Fairness & Wages

A fair wage is a complicated issue. Some people think it’s a political matter, define it as “enough to make ends meet”. But that’s not true. It’s a mathematical equation, and a simple one. A wage is fair if you produce more value than you receive, and if the employer raises your wage according to the excess value you produce. That’s it.

FAIR.

Fair is a balance. Unfair is when the employer keeps too much of what the employee produces for themselves. But it’s also unfair when the employee produces less than they receive. And that does happen a lot. When I first came to Ecuador, I was flabbergasted by the low wages people received here. Until I saw and experienced the quality of work.

Yes, it’s more complicated.

Self-fulfilling prophecy comes to mind. Why work hard for that wage? Greed comes to mind, many employers here are quite arrogant and egoistical. The culture plays a role, too. And yet, whenever I talk to people, most of them see the businesses as the bad greedy ones and the employees as the poor, innocent and exploited ones that have to be protected. Now, that said, here’s my take as a small business owner.

First, we’re not a family.

I always cringe when I hear that. One of the worst analogies ever used. My business is not like a family. I wouldn’t give my kidney to an employee. And they wouldn’t give it to me, either, nor would I ask for it. Now, that does not include the friendship that I built with my employees, that is different. I did do a great deal, sometimes even too much, for them, same as they for me. But we’re not family. And everyone who sees a business like that is doomed to fail. The word creates expectations and gives false ideas.

We’re a community.

A functioning community is balanced between giving and receiving. We have specialists for certain areas, we have a hierarchy due to that (in the best case based on natural authority), we help each other out, we work for a common goal which is the prospering of the business off which we all benefit. You have a bad day? Let me know and I’ll keep a closer eye on your work so no mistake slips through and damages the business. When I have a bad day, you or someone else from the team will do the same.

But be responsible.

That includes communication. If you screw up, if you cause damage to the company, I will charge you for it. Not the whole damage, as it’s never entirely your responsibility. But I pay you a good wage, over average, and I expect over average work for it. I expect your output to be higher than my input. And destroying company capital due to negligence or lack of communication does reduce that output and is not what I hired you for. You’re not doing your job at that moment, on the contrary, you’re damaging the company that I trust you with.

Fines aren’t bad.

They can re-establish the balance. Again, if they’re fair. I’ve given out a lot of fines while owning businesses. I remember one of my employees looking at her paycheck and getting furious about the amount of fines. We sat down, and I walked her down the list of all her mistakes, what they cost directly, and the damage they did to the company in form of clients not coming back and such. Because it’s never just a moment. Everything has consequences in the long run. She accepted most of them, making a good argument on one of the fines, and I scratched it.

Because that is fair, too.

I can’t see everything from everyone’s perspective, so I need my employees to share theirs. If their argument is solid, I have no problem in admitting that. Because it also means that they thought about their mistake, which is important. I don’t give out fines randomly. And they’re not to collect money; I have a fund for damages. They’re an attempt to wake up. You can only talk so much about being responsible, taking work seriously, caring for equipment and ingredients. After talking, action must follow. It can't always be the carrot. If someone doesn’t care enough, there must be an escalation available.

I make more money selling high quality products, not with fines.

That’s the key. Fines are nasty extra work. I want my business to run without interruptions. I want to be able to trust. I want to be able to know that I won’t have to apologize to clients for screw ups by the team or to run around organizing to make up for their mistakes. That, too, is work. And my work is valuable, too, not just my employees’. Them doing damage to the business is also a form of disrespect and depreciation of my time, energy and work.

Mostly not intentional.

But doing the same mistake again? Not improving? That is not tolerated. On the other side, if something breaks repeatedly because of carelessness, I won't just endlessly collect to replace it. That would be short sighted. As a leader, I must look into why that person is so careless. If it's something innate to them that they can't change, or if it's just lack of interest. Or maybe something entirely different. And then I work with them on a solution, how to make them aware. Or make a deal to buy more sturdy equipment so neither I nor them have to worry about it. That, too, would be discussed with them as part of the investment would affect the bonus payments for everyone.

Yes, everyone gets bonus payments.

And it’s based on net profit. So, if the company has less net profit because someone keeps doing damage, everyone gets hurt. Like in a community.

What are your thoughts about this topic? Please feel free to engage in any original way, including dropping links to your posts on similar topics. I'm happy to read (and curate) any quality content that is not created by LLM/AI, as well as read your own experience and point of view, I love to learn!

Pictures taken with a Motorola Edge 60 Pro, I reserve the copyright - but feel free to ask if you want to use one of the pictures!