I have taken an interesting decision at Peach recently. I have decided to establish my own level of minimum wage, set at more than twice the prevailing rate.
I have done so for a variety of reasons:
First, I have done so to protect my company. I feel that India is experiencing an unreasonable degree of inflation. And this inflation does not affect us all equally. We can see several of us, at least a huge portion of the people who can manage to read this blog, earning decent five-figure salaries. For such people, inflation works both ways, as their salaries also rise, and therefore they do not get really affected. In fact, they are able to afford even more, even though they may grumble about inflation. But for the rest, the vast majority constituting poor people to whom we rarely even give a thought, this inflation has cut into their lifestyles. They can no longer afford even milk. They cannot even dream of owning their home some day. They can no longer manage their expensive social traditions and even basic needs for survival from their income. Therefore, like many people I've seen around me, they are forced to sell their assets. Next, they borrow.
This is not going to sustain. Some day these guys are going to stand up, and vent out their frustration on us, like they've done in Mid-Eastern countries, as we grow more and more insensitive to their troubles. I do not want to see this happening. At least, I do not want to be part of its cause. Therefore, I must set a salary level at which they can manage to live respectable lives.
Second, I have taken this step to build a loyal and satisfied team. If I pay 20K to a developer, he will find an option of 30K elsewhere. But if I pay 8K instead of 5K to my driver, I am assured that he is not going anywhere, cuz by far nobody will pay this. I am buying his loyalty. And believe me, I've found these people - administrative staff, driver, peons, etc. - to be far less replaceable than my developers. One may find a typical ASP.NET programmer anywhere, but it's tough to find and train a driver with our specific preferences, familiarize him with our frequent destinations, and build a trust so that we can send him with our guests. Yet we manage to exploit him cuz he does not know his importance to us well enough. Or maybe market forces setting rates exploit him.
Next, I have raised the level of wages to raise the level of intelligent output at my company. I do not have a cash-rich company with vast operations. Instead, quite to the contrary, I cannot afford the luxuries of such initiatives. However, I firmly believe that the intelligence of most people is not widely varying. It is their training, and luck that forced them into a particular profession, that determines who gets how much. I always have the option to train people, and I cannot penalize them for bad luck! Therefore, I have decided that the salary band in my company will range from 10K to 50K. People seeking more than 50K can earn it through performance incentives and profit-sharing - I will not give security (without performance) to such highly-paid people. But the lower limit is more relevant to this topic. The employee and I have to work out ways to ensure that he delivers worth this amount. I have to train him, and he has to work as hard as it takes. I have to identify the gaps, and add to his roles. This is a management challenge, which I cannot shy away from by insulting people's intelligence. I have observed that several people, who had given up on ever needing to use their brains at work, have reactivated their IQ, and are making wonderful contributions to Peach.
Even Peter Drucker (aka Guruji) has been a strong proponent of narrowing the gap between the wage of the janitor and that of the CEO, to ensure stability in the company. I think it is simply common sense, and an all-win option.
I will share more as I experience the fruits of this initiative. I am confident that this should work out well, but I'll update you even if I find gaps in my approach. Feel free to share your thoughts on the applicability of this system, or whether you find this worth implementing at your workplace.
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