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Can someone explain to me why corporate management seems unable to grasp the concept of properly paying and providing benefits for their employees to increase r

Can someone explain to me why corporate management seems unable to grasp the concept of properly paying and providing benefits for their employees to increase retention and have more successful hiring? Like...is it actual incompetence? Or do they know it's the answer, but just don't want to do it? I just can't grasp why a manager would refuse to provide proper pay and benefits and then get a Surprised Pikachu face when employees don't stick around.

jfim 2y ago
Because the dollars are easy to measure, but the employee happiness and other fuzzier metrics aren't. Just like we've known for a while that getting software developers their own offices increases productivity (but costs money/doesn't look trendy), or that getting rid of senior aeronautical engineers might lower quality over time (but saves money).
- tsunamifury 2y ago
  Many many executives do not believe happiness improves productivity and in fact many believe it reduces it. Specifically midwesterner’s who think pain is honor and grit vs a waste of energy and distraction.
  - smcin 2y ago
    Interesting comment, is there any quantitative study or data corroborating regional attitudes in the US?
    - tsunamifury 2y ago
      No obviously not
      - smcin 2y ago
        Anecdotally, do you find it tends to be true?
        tsunamifury 2y ago
        Yea it's pretty common in the Midwestern owners mindset. They see pain as a motivator and a grit builder. It's what commonly limits the midwest from building advanced tech these days IMO. They simply don't value building a 'better life' and enjoy the power structure as it is.
- RandomWorker 2y ago
  In the article they said it cost the company $5,000 per employee that left before the first year. So, before they took action they probably measured the money.
- Sohcahtoa82 2y ago
  > employee happiness and other fuzzier metrics aren't. I'd think turnover rate could act as a proxy for employee happiness.
bhickey 2y ago
This isn't a lack of understanding. It's the principal-agent problem. Non-founder executives are usually rewarded for short term results. They'll deliver on this even if it means laying off the entire Python language team in the midst of an AI boom. The market is bad at distinguishing these growth hacks for sustainable business, so they'll see 4% quarterly growth and pile on under the assumption that the hockey stick is going up. By the time reality catches up management has already cashed in their chips.
- physhster 2y ago
  I see what you did there.
- kermatt 2y ago
  The market is bad at looking beyond the next fiscal quarter.
  - Ekaros 2y ago
    Most of the market is designed to look for next fiscal quarter. Index fund dump more money in stock going up. Most managed funds make money when stock goes up. So they aim for stocks that go up. In the end there is only limited number of entities seeking value. Or long term sustainable profitability. For everyone else it is line going up. Or blindly following others.
- alt227 2y ago
  The same reason that nothing good ever gets done in governments. They only lead for short terms and so never make any long lasting policies that would actually create change over time.
WheatMillington 2y ago
Managers are balancing multiple competing issues. Yes staff happiness and retention is important, but there is going to be some staff turnover no matter what. At the same time budgets need to be managed - managers simply can't pay staff whatever they please, businesses need to be functional and profitable.
- djbusby 2y ago
  Some firms are very profitable and still pay many workers very low, eg: Amazon and Walmart. They have money to pay more but they just don't.
  - pembrook 2y ago
    Actually they don’t have the money. Retail is notoriously a cutthroat, thin margin business. Walmart is a public company, so you can just look at their profit margins. They’re sub-3%. Amazons margins are only higher because of AWS.
    - djbusby 2y ago
      Walmart had a recent profit of like $5B. How is that not having money? https://stock.walmart.com/financials/quarterly-results/default.aspx https://stock.walmart.com/financials/quarterly-results/defau...
      - reaperman 2y ago
        $5B (quarterly profit) is $2,400 per employee, and a 3.2% profit margin on $611B of annual revenue. Yes, an extra $9,600 annual pay for each employee would make a huge difference to many, but how low of a profit will shareholders tolerate below 3.2%? Maybe a better argument would be to find a larger bucket (much larger than $5B/quarter) where Walmart could perhaps reduce spending and redirect that to rank-and-file employees?
        pembrook 2y ago
petra 2y ago
