By Carrie S Ahmad, SPHR, SHRM-SCP
Large Companies are Leading the Way for Higher Wages
Starbucks, Whole Foods, Ben & Jerry’s, IKEA, The Gap, Aetna, McDonald’s, Walmart, TJ Maxx, and Costco. What do these highly visible brands have in common? They are at the forefront of paying their employees a living wage. Ben & Jerry’s defines a livable wage as “enough to allow for a quality of life that includes decent housing, health care, transportation, food, recreation, savings, and miscellaneous expenses.” Ben & Jerry’s livable wage in 2013 was $16.13 for full-time hourly employees. That is almost twice the federal minimum wage! Learn more about Ben & Jerry’s livable wage by clicking here.
Build Loyalty and Reduce Turnover
An exciting trend is beginning to occur in the marketplace in which businesses are realizing that by providing their employees with a living wage, they build loyalty, reduce turnover, ignite productivity, and improve their bottom line. Mark Bertolini, CEO of Aetna, said Aetna increased the pay of low wage employees to $16/hour to reduce the worry and stress these employees feel just trying to make ends meet. Bertolini believes that even if the wage increase doesn’t impact the bottom line, it is the right thing to do for his people. Do you agree? Listen to and read more from Bertolini.
The High Cost of Replacement
For an entry-level employee, it can cost up to 40% of the individual’s annual salary to replace him or her should he/she decide to leave your organization. Let’s say you run a call center with 100 employees making $10/hour. The average turnover rate for call centers is 26%. In this scenario, if you have 26 employees, who are paid $20,800/year, decide to leave your organization you are looking at replacement costs of $216,320 (26*10*2080*.40). That is nearly a quarter million dollars to replace 26 low-wage employees. What if you could stop the money bleed by communicating value and understanding to your employees? What if you could build employee loyalty that drastically reduced your turnover rate? Would you do it?
The Right Pay for the Right People
You can pay employees what they are worth! You can provide your people a livable wage that reduces their stress, empowers them, and keeps them engaged when they are at work. At Turning the Corner, LLC, we work with small businesses to identify ways to hire right the first time, pay employees what their experience and skills are worth, and retain people to keep hiring costs low. Let us help you help your people!
Carrie Ahmad, SPHR, SHRM-SCP
Carrie is Turning the Corner’s VP of People. She has been advocating for the success of businesses and their employees for 18 years supporting start-ups, small businesses and large corporations. She holds certifications as both a Senior Professional in Human Resources (SPHR) from HRCI and Senior Certified Professional (SHRM-SCP) from the Society for Human Resource Management. She serves the local HR community as a member of BAHRA’s (Boulder Area HR Association) Treasury Committee.