SMB benefits from a living wage outweighs costs - NextGen
Most small businesses should be able to afford to pay staff a living wage and can benefit from attracting and retaining higher calibre people, provided they introduce the change incrementally.
Auckland chartered accounting and business advisory firm NexGen Group partner Peter Prema says that paying the living wage is the socially responsible thing to do and there could be benefits for businesses that do.
“A rough calculation of the numbers suggests the average small business will pay each staff member on the minimum wage an additional $6,000 by moving them on to a living wage.
“If they introduce the shift to a living wage in stages, and if their business is running in good order – as any small business should – it is definitely affordable,” Prema says.
“The vast majority of small businesses in New Zealand employ between 1 and 5 people, including the owners. This means the increase will equate to about $24,000 annually if they employ 4 staff – a small increase in goods or service prices won’t be noticed by customers but will adequately cover costs.”
Prema says the benefits, however, far outweigh the costs.
“I advise all of my clients to pay a living wage. Think about the goodwill you would generate by advertising that you’re a living wage employer. Put it on a sign and make it prominent. Share it on social media. New customers will be attracted by your ethical stand, and existing customers would happily pay a few dollars more.
Prema adds, “On top of that, you're going to be able to attract better quality staff and enjoy more productivity and enthusiasm from them. If you’re in retail or hospitality, you wouldn’t have to be twisting people’s arms to fill in when somebody is sick, or on leave, or when things get really busy.”
He says that his firm’s experience with businesses that have made the choice to pay a living wage is that they are happier and chuffed with their staff.
“Staff turnover is low, and they get lots of positive feedback about their customer service. They enjoy greater productivity, efficiencies and value from their people.”
Don't do it overnight
Prema cautions against jumping in with both feet.
“Review your numbers and assess if you can afford it first. If you can, well and good. If you cannot, review some strategies and a timetable to get you there.
“One strategy may be to put your prices up by two or three percent,” he adds.
Get your staff onboard
“Meet with your staff and tell them you’re dedicated to becoming a living wage employer and ask for their help in getting you there – even if it’s just stepping up their levels of customer service.
“Let them know that with a living wage comes greater responsibility. Moving from $16.50 to $22.50 is a big step, but if you all pull together to make a better customer service experience and create better efficiencies, it's a win for everybody.”