Reasons to Pay Above Minimum Wage
More companies are opting to pay employees above state and federally mandated minimum wages as they realize that paying more in wages ultimately enhances performance and customer service. Summit’s 42 years of experience tell us that higher wages produce tangible benefits for both employees and customers. Here’s why:
The Cost of Turnover
There’s a clear correlation between low pay rates and high employee turnover. In the mid-2000s, a group of researchers documented the turnover rate of security screeners at a Los Angeles airport. An initial 95 percent turnover rate fell to just 18.7 percent when the screeners’ pay was increased. High turnover raises an employer’s expenses by forcing increased spending on recruiting, hiring, and training new candidates. According to Keeping the People who Keep You in Business by Leigh Branham, the cost of losing an employee can range from 25-200 percent of the employee’s salary. A UC-Berkeley study calculated that the typical turnover costs exceed $4,000 for each employee. Increasing wages, they found, led to a decline in turnover of 34 percent. By raising the pay rate, turnover is lessened and recruitment, hiring and training costs are reduced.
More Skilled Candidates
The higher the pay, the better the candidate. Security Officers with a stronger background are more willing to apply if the wage rate matches their level of experience. Highly skilled candidates will provide superior performance, justifying their higher wages and increasing customer satisfaction. Alongside this, a study by Ernesto Dal Bo found that offering a higher wage correlates with candidates higher motivation scores. A higher pay rate will also attract a larger pool of applicants, giving employers a larger range of candidates to select from.
Higher Wages = Better Retention Rate
According to Entrepreneur magazine, 61 percent of job seekers choose to take a new job because of salary. Paying higher wages has been linked to a better retention rate, and thus the need to hire new employees becomes less frequent. As more and more security officers remain with the company, the less training is required to ensure an efficient, productive team. Security officers will become more comfortable with specific protocols, and it will show in their level of work.
It’s All about Your Satisfaction
A 2006 Wharton School study found a positive relationship between customer satisfaction and employee salary. In an industry where our people are frontline ambassadors, it’s imperative that they leave a great impression. While Summit requires every security officer to undergo customer service training and offers additional, optional training for interacting with clients, having a security force that’s incentivized on top of training is even more effective.
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