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Nothing you said is entirely true. It's certainly true if you look at it from a quarterly-earnings perspective. But there's no reason that a company paying out

Nothing you said is entirely true. It's certainly true if you look at it from a quarterly-earnings perspective. But there's no reason that a company paying out 100% of earnings to its employees can't outperform a company paying out less year-over-year. You do need committed investors, but even if you have investors cashing out it may be better for the company that they leave when you look at things on a 5-year or longer timescale.

bko 10y ago
I can rephrase that there is some point X where X is the amount you pay employees, such that you don't make any money on T time scale. You can't say that you always get better productivity as you pay more and more. There comes a point where paying them more does not improve their efficiency or your business enough to justify the higher salaries being paid out. I'm not saying that paying min 70k is beyond this point where paying them won't help you on T time scale, but it needs to be evaluated. You can't just assume that paying someone more will be more than made up for in increased long term efficiency.
jasode 10y ago
>Nothing you said is entirely true. It's interesting that you critique gp's comment for being binary, but you also make an absolutist comment yourself by stating "there's no reason" in: >But there's no reason that a company paying out 100% of earnings to its employees can't outperform a company paying out less year-over-year. ... it may be better for the company that they leave when you look at things on a 5-year or longer timescale. Instead of "no reasons", there are several reasons why a company paying out 100% of the profits to employees for 60 months will make it underperform another company that retains some of its earnings. A company can use its retained profits to spend on future expansion, speculative research & development, acquiring a company, etc. In many industry segments, if the company doesn't grow, it becomes irrelevant and dies. (At that point, the jobless employees get 100% of $0 profits.) I can't think of any example in business history of a company that paid 100% profits to employees and therefore had $0 in retained earnings year-after-year ... outperform its competition.

bko 10y ago

I can rephrase that there is some point X where X is the amount you pay employees, such that you don't make any money on T time scale. You can't say that you always get better productivity as you pay more and more. There comes a point where paying them more does not improve their efficiency or your business enough to justify the higher salaries being paid out. I'm not saying that paying min 70k is beyond this point where paying them won't help you on T time scale, but it needs to be evaluated. You can't just assume that paying someone more will be more than made up for in increased long term efficiency.

jasode 10y ago

>Nothing you said is entirely true. It's interesting that you critique gp's comment for being binary, but you also make an absolutist comment yourself by stating "there's no reason" in: >But there's no reason that a company paying out 100% of earnings to its employees can't outperform a company paying out less year-over-year. ... it may be better for the company that they leave when you look at things on a 5-year or longer timescale. Instead of "no reasons", there are several reasons why a company paying out 100% of the profits to employees for 60 months will make it underperform another company that retains some of its earnings. A company can use its retained profits to spend on future expansion, speculative research & development, acquiring a company, etc. In many industry segments, if the company doesn't grow, it becomes irrelevant and dies. (At that point, the jobless employees get 100% of $0 profits.) I can't think of any example in business history of a company that paid 100% profits to employees and therefore had $0 in retained earnings year-after-year ... outperform its competition.