When i worked in a small business,a factory, the boss, having a hard time getting people to work for hime(due to salary, benefits and work environment) explained it by "people just don't want to work". Why? Extroverts usually blame the world, introverts look for the reason in themselvs. Many managers are extroverts.
- superfrank 2y ago
  > Extroverts usually blame the world, introverts look for the reason in themselvs That's a really odd conclusion to come to IMO. I feel like it's more about the amount of self awareness and not extroversion vs introversion.
- mega-flop 2y ago
  I think in psychology this is a concept called locus of control (internal vs external). Not necessarily linked to the introvert/extrovert framework.
- sircastor 2y ago
  I think there’s an unacknowledged end to that phrase, being that “people just don’t want to work for unfair wages” But of course employers don’t want to acknowledge that they’re being unfair in compensation. To them, the compensation is just, and therefore people are simply unwilling to work. I think there is a degree of tolerance that’s shifted. A job is not a job, anymore. Healthcare is insanely expensive. Housing is insanely expensive. Raising kids is insanely expensive. What used to be a “good honest job” has transformed into maximum-value-extracted job. And everyone is desperate to get as big a piece as they can to ensure their own survival.
snarf21 2y ago
ELT are geniuses and deserve their $400K bonus package. Regular workers are replaceable cogs that can be found anywhere and have no skills. It is a perspective issue.
makeitdouble 2y ago
A parallel take to the sister comments: the concept that employees have information and can easily move away from the job is still newish and the prevailing management theories are from decades to centuries ago. Of course it's not only the employer, a significant number of people still see a job as something they're supposed to stay in despite the competitive market. Employers still keep some assumption that the employee doesn't have a choice or won't execute on it, and there's enough employees working under that model that the assumption doesn't look so wrong at a distance.
patrick451 2y ago
Corporate management's job is to make the company more money. It's not obvious that worker happiness is actually necessary or even positively correlated with profit. Just look at Amazon.
AndrewKemendo 2y ago
It’s not any more complicated than short term rent seeking from investors That’s literally it Investors hire managers that will ensure that investors remain the top priority for the lifecycle of the firm To such an extent that they made up fake rules like the idea that corporate officers have a fiduciary requirement to investors like a mutual fund manager does This is because the goal of financializing a company is to make it a narrowly focused high margin hedge fund You can’t do that if labor has bargaining power for control of the firm
- cscurmudgeon 2y ago
  > rules like the idea that corporate officers have a fiduciary requirement to investors What makes it a fake rule? Why should it be any other way within bounds of the law? > It’s not any more complicated than short term rent seeking from investors Any evidence? Doesn't "short term rent seeking" contradict "top priority for the lifecycle of the firm"? Would love a reference or two that investors force this. I know activist investors exist, but only for a fraction of companies. Do customers flock to companies that treat employees much better?
  - AndrewKemendo 2y ago
    It’s a fake rule because it applies a logical construct to a set of groups that it doesn’t apply to A fiduciary in the finance sense is specifically intentionally hired by somebody to manage their money that is not the case for a CEO in a corporation You don’t need more than one activist investor for all of your other investors to go along with it so the whole point is, as the lead that you bring in other investors with people who only care about market cap and that’s the whole point of managing a board Beyond that you’re starting to get a whole crop of CEOs and that’s how they believe they believe they are the investor class and they’re gonna do everything in the act like the investor class including fucking over every employee they can If you see a CEO with 90% of a company, you know for a fact, they’re trying to be Potemkin dictator
deleted 2y ago
[deleted]
nottorp 2y ago
Because IKEA is not a publicly traded company. Don't know about the non profit part, but their management doesn't have to worry about growing the stock price every month at the least.
- pas 2y ago
  Paying CEOs in stock leads to CEOs caring about stock prices. Also, as long as employees are grumbling, but still working, management doesn't care. (And since the extremely inefficient public programs of education and healthcare suck almost all the money out of welfare budgets the unemployment safety net is so weak no one really thinks of acting up.)

