I was just thinking about why there’s such a constant process of employees being overworked and underpaid.. and so I thought I should run a what-if scenario with numbers – see just HOW profitable being cruel to your workers is and how you can pull it off without being lynched. Here’s the results of that:
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Say you have a job that should require 10 people at $40,000 per year costing a total of $400,000 per year to do correctly with happy workers. You want to reduce that cost and not have to deal with so many employees. You could plan for each person to do two people’s jobs, employing only 5 people – and you can pay them less, say $30,000 per year. Doing that could result in mutiny though and what’s more, you don’t want to interact with their newfound animosity.
So to solve both problems you insert a middle manager at twice the reduced workers’ pay ($60,000). This overpaid manager is there to obscure you and ride your 5 overworked & underpaid workers so they don’t mutiny. This person will be willing to do that because you’re paying him or her bank and they have this false sense of authority. Your cost equaling what would be 7 employees, is a new total of $210,000 per year, nearly half of your original operating budget.
If you had 7 underpaid workers with no manager (same operating cost), you still might have a mutiny and you still have to interact with all of them. If you cut 5 jobs but kept their salaries the same (within $10,000 of the same operating cost) then there’s still a risk of mutiny and you have to deal with their woes of being overworked.
But with the original cuts and manager method you get your $190,000 (almost $200k) in savings without serious risk of mutiny or needing to interact with anyone besides your toady manager.
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That’s why it’s so profitable for CEOs to make your life hell, even in this one scenario they can nearly double their profits if they ride the fine line between mutiny and obedience.