Small Business Explained: If Your Workers Love You, They Won't Mind Not Getting Money

A blog about politics, sports, media, stuff
Feb. 11 2011 10:52 AM

Small Business Explained: If Your Workers Love You, They Won't Mind Not Getting Money

Cabinetmaking-company owner Paul Downs, who blogs for the New York Times as a representative of the American small businessman, has a meditation today on the

Advertisement

:


[H]ow much pay is required to inspire real effort? Or, put another way, can feelings of loyalty be substituted for monetary compensation?

In his line of work, Downs writes, he can't count on charisma, prestige, or inspiration to keep people making cabinets. So he has to pay the workers enough that they won't leave him.



This is, according to Downs, a calculation that he mismanaged:


Unfortunately, for many years I was paying my people more than I could afford, and more than they could find elsewhere. Making that payroll was often excruciating. My employees were very happy with their paychecks, but the high costs were bleeding the company white. I cut wages by 20 percent in 2008 and partially restored them in 2009. Through all of that, I had no defections. My conclusion: I was paying more than I needed to.

There’s got to be a sweet spot in the middle where you pay enough to prevent defections but no more. Additional wages and benefits, beyond your employee’s next best choice, are paying extra for something you have already bought.

...As soon as the package of pay and benefits that you offer exceeds the next best alternative, what you have bought is functionally identical to loyalty.

In 2008, you say? Well, there was sure a

for, cough,

rationalization

then. Rationalizing. Rationing. Maybe Downs' workers looked in their hearts and recognized that they had been 20 percent overpaid till then. Or maybe, given the prevailing

, they decided they preferred being 20 percent screwed out of their livelihood over being 100 percent screwed out of their livelihood. "Functionally identical to loyalty," in this context, looks functionally identical to hopelessness.


Tom Scocca is the managing editor of Deadspin and the author of Beijing Welcomes You: Unveiling the Capital City of the Future.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

Republicans Want the Government to Listen to the American Public on Ebola. That’s a Horrible Idea.

The Most Ingenious Teaching Device Ever Invented

Tom Hanks Has a Short Story in the New Yorker. It’s Not Good.

Brow Beat

Marvel’s Civil War Is a Far-Right Paranoid Fantasy

It’s also a mess. Can the movies do better?

Watching Netflix in Bed. Hanging Bananas. Is There Anything These Hooks Can’t Solve?

The Procedural Rule That Could Prevent Gay Marriage From Reaching SCOTUS Again

  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Future Tense
Oct. 20 2014 4:59 PM Canadian Town Cancels Outdoor Halloween Because Polar Bears
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.