May 2016 - By Ralph Varble - Many businesses choose to provide a higher hourly wage from the beginning, such as QuikTrip and Ikea. Studies of companies that offer a higher wage reveal that their employees are generally happier, more engaged, and have a lower turnover rate than employees at competitors who are paid less. Reduced turnover saves expenses and allows employees to become better trained, which further improves the customer service experience. Conversely, employees who are overworked are more prone to errors, poor customer service, and absenteeism, which can decrease productivity and profitability.
There is a direct correlation between happier, more engaged staff and happier, more engaged customers. Higher customer satisfaction generates a higher intent to return and a tendency to pay more, which, at the companies studied, helped provide the revenue necessary to fund the higher wages and yielded improved margins over time.
The key to success is in better managing your workforce. Smartly managing your labor will assist in controlling costs through the short-term transition to higher wages. Continually managing your labor helps maintain better margins as the improvement to your revenue and customer satisfaction develops over a longer period of time.