Introduction
When employee pay is low, it is a specific business practice that can have a damaging impact on employees, the local community, and the business or organization itself. Low pay can lead to employee dissatisfaction, leading to a decline in employee morale, productivity, and loyalty. This aspect can cause a business to need help attracting and retaining talented employees. Furthermore, low pay can have an adverse effect on the local community, as employees may struggle to make ends meet and support the local economy.
Factors Influencing the Implementation of the Practice
The motives for offering low wages differ from business to business, but some of the most common factors are a focus on short-term goals, a lack of resources, or a desire to reduce costs (Rouen, 2020). When a business is driven by short-term goals, it may prioritize cutting expenses like employee pay to quickly increase profits. It may also lack the resources necessary to pay employees a living wage. Finally, businesses may simply desire to reduce costs to maximize profit.
Potential Negative Effects on Employees, the Community, and the Organization
The potential negative repercussions of implementing low pay can be far-reaching. Workers might face difficulties covering their basic expenses, creating a feeling of financial insecurity and leading to high levels of stress and anxiety. This can, in turn, lead to lower productivity and morale among employees (Cominetti et al., 2021). Moreover, low pay can lead to a lack of loyalty among employees, as they may be more likely to seek other employment that offers higher wages. Finally, the local community can suffer, as employees may need more money to support local businesses and the economy.
Benefits of Adopting People-Friendly Practices
If a more people-friendly practice was incorporated, such as paying employees a living wage, the benefits for staff members, the surrounding community, and the company or institution could be immense. Employees would feel more secure in their financial situation and may even have more money to spend in the local community. This could stimulate the economy and create a more vibrant local community. Finally, the business or organization itself would benefit from higher employee morale, loyalty, and productivity.
Conclusion
Overall, low pay can have a damaging effect on staff, the community, and the organization itself. The reasons behind implementing low pay vary, but potential negative repercussions include lower employee satisfaction, effectiveness, and loyalty and a lack of support for the local economy. Implementing more employee-oriented practices may have far-reaching benefits.
References
Cominetti, N., McCurdy, C., & Slaughter, H. (2021). Low Pay Britain: 2021. Resolution Foundation.
Rouen, E. (2020). Rethinking measurement of pay disparity and its relation to firm performance. The Accounting Review, 95(1), 343-378.