As far as it seems, today's companies put high pressure on purchase departments
to always negociate the lowest cost. This does seem at first glance an advisable
suggestion. However only focusing on the lowest price for a good, you may
finish in a product that does not fullfill your technical requirements and
needs, causing you to throw away your money.
Putting a high pressure on salaries and costs will cause employees and in
consequence, if all companies throughout the world proceed the same way,
worldwide consumers to put an even higher pressure on your sales prices This may even
end up in the consumers being no longer able to purchase your goods. Your
business will then have one unique end: go bankrupt.
Paying your employees correctly is all the story behind the Ford model. Henry
Ford had this only main idea when America was suffering in a post 1929 Wall
Street krach period : "I pay my workers so that they can buy my cars".
The current worldwide model looks as of today to be : "I put lots of
pressure on wages costs so that my shareholders get the highest return on
investisment". Another reckon is : "The more attractive my shares are, the
highest their stock price is and the highest the cost is for some other company
willing to bid over to get control onto my company". A non said and real benefit for
companies Chief Executive Officers: "The highest my company's stock price is
along with the highest dividend return, the more profits I personnally make".
So, as you can guess, there ought to be a dead full conflict between short term
shareholders and immediate CEO's profits in their obvious advantage to pay low
their staff and the long-term survivance of the company.
Along with at any level putting high pressure on costs (purchases departments
, salaries and finally consumers), this does look to be a short-term minded view for
businesses to actually survive. Applied to worldwide economy, this does look
like a long-term suicide.