I have a pull-away calendar on my desk where each day is a new quote of someone saying something stupid. I was inspired by April 19th’s that read, “Remember, you get what you pay for. And at the Hub Furniture Store, you pay less!”, said a furniture store ad. While that ad was probably a mistake that made me laugh, it got me to thinking about this idea of the bargain. Am I really saving any more buying less expensive things?

If you need to replace something, say a power tool like a cordless drill, of course you want the get the best deal possible and you start shopping around. You go from store to store and realize to get a good quality cordless drill, you’re going to spend 150-200 dollars. Then you find a Harbor Freight catalog in your mailbox and see they sell a similarly spec’d drill for $50.  You know in the back of your mind that Harbor Freight tools are inferior in quality and craftsmanship, but you rationalize it. You ask yourself, Do I really need $100 more worth of quality? “I’m just a do-it-yourself home-project kind of guy.” So you pickup the cheap tool excited about this next upcoming project thinking you’ve got $100 extra to spend on it because you are saving it on the drill. You buy these materials to buy this project and a quarter of the way into it, you find the battery doesn’t last very long and it’s diminishing. Frustrated, you keep working around having to spend more time charging batteries and less time drilling. Half-way through the project, the drill’s motor shoots sparks through the ventilation and seizes up. You’re sitting there half-finished and in a spot needing another drill. Realizing that the extra $100 of value really was worth it, you run out and pickup the more expensive one to finish your project.

So what did this really cost you? The obvious cost was having to buy two drills instead of one. There’s the cost of driving into town twice. There’s the cost of your free time. If you had bought the good drill from the beginning, the battery would have stay charged longer. The drill would be more powerful, so you would have expended less energy. So in the end, you have saved energy, time and money if you had just bought the better tool first.

Everyone knows this and as Americans, we are risk takers. This really is a good thing because this is how most of us learn. However, in the 14 years I’ve had a job (I’m 30), I’ve encountered very few employers that have learned this lesson when it comes to hiring employees. Most of my employers had the mentality that they would pay as little as possible and take the hit of retraining someone when someone leaves. They only seem to see the dollars required to keep them around. Especially for ‘unskilled’ jobs. This creates numerous problems for the company that many companies either don’t care or they can only see the immediate effects on their bottom line.

In 2003, I got a job providing telephone based tech support for a company, Alphasmart. Alphasmart taught me how employers can be different. They taught me how to do it right. So right off the bat, they offered me a wage that at the top of what I requested, not the bottom. I was offered benefits immediately. There was no 90 or 180 day trial-period. They were sure they wanted me because they took a lot of time to interview me. Those benefits were top notch. I had full health care for my whole family. I had to contribute zero. That was full medical, dental, vision and life. They offered a 401k and I was vested right off the bat. They contributed 50 cents on every dollar I put in. My PTO and sick days started accruing immediately and were very generous. They even had a free soda machine in the break room. Their annual company event was at a resort where they paid for travel, hotel and all accommodations for the weekend.

What was the result of all of this. In the 1.5 years I worked there. I never saw anyone leave. Not one. Moral was always high. Productivity was always high. And I’m here seven years later writing about how well they treated me. You can’t get all of that when you pay a minimal salary, make employees wait 90 to 180 days for benefits. Contribute little to their health coverage which may only cover the employee and not the whole family. If they even offer a 401k, make them work there 5 years before they are fully vested and get to keep all of the company’s contributions which are more like 10%. They think that putting the carat at the end of a five year long stick will incentivize people to stick around. These costs of low productivity, low moral, high turn-over rate  are going to be higher than simply treating your employees with value.

I have also seen a feature on a privately held tech company that had several thousand employees that took it far beyond what I experienced. The benefits were unbelievable. For example, they had a general practice doctor that worked onsite and was free to the employees. Normally someone would have to request at least half a day off to run to the doctor for a 1 hour long appointment. Now they can just walk down the hallway and be back in that same hour. They don’t have to pay half a days pay when they didn’t produce anything. They have an onsite mechanic, that is free to use. They have free onsite daycare. The list goes on. Who would want to loose a job like that?

So why did I leave Alphasmart. Another company acquired Alphasmart and reduced all of our benefits to what they called ‘competitive’ levels. They also moved my job half-way across the country. One person went there temporarily to train their new team, but no one was willing to uproot to keep a lesser job. That new company didn’t get this. The last week we were open, the Alphasmart CEOs came down from the corporate office to personally thank us for sticking around to the end. They gave us a prepaid $500 Amex just as a thanks on top of the severance that included a month of pay and time with someone that helped us build our resume and interview skills.

So when I’m in a position to have employees of my own, I want to go out of my way to treat them well.

Tags: business, expenses, money, saving