By Professor Rosalind Searle
In the 1770s economist Adam Smith explored how to improve the human condition in a series of lectures in Glasgow, Scotland that resulted in his seminar book ‘An Inquiry into the Nature and Causes of the Wealth of Nations’, better known today as “The wealth of nations”. Despite over 300 years passing, the inequality that Smith was speaking out about still exists. He argued that “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.” The role of work as a way to escape poverty remains broken in the UK, with material deprivation levels rising substantially despite individuals being in work. But low paid work is not viable for organisations either.
Relying on low wages is a false saving for organisations as it fails to take account of the complete costs that are created. Having a low wage does not make the organisation more attractive, nor does it foster workers’ loyalty or engagement. In fact, quite the reverse. If a better wage is offered elsewhere, low paid workers will leave. This loss then results in a range of costs that the organisation may not consider when it decides to be a minimum wage employer. These unaccounted costs include: the advertising of the vacancies; the increased levels of errors and sabotage of the staff required to fill-in while for the vacancy; then there is the costs of management time in reviewing the applications, interviewing candidates, checking references, before finally inducting and training the successful applicant so they can work alongside others.
Paying the minimum wage keeps the organisation as the employer of last choice. Their staff are unlikely to be engaged with their work leading to minimal levels of customer service and satisfaction. In doing their work while they may spot new ways that could improve their work and the service delivered to customers or suppliers, they will keep these ideas to themselves. These hidden issues remain either adding organisational costs or reputational damage.
Employees would prefer to be able remain with an employer in a decent job. But they want work that provides a living wage, job security, certainty about the hours they will work, and has opportunities for promotion and career progression. They also may have challenging personal circumstances they are trying to juggle, that their employer may not be aware of. Employers who are more aware of their staff will have insight into what matters to them and so can create policies and practices that actual support them. These engaged employers who offer decent work are far more able to attract and retain talented workers. As a result, they will be more resilient organisations.
Line managers in these organisations have a distinct frame of reference – they are not short-term focused on servicing the revolving door of exiting and then new staff. Instead, their work can be more satisfying and engaging – they can focus on the organisation in the future, working to support and develop their staff. Their attention is on building capacity, identifying training needs, while knowing those invested in will remain with the organisation. Their more-engaged staff will identify issues early, altering managers to the problems and disconnect; this shared information can be invaluable in raising the quality of the organisation’s service and deliver as well as reducing its costs. Therefore, these organisations can retain staff at all levels – providing depth and breadth in their workforce. They are more resilient.
So what are the things employers can do? Aside from paying a living wage, they can:
- Ensure management recognise and tell staff how their work matters – this feedback can be critical. Think about the NASA cleaner who understood that their work was helping put a man on the moon.
- Do the maths and identify the hidden costs of servicing a revolving door for your business – would it be cheaper in fact to pay the living wage when these other costs and lost opportunities are factored in?
- Rather than asking ‘how can I get the workers I need?’ – ask ‘how can we keep the ones you have?’ Identify the things that matter for your staff and what you can do to meet them. For example, supporting staff higher home costs by adding showers, or providing food at work. In addition, monitor which of these retention strategies are most effective – Engage staff to suggest these ideas. These create a positive environment that recognises the issues that people are facing and actively supports them in tangible ways.
- Invest in upskilling those who already have knowledge of your business and the right attitude and history of good quality delivery. The return of investment for these staff is likely to be high. Again measure the savings such programmes generate so that the organisation can understand its value. Who makes the difference to your organisation? What knowledge, or attitudes matter?
- What partnerships can help you? Identify and experiment with opportunities to partner with other organisations that could help reduce training costs, or provide upskilling opportunities for your staff. These might spread costs and create further opportunities
For more information, resources and research on decent work, visit Decent work | EAWOP impact incubator