A company ‘overpaying’ its employees

http://nyti.ms/20WFZqB – Managed by Q’s ‘Good Jobs’ Gamble

Interesting case study on how long term thinking can help a business.

Managing and optimizing quarter by quarter encourages focusing on cost alone. Growth takes time and is uncertain, while cutting an employee is immediate and controllable. I was lucky enough during my time as a consultant to focus primarily on the revenue side, which to me always felt more additive and positive.

Underpaid employees and turnover are costs too. Costco has been successful with higher people costs compared to companies like Walmart. It’s interesting that this can work for Q, when most people would assume that a cleaning business would be tough to run without lowering costs because it was so commoditized.

There’s also a parallel here to ownership. Well paid employees would naturally feel more connected and a part of the entity. It’s the same as how people treat a rental versus owning a home – without that feeling of ownership no one takes the same care to guard a resource. If you want your employees to be good ambassadors, they need to be bought in in a meaningful way.

The current corporate governance system seems to encourage bad leadership with myopic short term-ism. Hopefully this company will be successful and more will follow!

Let me know your thoughts!