7 Aspects that Prove Higher Salary Leads to Increased Productivity


On 9th January 2020, Taco Bell announced that it will test 100K salary for general managers of certain company-owned locations later this year. The announcement was generally taken as a good omen for businesses across the country but raised a few eyebrows among the food and beverage industry. In the US, Taco Bell is not the first company that is offering such a lucrative salary package to its employees. In 2018, Amazon increased its minimum hourly wage to $15 and in the same year, Walmart set a minimum wage of $11.

Many companies, especially the big tech giants like Google, Microsoft, Facebook, along with Amazon, offer excellent salary packages, especially to the top management. But when it comes to middle management and new employees, the salary offered is just not up to the mark. And this rise in minimum salary increases the risk of cost-cutting in the companies through a cut in bonuses, benefits, and even a reduction in the workforce.

Is High Salary the Most Important Factor for Employees?

Employee salaries are a critical business decision made by company leaders and HR managers. There’s much to consider: current and future company revenue, the opportunity cost of money going to employees as opposed to somewhere else, the impact of salaries on your hiring processes, and so on.

It is a general practice among big conglomerates worldwide that they pay a considerably handsome salary to their employees as compared to small businesses and startups. Researchers are still looking for answers in this concern, but one thing is for sure. High salaries and other fringe benefits to attract the best talent in the industry and companies are able to retain the star performers.

I will try to explain the connection between high productivity level and high salaries and perks and what companies, especially small businesses, and startups must do in this concern. What strategy they need to come up with is the real question. Please go through the following seven factors and I hope all your queries will be answered.

Related Read: 4 Management Practices that can Yield Optimum Productivity from Employees

  1. Hiring the Best Talent

The role of human resources in recruitment is critical. The requirement from every department in a company is about hiring the best available talent in the market. Top position holders and sharp minds don’t choose a startup and SME that often; they look for the tech giants and business conglomerates. So how a small business can attract them? Well, they need to make some effort in this concern. To start with, offering a higher salary than the market average is one way to get the attention of job seekers.

  1. Create a Great Working Environment

An engaging workplace with a lively culture will make employees more likely to stay in their jobs. The point here is that hiring the best talent is not everything; retaining them is also important. The job market is full of opportunities and through platforms like LinkedIn, companies try to lure the best in the business. So, it is imperative for all companies to make some serious effort in retaining their star performers.

Employees who work for a company for several years automatically get accustomed to the system, processes and how to achieve the goals. That can make them more productive and is one of the factors for high employee retention. Hiring new talent all the time is not easy and this can solve the woes human resources department face in every company.

  1. High Output Level

When a company offers an above-average salary, they certainly look forward to a high output level from the employees. High pay is certainly a factor that compels an employee to work to his full capacity and offer something extra as he knows he is being paid much higher than the average salary. Higher salaries and perks are great incentives to cultivate a culture of high output. That’s why they need to work harder to show that they are worth every penny being given to them.

  1. Free Marketing through Word of Mouth

Employees highly satisfied with their job use social media to tell everyone how happy they are with their current employer. People who enjoy their work motivate others and offer them to join their company for fast growth. But this shouldn’t be limited to just the employees. Even a company can make its employees feel special by mentioning their name on the Facebook page, for example.

The seemingly simple act, mentioned above, can go a long way in getting free marketing for companies. With lots of exposure for the company and the employee, the productivity level of employees can shoot up for the better. Prospective employees will look up to this company so that it can expect a continued supply of top talent without making much effort in this concern.

  1. Satisfied Employees Work Better

People work extra hours, start a part-time job, and try to invest their money to earn some extra income. But when employees are free from the worries of low salary, they can fully focus on their assigned tasks and work far better than in the scenarios mentioned above. Some of the benefits are better task management, grip on understanding a project and completing it on time. As they have fewer worries after being financially stable, it leads to a higher level of productivity.

Related Read: 4 Key Productivity Metrics That Small Business Owners Should Keep an Eye On

  1. Bonus, Perks and Much More

While a high salary is enough reason for employees to work diligently and with dedication, companies need to go the extra mile in evaluating the performance of high achievers. Companies offer bonuses, leisure trips and other perks to employees like free lunches, movie tickets and discount coupons. For employees, nothing is more valuable than an honest recognition of their efforts and hard work.

Employees who create value for the company get the reward they deserve and create a culture of equality and recognition that increases the productivity manifold.

  1. Fewer Employees Required to Complete a Task

A team boasting of high achievers, high output and best quality in work are achieved with employees onboard. A team of three highly talented employees will work significantly better than five average employees as they are capable of completing tasks quickly and efficiently. For small businesses and startups, this can significantly lower the operational cost of running a business and how to survive and grow in the long term.

Over to you

If you think you can add something valuable to this blog or have any query in mind, you are welcome to give any kind of feedback. Please use the comments section below in this concern.