Many companies are simply cheap. They want to save a little here, and save a little there. Let’s get office space in the worst part of town and save a few dollars. Let’s hire some workers that don’t charge much, so that we can keep our costs down. If your office functions and nobody minds being in the ghetto, then go ahead! Never mind what type of feng-shui your office will have, and how that will effect your future — you are saving a few bucks and that is what matters (for now). If your workers get the job done for less, that is great.
But, in the real world it is not always that simple to just pay less, and save a few dollars. You usually lose something when you pay less, unless you really know how to scour a market, or are really lucky, or blessed. I personally love the art of market scouring. Some people scowl at the art of scouring, but it is a critical task to have in the labor commodity business. The problem is, that when I assess a company’s value to me, it takes months to find out, and the equation is very complicated, and always seems to change over time. Whatever company I liked in September seems to be on their bad behavior in October and vice versa!
Paying a little more also doesn’t guarantee anything. There are plenty of people who charge a bundle who deliver unsatisfactory service. So, what is the secret?
Billionaire investor Warren Buffet looks for the intrinsic value of a company before purchasing shares of stock in it. When I invest in labor, I look at (try to look at because it is deceptive) the intrinsic value of a worker. I look at the price last since it is deceptive. Prices are hourly, but I don’t know how much they get done in an hour, and how good the output will be.
Advice: Look at the value of a prospective worker before you look at anything else.
If you find someone who is so good that they will be like a magnet attracting clients, your company will probably grow even if your sales department is missing a few screws (and perhaps bolts as well). You will also keep your clients very happy if you have someone good. What client will want to leave when they are getting the best service in town?
I personally have many people who I work with who offer outstanding service to me. I do not leave them. I stay with them for years or decades . Sometimes I have to go through a lot of people to find those good ones, but when I find quality, I stick with it.
Advice: When you find your star employee, offer them more than what you would offer an average or underaverage employee.
If you have amazing staff, your business has a big chance to grow. If you hire lousy staff members, they could put you out of business in a few years — slowly. Be careful. Your company is only as good as your worst staff member.
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