I keep hearing repeated this idea that businesses are only interested in profits. Although its true that companies have a legal obligation to protect the investments of its owners/investors and to maximize profits, many people seem to have a fundamental misunderstanding of how thats done. Businesses cant just slash salaries. They have to compete for the best talent, and reducing wages opens the window for competitors to steal away good employees. The net result would be a reduction in productivity and profit. If you want proof that businesses cant just slash salaries at will, look no further than the fact that 98% of employees are paid more than minimum wage, voluntarily. Businesses cant just increase profits. When the economy improves, it improves for not just your company, but for your competitors as well. If you took the resulting windfall and just gave it to your owners, you open yourself up to competitors who might instead take their increased earnings and use it to cut prices (and thereby steal customers) or increase wages (and thereby steal talent) or improve products (and thereby hurt sales of your inferior products) or expand operations (and thereby reduce your relative share of the market). Instead, all of these inputs, from profits to investments to wages to product quality to prices, have to be carefully managed to produce the maximum profit. To imply that its a choice between wages and profits betrays a lack of knowledge about how businesses must operate to survive.
Posted on: Tue, 23 Sep 2014 16:00:59 +0000
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