I was listening to a podcast recently on hiring challenges in the accounting profession. The guest, a long-term accounting firm partner, said the profession needed to pay their people more. It was an interesting interview, because less than 15 minutes later the host changed the topic to stresses on the profession to bill clients more as well, as if it was a bad thing. This same conversation could have been about many different professions I suspect.
The irony that I found in this conversation was this...
Generally, the biggest limitation to paying people more is the reluctance of management to increase the price of the service.
As a business coach, and in my prior profession as well, I’ve worked with many business owners in many different industries. There is a correlation between those that are scared to raise prices, or at least don’t have a regular method for doing so, and those that have difficulty attracting talent. This can apply to an individual company, or even an entire industry in some cases.
The reality of the matter is that if a company needs to pay their employees more, it can only come from two places. Either by 1) increasing prices, or 2) decreasing profits. Many owners get trapped between the proverbial “rock and a hard place” when faced with this decision. We obviously don’t want to decrease profits because we have worked hard as well, but we also are concerned that if we raise prices, we ultimately will scare off customers, perhaps too many to replace. Yes, it is a difficult decision, but in practically every case, there is room for a price increase of some kind, whether across the board or in segments of the business. Few companies have pricing at the perfect level. It takes analysis and adjustment at regular intervals to ensure prices are set appropriately for the market.
In a nutshell, if you are having trouble paying market wages, it’s likely that your pricing structure needs an update. When pricing is pegged at the right level, it becomes much easier to pay your team what they are worth.
As always, I wish you the best in life as well as your business. Please don’t hesitate to reach out if we can be of assistance.
Mark Goldman
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