Three characteristics of high-paying industries

1/5. An abnormal case

A colleague once worked in an advertising company, and the boss of the company was very pursuing. , the salary offered is 50% higher than that in the industry. His business philosophy is to use higher salaries to attract talents, use a superior environment to retain talents, and use awesome business to grow together with talents. The concept is very good, right? ?

I once met an owner of a Taobao e-commerce company. Although he was a very business-savvy person, the things he sold were very ordinary, and the wages he paid his employees were lower than those in the industry.

Which company do you think will have a better future?

The story of the advertising company is rather bizarre. I will leave it to the end. The e-commerce company behind it relies on its low-cost supply chain advantage and grasp of market opportunities. Its business is getting bigger and bigger, and its employees are already It has increased 10 times from the original. The only thing that remains unchanged is the salary level. Although the salary of management has increased, the salary of ordinary employees is still lower than the industry level.

Talking these two examples does not mean that the boss is justified in giving low salary. In fact, employees are not fools. The salary offered by the company is too low, the brain drain is serious, and the development of the company is easily restricted.

That is why an anomalous case deserves study.

2/5. A company that doesn’t mess around

Through many peer exchanges, I discovered that that e-commerce company has a characteristic—the employee turnover rate is extremely low.

E-commerce is an industry with high liquidity. There are many reasons. The industry threshold is low, the positions are very versatile, employees are generally young, and the company itself is easy to go bankrupt and transform. But the most important thing is that Reason: Salaries in this industry are low, and salary increases mainly rely on job-hopping.

So why does this company have a low employee turnover rate? I summed it up in nine words: don’t bother, don’t bother, or don’t bother.

The first point: no-hassle work

At that time, the e-commerce industry had poor standardization of work processes due to platform rules and tendencies changing year by year, which often resulted in useless work. Significant overtime and repetitive work.

The boss of this company used to be a senior executive of a foreign company and focused on the standardization of work. Even if the rules of the platform changed, he would always standardize the new work standards after a period of trial and error. , employees perform more brainlessly. Although employees don't like low wages, they also hate changing orders day and night, being at a loss as to what to do, and accompanying their bosses in meaningless attempts.

Although employees often leave for a combination of reasons, emotional breakdown caused by repeated tossing over a period of time is often the decisive catalyst.

Not making troubles does not mean that the company does not want to make progress. E-commerce is an industry that requires repeated "trial and error", but these "frustrations" are more borne by the boss and a few senior executives.

Second point: A corporate culture that doesn’t bother you

To put it bluntly, a corporate culture that doesn’t bother you means that there is no corporate culture, because the essence of corporate culture is non-work-related frustration. In the process of tossing and turning, those whose ideas can be reformed will stay, while those who cannot be reformed will leave. Naturally, the more tossing, the higher the turnover rate.

Many bosses feel that if they do not develop corporate culture, they will not have a sense of belonging to the company. In fact, you can still have a sense of belonging without culture.

You see, people who don’t like the wolf culture come to the company and stay; people who don’t like the KPI culture come to the company and stay; people who don’t like the lawsuit culture come to the company and stay. Also stayed. A group of people who don't like the company culture stay and naturally become the new company culture.

Of course, many readers may feel that they would rather work more, endure a company culture they don’t like, and have a high salary.

Yes, if it is a simple salary comparison, everyone likes high-paying jobs, but human needs are complex and human rationality is limited. Many people will accept higher-paying jobs for certain reasons. The salary is low, so the third point "employees who don't like to toss" is more important.

The third point: employees who don’t bother.

I found that many of the employees in this company are low-educated women who have just gotten married and have children who are five or six years old. Their life priorities are completely In terms of family, they cannot be full-time wives, not only because their income is not enough, but also because they feel insecure without a job, but they have no way to devote more energy to their work.

Companies always like dedicated employees and are willing to pay high salaries to find these people, but the reality is that most people cannot get the joy of life and the value of life from work, and will not pay for high salaries. too much.

Most employees of e-commerce companies do low-level and trivial tasks: they need to hold an event today, change the price, take inventory in the warehouse tomorrow, and delay the delivery of some orders by one day. Work requires a step-by-step personality and standardized processes.

People with higher salary requirements will naturally not feel at ease with these boring and trivial tasks. On the contrary, some low-paid people are more likely to feel at ease in such routine work.

In addition, clothing e-commerce is a circle, and many new employees are recommended by internal employees. This unique working atmosphere and employee personalities form a wonderful self-cycle.

Low employee costs are a key advantage for clothing e-commerce companies with low profits. This advantage can maintain the company's stable development and create a stable external environment for this group of employees who pursue stability. Environment, this is another self-cycle.

3/5. People-oriented or human-cost?

After I became a fund manager, I paid special attention to several familiar industries with emotional experience, including the retail and professional service industries.

I found that although they all belong to the service industry, they have very different views on the "value of employees": in order to cope with fierce competition, the retail industry regards controlling labor costs as an important management goal, while Professional service industries such as advertising are more inclined to increase employee salaries to increase corporate competitiveness.

The employees of the former are variable costs, while the employees of the latter are advanced equipment.

In most industries, the wages of employees in outstanding companies are higher than those of their peers, but this is not obvious in the retail industry. The most typical example is Wal-Mart, which has long been criticized for having lower wages than its peers. Even Amazon, which has more technological attributes, is one of the most stingy companies in Silicon Valley when it comes to its employees.

