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Balance Between Remaining Profitable and Paying a Decent Salary

For a company to stay afloat and running it is fundamental for it to make a profit. However, simultaneously, it is also important that the company pays their employees compensation that compliments their skills and abilities and allows the employee to live a comfortable life. A company cannot slack in one category as both these aspects are very intertwined with each other. Therefore, a balance between remaining profitable and paying a decent salary to employees should be goals for an organization.

Importance of balance between profits and wages

Compensation, benefits, and the ease provided to employees become a matter of ethics in companies. With all the movements and unions nowadays, organizations can get a lot of negative publicity if they do not provide a living wage for their employees while making enough profit. Moreover, this could harm the employee’s morale as they feel unappreciated and used when they see that the organization is not paying them the amount they deserve even when they could(01). An employee could lose motivation and have an overall decrease in productivity, impacting the organization’s outputs and goals and eventually decreasing the profits. This could turn into a cycle that will not benefit both groups and companies should avoid it (01).

Many employers in the US are part of certification programs that recognize these employers for paying a living wage, impacting thousands of employees who have a low salary worldwide (01). More than 2500 small to medium-sized businesses are part of the living wage network and ensure that employees are paid a living wage.

Taking away an employee’s stress due to low wages will benefit the employer through multiple factors(01).

Firstly, living wages grow the economy as consumer demand increases when spending power increases. Therefore, consumers buy more products and services which positively affects the profit of a company. Hence, a cycle is created where both parties are in a win-win situation. Employee morale, attitude, health, and quality of work also increase when they receive a living wage which benefits the organization as turnover and absenteeism reduce(02). This saves organizations the cost of replacing employees and dealing with the cost of training new ones.

Therefore, organizations need to find a balance between creating a decent profit and giving back to the employees with the wages they deserve and can easily live a comfortable lifestyle.

The balance between remaining profitable and paying a decent salary is important!

TEDx Talks. (2015, July 9). The social responsibility of business | Alex Edmans | TEDxLondonBusinessSchool [Video]. YouTube. 
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