jfim 2y ago

Because the dollars are easy to measure, but the employee happiness and other fuzzier metrics aren't. Just like we've known for a while that getting software developers their own offices increases productivity (but costs money/doesn't look trendy), or that getting rid of senior aeronautical engineers might lower quality over time (but saves money).

tsunamifury 2y ago
Many many executives do not believe happiness improves productivity and in fact many believe it reduces it. Specifically midwesterner’s who think pain is honor and grit vs a waste of energy and distraction.
- smcin 2y ago
  Interesting comment, is there any quantitative study or data corroborating regional attitudes in the US?
  - tsunamifury 2y ago
    No obviously not
    - smcin 2y ago
      Anecdotally, do you find it tends to be true?
      - tsunamifury 2y ago
        Yea it's pretty common in the Midwestern owners mindset. They see pain as a motivator and a grit builder. It's what commonly limits the midwest from building advanced tech these days IMO. They simply don't value building a 'better life' and enjoy the power structure as it is.
RandomWorker 2y ago
In the article they said it cost the company $5,000 per employee that left before the first year. So, before they took action they probably measured the money.
Sohcahtoa82 2y ago
> employee happiness and other fuzzier metrics aren't. I'd think turnover rate could act as a proxy for employee happiness.

bhickey 2y ago

This isn't a lack of understanding. It's the principal-agent problem. Non-founder executives are usually rewarded for short term results. They'll deliver on this even if it means laying off the entire Python language team in the midst of an AI boom. The market is bad at distinguishing these growth hacks for sustainable business, so they'll see 4% quarterly growth and pile on under the assumption that the hockey stick is going up. By the time reality catches up management has already cashed in their chips.

physhster 2y ago
I see what you did there.
kermatt 2y ago
The market is bad at looking beyond the next fiscal quarter.
- Ekaros 2y ago
  Most of the market is designed to look for next fiscal quarter. Index fund dump more money in stock going up. Most managed funds make money when stock goes up. So they aim for stocks that go up. In the end there is only limited number of entities seeking value. Or long term sustainable profitability. For everyone else it is line going up. Or blindly following others.
alt227 2y ago
The same reason that nothing good ever gets done in governments. They only lead for short terms and so never make any long lasting policies that would actually create change over time.

WheatMillington 2y ago

Managers are balancing multiple competing issues. Yes staff happiness and retention is important, but there is going to be some staff turnover no matter what. At the same time budgets need to be managed - managers simply can't pay staff whatever they please, businesses need to be functional and profitable.

djbusby 2y ago
Some firms are very profitable and still pay many workers very low, eg: Amazon and Walmart. They have money to pay more but they just don't.
- pembrook 2y ago
  Actually they don’t have the money. Retail is notoriously a cutthroat, thin margin business. Walmart is a public company, so you can just look at their profit margins. They’re sub-3%. Amazons margins are only higher because of AWS.
  - djbusby 2y ago
    Walmart had a recent profit of like $5B. How is that not having money? https://stock.walmart.com/financials/quarterly-results/default.aspx https://stock.walmart.com/financials/quarterly-results/defau...
    - reaperman 2y ago
      $5B (quarterly profit) is $2,400 per employee, and a 3.2% profit margin on $611B of annual revenue. Yes, an extra $9,600 annual pay for each employee would make a huge difference to many, but how low of a profit will shareholders tolerate below 3.2%? Maybe a better argument would be to find a larger bucket (much larger than $5B/quarter) where Walmart could perhaps reduce spending and redirect that to rank-and-file employees?
      - pembrook 2y ago

petra 2y ago

When i worked in a small business,a factory, the boss, having a hard time getting people to work for hime(due to salary, benefits and work environment) explained it by "people just don't want to work". Why? Extroverts usually blame the world, introverts look for the reason in themselvs. Many managers are extroverts.

