Profit and People: The Bottom Line

Group of Business People Meeting About Teamwork

What is the bottom line for business?

Revenues minus expenses is the stock answer, and it is absolutely correct. But what are the true expenses, and what is the true bottom line?

Expenses are the payments made to generate profits. When profits are threatened, expenses may be cut.  And sometimes, to save the company, the sacrifices must be draconian. Jobs may be lost, hours cut and benefits slashed. The bottom line is saved, and profits are maintained.

But what is the real cost?

Part-time employees can be far less expensive than full-time employees.   There are savings in benefits and apparent benefits in  staffing flexibility and coverage. However, there are hidden  costs. To make ends meet, employees supporting families will work multiple part time jobs. For any one employer, this means less availability, less schedule flexibility, and  more scheduling challenges. Multiple part time employees require more training time and because their scheduled hours are limited, they will not become proficient as quickly as a full time employee. Their focus and loyalty are divided between employers, and turnover may be greater.

Full-time employee compensation can also have hidden costs. How much does it cost for a family to live in your community? How does this compare to the salaries paid? . Employees who must work additional jobs to make ends meet are not focused fully on the needs of the business; they are focused on paying their bills. They may be exhausted, and more prone to illness, errors and on -the-job accidents. A competitor’s offer of a livable wage will raid the best employees.  Beyond a fatter paycheck, a livable wage means freedom from the necessity of working multiple jobs. Paying a livable wage today can be the best investment in a company’s future.

What about cutting benefits? Cutting health insurance benefits can save dollars in expenses, but can result in costly outcomes.  Staff members unable to afford health insurance may suffer from untreated illness, be prone to accidents, lose time from work, or report to work, spread illness and devastate the workforce. Workers compensation claims may rise. Health insurance premiums may be high for employers, but comparable insurance is likely to be even more costly for individuals. The dollar value of insurance can be worth much more than a dollar of salary to employees. A good benefit package can land quality candidates who would not otherwise apply.

So what if, as a strategy, a company supports upper management mightily, while providing the lowest possible salary, benefit and staffing structures to lower level employees? Can well-compensated management compensate for a minimally supported workforce? Where is the real work done? Probably by front line employees. Great leadership needs resources to produce great results, and a robust workforce is a key resource for profitability.

Employers who find a way to pay a livable wage with good benefits to full-time employees will have their pick of the best, the most productive and the most valuable employees. They will have an unmatched competitive edge.

So what options are there?

Businesses need profit to survive; how can this be balanced with a desire to be a good employer?

First, recognize that there can be other bottom lines, in addition to financial short term profit. A long term investment in staff can take a business through challenges which money alone might not overcome.

Second, look for creative solutions to meet both the business needs and the needs of employees. What are other opportunities? Even in personnel-heavy industries, look for innovative options to decrease expenses and increase revenue.

  • Take a fresh look at your business. What has changed? How can you use this to reposition?
  • Ask employees for ideas. Often they can help develop alternatives that not only meet the business needs, but meet their needs better, as well.
  • Look to other industries. What solutions can you re-purpose and apply?
  • Can investing preferentially in front line staff  improve long-term corporate performance?

Profit is good. Profit with high employee satisfaction is better. Consider the financial bottom line, and consider the human investment that can make a strong bottom line a reality.


No comments yet.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.