JPMorgan did something amazing by raising pay for its 18,000 lowest-earning workers
Big banks and other corporations are recognising moral and sound business reasons to foster a contented workforce
Business has been pretty bad over at Swatch, the Swiss watch company. Demand is falling and its latest report shows profits slashed in half; however the directors have ruled out cutting costs by cutting staff. In a statement that will no doubt astound big guns of the investment community the company maintained that employees cannot be considered as “just a cost factor”.
Meanwhile across the Atlantic JPMorgan Chase did something to improve its image by giving quite substantial pay rises to 18,000 of its lowest paid employees.
Chief Executive Jamie Dimon declared that the bank was doing this because “a pay increase is the right thing to do”. Cynics, of whom there is no shortage when it comes to bankers, dismissed this move as a piece of PR and an attempt to divert criticism over high executive pay – this is understandable considering that Dimon’s total remuneration package totals somewhere north of US$27 million. The bank’s new pay policy should therefore be seen in perspective yet it is meaningful. Call centre workers, for example, are in line for a pay rise from US$10.50 per hour to as much as US$16.50; that’s a pretty big hike.
So, what’s happening here? Can it be that business is actually putting its money where its mouth is? It’s too early to draw any general conclusions but there is something in the air. Even in Hong Kong we have seen Li Ka-shing, the doyen of big business, talking about the need to do more for the “deserving” poor, even though his suggestion of inching up corporation taxes has drawn wry smiles.
Yet the very fact that Li felt the need to discuss this matter and that companies like Swatch are going beyond routine declarations of appreciation for their staff reflects something of a new mood.
In part this is a response to the populist surge which has seen the so called underclass rise up and declare that they are thoroughly fed up with the established order, even though some of this frustration is expressed in bizarre ways; not least in the United States where working people are flocking to the banner of a billionaire presidential candidate with a way less than stellar record of concern for his own employees.
The shrewder members of the business community are beginning to appreciate that business as usual can no longer be taken for granted. When Dimon says that a pay rise for the lowest paid is “the right thing to do”, he is implying a moral imperative. This may exist but there are also sound business reasons here.
Staff morale has a direct impact on productivity, then there is the matter of staff retention because even the most menial jobs require a level of training and high turnover, prompted by low morale and poor pay, is costly in terms of recruitment, management time and outcomes.
It is pretty obvious that a contented workforce is a better workforce yet the trend, particularly in Western countries but also on the Mainland, is to hire staff on short-term contracts, allowing employers to hire and fire at will and to take on staff without all the usual obligations of staff benefits. On paper this works well and can do wonders for the bottom line.
However businesses are there, or should be there for the long term and long-term sustainability involves a high level of employer commitment to employees. Pay is one aspect of this commitment but there are other less tangible elements in the mix. Some companies seem to think that if employees are called “team members” or maybe “associates”, this gives them a closer sense of identity with the company. But all too often this terminology falls directly into the BS category devoid of reality in the workplace where highfalutin talk about valuing employees faces daily contradictions. Sometimes it take no more than simple steps to make things better such as the way that senior staff talk to less senior staff, the absence of special facilities – from washrooms to dining rooms – separating employees. Perhaps more important is flexibility in responding to personal issues facing staff members, such as family bereavements or childcare-related problems. Company rule books should not be the sole determinant of how these issues are handled.
Big organisations are notoriously bad at this kind of thing, anyone doubting this assertion should look at Hong Kong’s civil service, where most employees earn reasonable salaries but where seething resentment and bureaucratic inertia combines to make a workforce that can hardly be said to be working to maximum efficiency.
I recently overheard a conversation in which a company executive was being lavishly praised for her ruthlessness and determination to keep the staff under control. In some quarters this sort of thing is highly valued, elsewhere human beings inconveniently lurch into the picture.
Stephen Vines is a Hong Kong broadcaster, writer and entrepreneur