superfrank 2y ago
> Extroverts usually blame the world, introverts look for the reason in themselvs That's a really odd conclusion to come to IMO. I feel like it's more about the amount of self awareness and not extroversion vs introversion.
mega-flop 2y ago
I think in psychology this is a concept called locus of control (internal vs external). Not necessarily linked to the introvert/extrovert framework.
sircastor 2y ago
I think there’s an unacknowledged end to that phrase, being that “people just don’t want to work for unfair wages” But of course employers don’t want to acknowledge that they’re being unfair in compensation. To them, the compensation is just, and therefore people are simply unwilling to work. I think there is a degree of tolerance that’s shifted. A job is not a job, anymore. Healthcare is insanely expensive. Housing is insanely expensive. Raising kids is insanely expensive. What used to be a “good honest job” has transformed into maximum-value-extracted job. And everyone is desperate to get as big a piece as they can to ensure their own survival.

snarf21 2y ago

ELT are geniuses and deserve their $400K bonus package. Regular workers are replaceable cogs that can be found anywhere and have no skills. It is a perspective issue.

makeitdouble 2y ago

A parallel take to the sister comments: the concept that employees have information and can easily move away from the job is still newish and the prevailing management theories are from decades to centuries ago. Of course it's not only the employer, a significant number of people still see a job as something they're supposed to stay in despite the competitive market. Employers still keep some assumption that the employee doesn't have a choice or won't execute on it, and there's enough employees working under that model that the assumption doesn't look so wrong at a distance.

patrick451 2y ago

Corporate management's job is to make the company more money. It's not obvious that worker happiness is actually necessary or even positively correlated with profit. Just look at Amazon.

AndrewKemendo 2y ago

It’s not any more complicated than short term rent seeking from investors That’s literally it Investors hire managers that will ensure that investors remain the top priority for the lifecycle of the firm To such an extent that they made up fake rules like the idea that corporate officers have a fiduciary requirement to investors like a mutual fund manager does This is because the goal of financializing a company is to make it a narrowly focused high margin hedge fund You can’t do that if labor has bargaining power for control of the firm

cscurmudgeon 2y ago
> rules like the idea that corporate officers have a fiduciary requirement to investors What makes it a fake rule? Why should it be any other way within bounds of the law? > It’s not any more complicated than short term rent seeking from investors Any evidence? Doesn't "short term rent seeking" contradict "top priority for the lifecycle of the firm"? Would love a reference or two that investors force this. I know activist investors exist, but only for a fraction of companies. Do customers flock to companies that treat employees much better?
- AndrewKemendo 2y ago
  It’s a fake rule because it applies a logical construct to a set of groups that it doesn’t apply to A fiduciary in the finance sense is specifically intentionally hired by somebody to manage their money that is not the case for a CEO in a corporation You don’t need more than one activist investor for all of your other investors to go along with it so the whole point is, as the lead that you bring in other investors with people who only care about market cap and that’s the whole point of managing a board Beyond that you’re starting to get a whole crop of CEOs and that’s how they believe they believe they are the investor class and they’re gonna do everything in the act like the investor class including fucking over every employee they can If you see a CEO with 90% of a company, you know for a fact, they’re trying to be Potemkin dictator

deleted 2y ago

[deleted]

nottorp 2y ago

Because IKEA is not a publicly traded company. Don't know about the non profit part, but their management doesn't have to worry about growing the stock price every month at the least.

pas 2y ago
Paying CEOs in stock leads to CEOs caring about stock prices. Also, as long as employees are grumbling, but still working, management doesn't care. (And since the extremely inefficient public programs of education and healthcare suck almost all the money out of welfare budgets the unemployment safety net is so weak no one really thinks of acting up.)