The typical investor generally looks for several things: relative safety of principal, above-average return on principal (dividends, for example) and growth in the value of an investment (a stock’s price rises.)
Investors have been rather pleased in recent months. Returns have grown and prices have climbed. A business also wants to achieve the best possible return on any investment it makes.
One of those investments is the one it makes in its workers. We all learn that rarely do we get more than we pay for. Yet the “economic man” in all of us seeks to pay as little as possible. You have read about and/or watched on TV about fast food chains and the pay they offer, compared with the minimal cost of living for a person in their area. It appears some social activism is evolving.
Some readers employ workers in the “minimum wage area.” Some also have added workers in the past few months and paid them less than in pre-recession days because labor market conditions have changed. The difficulty many managers face now is how to get a significant return on a minimal investment. How do you motivate low-paid workers to be dedicated, engaged and productive?
This is not a new problem; it’s a significant issue today, however, because a large proportion of the new employees in the labor market are low-paid people, according to Bureau of Labor Statistics and employment data. It has been well publicized in the press.
Minimum-wage workers are not a homogeneous mix; there are numerous categories that must be recognized. Many such workers are quite young and are new entrants in the labor force; some are only part-time workers. Many of us can remember when we had our first job at age 14 to 18, maybe as a grocery clerk or a bagger, or even a “soda jerk.” Today health care and food service attract many from within this group, as well as retail. What will excite and engage these workers? What excited you then? What have you found to be good motivation tools for them today?
Another category consists of minority employees coming from the ranks of U.S.-born African-Americans. Many may have left public schools prior to graduation and may lack essential skills that anyone who has a high school diploma possesses. These are not preferred workers today because a considerable investment in training may be necessary to see a desired return on your investment in them, via even the minimum wage. Health care work accounts for a sizable number of these job entrants, although many are attracted to other sectors of the economy, especially retail and fast food outlets.
Another category for special attention in today’s world is the increasing face of immigrants, legal and undocumented. They are concentrated in such ethnic groups as Latin Americans and Mexicans, Southeast Asian immigrants and lesser groupings. The minimum-wage workers within these populations are concentrated in the food service industry and in some construction trades. Look at fast food chains and ethnic restaurants. Some are also attracted to farming/forestry work, as well as retail. Are the minimum-wage workers in ethnic food restaurants more satisfied? How might they become more productive?
Look at the concept of a minimum wage: Most states (and some municipalities) have established a minimum wage for employees. Most are higher and some are lower than the federal minimum wage of $7.25 an hour ($14,500 a year at 40 hours a week). Washington state has established the highest minimum wage — $9.19 an hour. Five states have no minimum wage regulations. Efforts to raise the federal minimum have met with resistance from “interest groups” and no “reform” has been agreed upon since 2009. It should be noted that economists are split about the effect of minimum wage laws on employment levels.
Most minimum-wage jobs carry no benefits. There are rarely paid holidays or vacations. There typically is no insurance paid on the worker’s behalf and such workers are often unable to afford private health insurance. The Affordable Care Act addresses the health insurance issue, beginning in 2014. The recent District of Columbia minimum-wage requirements for Wal-Mart to locate there continue to have repercussions.
City-by-city demonstrations are bringing to the attention of the public the question of the adequacy of the current minimum wage laws, relative to basic requirements to maintain self and family sustenance. It is important to recognize this as we look at how you and your counterparts in management can work with such employees to get the maximum benefit from their efforts.
Virtually all of our traditional research findings suggest that the employee must view the pay (weekly/monthly net) as being sufficient for usual household expenses if other motivational tools are to be useful. For the traditional unmarried part-time minimum-wage worker and some unmarried full-time minimum-wage workers, who may live with their parents as they tackle their first employment, it is possible that the minimum $14,500 before taxes will provide sufficient security that a worker may respond to other motivational stimuli.
A good manager would try. But what to try? Recognizing that $14,500 is below the national (conservative) poverty level, it is possible that more compensation can be motivational. Restaurants, especially fast-food restaurants, give employees a “fringe benefit” in the form of free or discounted meals. This is a carryover from retail stores, which offer their minimum-wage workers a discount on products (normally 10 to 20 percent, except at selected times of the year, when it’s higher.) This is especially important as a means of enriching the income received. Some fast food restaurants allow additional purchases at a 50 percent discount at the end of a shift or for food taken home. Regretfully, this motivational effort is not tied to performance. Some health professionals suggest that such discounts can, in fact, lead to less healthy lifestyles for minimum-wage workers.
What about motivation? Four thresholds must be crossed in order to motivate a worker: engagement, encouragement, measurement and recognition. It could be argued that these thresholds are especially significant for minimum-wage workers.
It is likely that all categories of minimum-wage workers have relatively low self-esteem and that many have little experience in the work in which they find themselves. Although each minimum-wage worker is probably happy to be employed, they do not believe they were selected as quality applicants.
What kind of orientation program does the employer offer? What is done to make the minimum-wage worker believe this company is a great place to have been hired into? How does the supervisor interact with the minimum-wage worker? Too often there is almost a hands-off approach and the minimum-wage worker is made to feel inferior within the workplace.
The engagement threshold requires the business to make an effort to show it is proud to have the minimum-wage worker; this can be accomplished by a quality introduction to the company and a set of materials to be taken home for the spouse and family to read about the company (in a native language of the worker because family members often will have fewer English skills than the worker).
Encouragement centers on training and recognition. An assigned mentor often can be an encouragement. At each stage of the training the minimum-wage worker must be nurtured and recognized for a job well done. At the end of each week, month or quarter the measurement data should be reviewed with the worker. What should be done at the end of the training period, which is also a probationary period? A cents-per-hour increase will be a capstone recognition — yes, just as you would for a new mechanic or a new salesperson.
Recognition is critical, but it depends on two variables: What is being measured, and will the minimum-wage worker see the type of recognition as being of value? What is the productivity improvement the manager desires? That should be the focus of the measurement.
What other forms of recognition might most minimum-wage workers appreciate? Consider these for a beginning: a certificate for years of service; a bonus of, say, $100 (5 cents an hour, but not on a continuing basis) in a lump sum will be more meaningful; a day off with pay; a prepaid gas card; a supermarket prepaid card; or a day-at-an-amusement park pass for the worker and family if the worker gets days off. Be sure you are consistent from worker to worker and that you show no favoritism.
Minimum-wage workers need to have a better self-image; need to believe there are promotions/transfers that will yield greater rewards; and must believe they are valued as a member of the team. What do you do with your low-paid employees? I would love to hear of your successful efforts.
Jerald F. Robinson, Ph.D., is professor emeritus, international management, at the Pamplin College of Virginia Tech in Blacksburg, Va. He can be reached at (540) 449-5870 or by e-mail: JFR@vt.edu.
This article originally appeared in the September 2013 issue.