Learning & Development Invest in Entry-Level Employees and Increase Profitability

A study by the McGill Institute for Health and Social Policy indicates a cause-and-effect relationship between the welfare of lower-level workers and a company’s bottom line.

While companies have long been accustomed to using high wages and good working conditions to attract and retain quality professionals, they often overlook incentives for their junior employees.

Management’s traditional assumption is that employees at the bottom are more readily replaceable or are less valuable to the company’s performance, so investing in them is not seen as profitable.

However, these often-overlooked workers actually contribute disproportionately to a company’s financial and social performance. Investing in them can be an advantage in both good economic times and bad.

The six-year McGill study looked at companies in nine countries, ranging in size from 27 employees to 126,000. The businesses were chosen to represent diversity in geographical location, company size and industrial sector.

The study’s authors went from believing that it was possible for companies to improve working conditions while remaining profitable to realizing that the companies studied had actually increased their profitability by investing in their lower-level employees.

Key Findings Investing in workers’ health, including flexible leave policies, can easily save more money than these new policies cost to implement. Also, healthy workers are essential to greater productivity, as well as lower absenteeism and turnover rates.

Offering training programs and identifying clear career paths for junior employees leads to easier recruitment and lower turnover. Classes in such areas as language skills can increase communication between employees and improve work efficiency.

Incentives through wages or performance bonuses, sometimes based on the productivity of a team, can be an excellent motivation for employees to excel at their jobs. It can also have a positive effect on recruitment and turnover.

Asset-building plans, such as offering stock options, can generate among employees a sense of shared ownership and an overall commitment to increase not only sheer productivity but also the quality of the work performed.

Engaging line workers by soliciting their expertise, and then rewarding them for recommendations you implement, can improve efficiency rates while fostering employee loyalty. When employees feel engaged, there can be a profound impact on absenteeism and turnover.

Being a good citizen in your local community is important. If the surrounding community appreciates your outreach efforts and values the economic opportunity your company represents, you will become an employer of choice.

Profitable Ideas The experiences of the companies in the McGill study suggest five ways in which corporate leaders can adapt their strategic approaches so that all levels of a company can profit together.
• Understand who performs the majority of the essential work. At professional services firms, this may be lawyers or paralegals, whereas in call centers, the employees answering the phones are central to the firm’s productivity.
• A firm’s success depends on the quality of the work of those who carry out the majority of the labour. Remarkably few firms currently structure their work environments to optimize the efforts of employees at the bottom of the corporate ladder — even when these employees are central to creating the firms’ added value.
• The quality and productivity of employees in entry-level positions, like all parts of a workforce, depend on whether these employees are healthy, adequately rested, well prepared to carry out the tasks they are asked to perform, and motivated in their work.
• Line workers are often the ones who know best how to increase the efficiency of operations, either by increasing the quality or the pace of production.
• As companies increasingly operate in distant locations, the same factors come into play around the globe. The health, skills, training, motivation, input, and commitment of line workers influence the bottom line, wherever the workplace is located.

An executive summary of the McGill study is available online: Profit at the Bottom of the Ladder. The full report, along with case studies and strategies for implementaion, is available as a book: Profit at the Bottom of hte Ladder: Creating Value by Investing in Your Workforce, published by Harvard Business Press in May 2010. ?Copyright © 2008 go2 Tourism HR Society. ?All Rights Reserved. Republished under license. Contact: ,,


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