As expenses continue to rise or business slows down, many companies look for ways to cut corners and save on costs. However, while it may save you money on the surface, offering low salaries to employees can ultimately cost your business substantially more in the long run.
Between difficulty finding qualified candidates and reducing effectiveness and morale at work, it can be tough to find and retain the right employees to move your business forward if you’re not paying competitive salaries. Understanding the consequences of low pay will help your hiring team take the best approach to the recruitment and hiring process.
Here are some negative outcomes of low pay rates.
It’s no surprise that low pay rates often result in greater employee turnover. When vacant positions occur for extended or even shorter lengths of time, they can have a negative impact on your organization in many ways – including reduced productivity and poor morale. Vacancy can take its toll on your existing employees, many who will be expected to work overtime or take on more responsibilities to keep things afloat. Furthermore, it’s common for your remaining employees to resent the added burden to their workloads and begin looking for employment elsewhere.
When there’s poor employee retention, reduced productivity is bound to follow. Vacancies can greatly impact your operational processes, as well as the quality of service or product delivered. When productivity is derailed, your bottom line can take a turn for the worse – potentially resulting in lost customers. A delayed production of goods and services ultimately creates low profitability, which can have devastating consequences on your cash flow and bottom line.
It doesn’t take long for your organization to get a bad reputation as a result of paying workers less than a fair rate. In addition to your current workers experiencing job dissatisfaction, you’ll begin attracting a less-qualified candidate pool to your job openings. Less than optimal talent is bound to result in poorer performance in the workplace, which translates to unhappy customers. Taking steps to offer employees fair pay is one of the most important building blocks to a positive reputation for your organization.
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