Wal-Mart has always claimed that it is the largest employer in the United States, but what the company has always avoided talking about is that it pays most of its employees the social minimum wage. According to some statistics, among Wal-Mart employees who apply for government social welfare The proportion of welfare assistance is the highest among the top 500 companies, and they believe that Wal-Mart's low prices are equivalent to government subsidies.

Although Wal-Mart is suspected of exploiting its employees for cheap labor, the stability of its employees is very good, because most of them have no special skills. Once they lose their jobs, it is difficult to find decent jobs like Wal-Mart employees.

The core of competition in the chain retail industry is to attract consumers with lower prices, and to use larger scale to reduce purchase prices. Of course, employee quality is also important, but cost control is the top priority.

Looking at professional service industries such as advertising, law, design, and consulting, good talents are the guarantee for business growth, and good talents are always expensive, so high salaries are the most common in these industries. business strategy.

However, in these industries, whether in China or abroad, there is basically no company with a large market value, and there is no trace among the top 500. Many companies rely on high salaries to recruit people to build large-scale companies, and cannot establish and sustain the company. Competitive barriers tend to rise and fall quickly.

Let’s talk about the advertising company mentioned at the beginning.

After recruiting a group of industry giants with high salaries, he quickly won several big customers and expanded the scale several times. Then, the boss sold the company to a listed company, cashed out and left. The next year, the company suffered serious losses. After experiencing salary freezes, staff losses, and customer losses, it returned to its original size - no one can escape the rules of the industry.

But why can IT and finance, which also like to steal people, be as large-scale as Wal-Mart?

4/5. Three characteristics of high-paying industries

IT, biopharmaceuticals, finance, and real estate, these industries where employee salary levels are positively related to company size, all have three characteristics** *The same characteristics:

First, employee salaries account for a low proportion of total costs, and employees’ personal contributions to the company make a big difference.

The most typical one is real estate. Due to the serious homogeneity of products, human factors have a great impact on performance. If the company is willing to hire a product planning and marketing team with twice the salary, the performance is likely to be very different. The labor cost in this industry accounts for less than 3%, so even if companies significantly increase wages, they will not have a major impact on costs.

It is this condition that excludes industries such as advertising, law, design, and consulting. Their labor costs are too large and they often fall into a dilemma: if you don’t increase the salary, you can’t find good employees, but if you increase the salary, you can’t find good employees. It also reduces the profitability of the company, and the marginal cost of business development is higher than the marginal revenue. Therefore, the company cannot expand when its scale reaches a certain level.

Second, gradient incentives for highly paid talents.

Highly paid talents are naturally highly mobile, and the intense competition brought about by high salaries makes employees prone to fatigue. Therefore, this type of enterprise generally uses a salary structure with large differences. The employees at the bottom are only slightly higher. With each level, the salary increases exponentially. The real sky-high salary belongs to a few high-level employees at the top of the pyramid, and the industry halo it represents It attracts low-level employees to work their way up and limits their options for job-hopping.

Third, the role of the platform is equally important.

It is not good if the role of talents is too great. It is easy to compete with enterprises, and the platform needs to be able to carry out checks and balances. This is the difference between the finance and real estate industries and the IT, Internet, and biopharmaceutical industries.

The core resources of finance and real estate are in the hands of the government. The role of the platform is not obvious. Senior talents are easier to move, which limits the scale of enterprise development and leads to low concentration in these two industries. ; However, IT and biopharmaceuticals are market-oriented operations, and the platforms have stronger control over resources and create professional differentiation, which restricts the flow of talents to a certain extent, making it easier for monopoly companies to be born.

5/5. The income gap among employees will be even greater in the future

When researching A-share listed companies, I found that China’s manufacturing industry has become increasingly poor in R&D capabilities in the past ten years. Strong, employees are getting better and better educated, but the increase in employee salary is relatively low.

Why can listed companies carry out research and development work that can only be carried out by highly paid personnel at a relatively low cost?

I think the most important reason is equity incentives. For Chinese manufacturing companies with low profit levels, if they only look at salary, it will be difficult to compete for talents with companies in the IT, Internet, finance, and real estate industries. But after a company goes public, it can use lower salaries and higher equity incentives to retain senior talents.

After the employee shareholding restrictions of these A-share manufacturing listed companies are lifted and sold, although it is not as good as the "mass wealth creation" of Internet companies after they go public, it is still worth several years or more. annual salary.

Therefore, after a company in an industry is the first to go public, it can use equity incentives to retain and attract talents, and it can seize opportunities and expand its advantages in the competition. This has also been the case for manufacturing companies in the past ten years. An important reason for the rapid progress of technological level.

On the contrary, after many state-owned enterprises were listed, they were unable to carry out equity incentives due to institutional restrictions, thus missing the opportunity for expansion.

China is very likely to avoid the "middle-income country trap" in the next few years, and wages will also increase significantly. However, the cost structures of industries are different, and companies in some industries must maintain their low-cost advantages. , requires a large amount of low-cost labor, and some industries compete globally for high-paying talents, causing the income gap between employees, companies, and industries to continue to widen.

Enterprises are always pursuing more efficient labor cost expenditures, and employees will always have to weigh between high salary and jobs that better meet their needs, and many results are determined on the first day you choose an industry. .