Lead:

The so-called efficiency wage refers to the salary paid by the enterprise to the employee higher than the market average, which can effectively motivate professionals and improve productivity and business performance.

Huaxia Company is a book company. In the early days of entrepreneurship, relying on a group of like-minded friends, everyone is not afraid of hardship or tiredness, and works hard from morning to night. After a few years, the number of employees has grown from a dozen to several hundred, and the business income has grown from hundreds of thousands to tens of millions per year. The company is bigger and there are more people, but the company's leaders obviously feel that everyone's enthusiasm for work is getting lower and lower.

Lao Zhang, chairman of Huaxia Company, has always paid attention to thinking and learning, and for this reason, he went to Xinhua Bookstore to buy some books on the operation and management of successful enterprises to study, and he saw such a passage in the article introducing Matsushita Konosuke's way of employing people: "The principle of management is naturally to hope to achieve 'high efficiency and high salary'. When efficiency increases, companies are likely to pay high salaries. However, when Mr. Matsushita advocated 'high wages and high efficiency', he did not put high efficiency as the first goal, but increased the willingness of employees to work, and then achieved high efficiency. He thinks that the company has developed, and it should indeed consider improving the treatment of employees, on the one hand, it is a reward for the hard work of old employees for the company, and on the other hand, it is the need to attract high-quality talents to join the company. To this end, Huaxia Company has reformulated the remuneration system, greatly increased the wages of employees, and renovated the office environment.

As the saying goes, "under the heavy reward, there must be a brave man", the effect of high salary was immediate, and Huaxia Company soon gathered a large number of talented and capable people. All the employees are very satisfied, everyone's enthusiasm is high, the work is very hard, and the company's spirit is also renewed.

In the above case, Lao Zhang's approach involves the issue of efficiency wages in economics. The so-called efficiency wage refers to the salary paid by the enterprise to the employee higher than the market average, which can effectively motivate professionals and improve productivity and business performance. To put it simply, efficiency pay is a system of incentives and compensation that enterprises or other organizations pay to employees much higher than the market average to motivate employees to work hard.

The first to implement the efficiency wage system was Ford. At the beginning of the 20th century, the phenomenon of worker slacking and turnover in the United States was quite serious, so in 1914 Ford announced that it would raise the daily wage of workers from $2.34 to $5, which is the efficiency wage. So job seekers lined up outside the Ford plant, hoping for such a job offer.

What are the reasons for this initiative to alleviate worker slack and mobility?

1. It can reduce the cost of monitoring, and even play a role in motivating and restraining employees when it is impossible to monitor the degree of effort of employees. Because efficiency wages can relatively improve the personal utility of employees' hard work and loyalty to the enterprise, and increase the cost of laziness of employees, it has the dual role of incentive and constraint. After the adoption of efficiency wages, employees have a strong motivation to work hard, while the motivation for unethical behaviors such as laziness and deception is relatively reduced, so the probability of unethical behaviors in enterprises decreases, and the cost of unethical behaviors and the corresponding monitoring costs can be reduced. For capital-intensive and knowledge-based enterprises, the incentive-constraint effect of efficiency wages is even more pronounced. In knowledge enterprises, the degree of effort of employees is very difficult to monitor, and the risk of laziness, deception, and leakage of secrets is greater and the cost is higher. It is in this sense that some Western scholars have argued that "efficiency wages are paid only to highly skilled workers".

2. The adoption of efficiency wages can attract and retain high-quality employees. Efficiency pay is a screening mechanism that selects high-quality employees at a wage level above the market-cleared wage and keeps them within the business.

Efficiency pay is essentially a signal, and this signal is of great significance to both the business and the employees. For enterprises, paying efficiency wages means that the enterprise is in the main sector, and it is a capital-intensive, technology-intensive and knowledge-intensive enterprise, with good growth potential. The credibility of a business continues to grow and it is able to give it to its employees, to share it and to be in a favorable position in the labor market. For employees, being able to accept efficiency wages and obtain efficiency wages indicates that the value of their human capital will increase, their human assets will continue to increase, and they have good quality and potential. Thus, efficiency wages are able to exclude incompetent people from the labor market and bring valuable professionals to the table.

3. The adoption of efficiency wages can increase the resignation cost of professionals and ensure the sustainable development of enterprise competitiveness. The adoption of efficiency wages can reduce the quit rate of workers and attract the highly skilled workers needed by the enterprise to the enterprise.

Therefore, an effective incentive mechanism should reduce the motivation of professionals to quit and increase their willingness to stay in the enterprise. The efficiency wage can ensure that this condition is met.

Therefore, some far-sighted enterprises, the boss has offered high wages to attract talents and improve the economic efficiency of the enterprise, such as the famous domestic Huawei company, which stipulates that the salary of the company's employees is higher than the average level of the same industry.