Gravity yesterday. I posted a lot. I think this is a smart move for some companies (not all).
At Netflix, if they determine that an employee has done an adequate job — they fire that employee. Because adequate isn’t good enough. You have to be excellent, or you are out.
Now, you cannot do that if you hire and reward employees the way everyone else does. You have to make it a highly desirable place — you want people pounding on the doors begging for a job. Then, you hire superior people. And you keep them BECAUSE no one else will match their salary. You save on hiring, and training and accumulated job knowledge.
And you make it clear — absolutely no slacking. Everyone works hard. All the time. No excuses. If you come to a meeting unprepared, there is a problem.
A high minimum salary becomes a basis on which you hire only superior people and fire anyone who underperforms. It can be smart.
Also, some people perceive Gravity paying the same exact salary ($70,000) to everyone no matter what. That isn’t it at all. Junior positions start at $70,000 and then things go up. Excellence is rewarded.
You would think that would be the case, but my experience with poor people who don’t know how to handle money (thus one of the reasons why they are poor) is if they earn more... they will simply work less.
This happens all the time with poor people, they will make plenty of money in just a few months of work (more than many earn in a year) but then they will take the next few months off to go fishing or whatever until it’s all gone and then rinse and repeat.