Small Business Uses Higher Minimum Wage to Rethink Operations

​​​Wall Street Journal / John Sullivan / May 2, 2016 

If you’re amo​​​​ng employers facing a higher minimum wage, instead of agonizing over rising payroll costs, consider using the wage increase as an opportunity to rethink your operations, and to turn lemons into lemonade.

First, recognize that your new wage costs are likely to be even high​​er than expected. 

That’s because all of your hourly emp​​loyees working levels above entry-level workers, will – for equity purposes – be expecting a proportional raise. Fortunately, if you use the right advanced people management tools, it’s relatively easy to improve productivity to match even a 10% increase in costs.

Raise the “produc​tivity bar” in these areas:

Improve retent​​ion. Retention is the area with the highest ROI. Start by identifying the high-impact employees that you would regret losing. Then conduct a “stay interview” with each and let them know how important they are to the team. During this interview, ask them to list the factors that keep them working with you and any frustration factors. Spend time reinforcing the positive and minimizing the negative factors. Finally, add one or two excitement opportunities that would really energize them, like letting them pick their own short-term one-day-a-week job/project rotation.

​Improve the productivity of current emp​​​loyees. 

A great best approach for incre​asing productivity is eliminating barriers to employee productivity. Challenge your employees by asking them “What would enable you to produce 20% more?” Ask them to identify the barriers, rules, policies, approvals, etc. that keep them from reaching that higher goal. Work together to eliminate the easiest-to-remove barriers. Your top performers want to excel, so assign each “stretch goals” that require them to perform at a higher level or to learn new areas. Measuring and internally posting individual and team performance results also increases productivity, because it creates both widespread awareness of performance problems and healthy competition.

Reduce the percentage of weak perform​ers. 

Rank your employee​​s by their performance level. Rather than trying to “fix” weak employees, realize that the higher ROI comes from releasing them. If you can’t release them, reduce their hours or move them into lower-impact jobs.

Hire better perform​​ers.

Whenever an ope​ning occurs, ask your best-performing employees to make a referral of someone that is “better than they are.” Ask all employees to make referrals of the best employees that currently work at your competitors (your firm improves, theirs gets worse). Next, identify the sources where your best new hires came from, and look there again for additional high-quality hires. Finally, use LinkedIn to reconnect with your best former employees, ask them to return as “boomerang rehires” or to refer another star like themselves.

Improve proce​​sses. 

A process for sharing best ​​practices is the fastest no-cost way to increase efficiency. Develop an internal sharing website that gives everyone access to “what works” and “what doesn’t work.”

Technology soluti​​ons. 

Examine software solutions that red​​uce overtime, improve scheduling and that increase onboarding effectiveness, that is, getting new hires up-to-speed faster. Finally, audit your competitors for software and hardware solutions that can permanently replace a layer of your now higher-cost employees.​

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