“Skilled workers require pay,” personal finance expert Dave Ramsey says, and business owners need to accept that reality. “They’re not going to work for half of what they could work across the street for,” he told a caller on the “EntreLeadership” recent podcast.
Andrew from Albuquerque, New Mexico, called into the podcast with a question many small business owners face: how do you grow a company, hire skilled workers, and pay off a mountain of debt all at the same time?
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Rising Wages Shouldn’t Be Feared
Andrew is the CEO and co-founder of a prototype machine shop that he started with his father over five years ago. The shop has grown to 11 employees and brings in just over $2 million a year. But it's also carrying $1.66 million in debt. “How do I go about adding more skilled team members in an environment that is increasingly becoming more difficult to find talented workers with rising wages,” Andrew asked, “and a commitment to paying off debt without losing the big momentum?”
Ramsey responded with a dose of direct advice that cut to the heart of the matter: You have to pay skilled workers what they’re worth. They’re not going to settle for significantly less than what other shops are offering. “And if you’re going to grow that side of the business, you’re going to pay for them. It’s that simple,” he added.
Ramsey emphasized that paying fair, competitive wages is a non-negotiable part of business, even for companies burdened with debt. If the new hire can bring in more value than they cost, Ramsey said, then it's worth it.
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And rising wages? They're just part of the cost of doing business. “Wages are built into product price 100% of the time,” Ramsey explained. “No product is produced without wages built into the product price.”
Finding Good People Through Good People
To solve the hiring problem, Ramsey advised turning to the people already on your team. “Your machinists know the other guys in the machinist world. They know the ones that are really good,” he said.
He recommends offering referral bonuses: “I’ll pay you a thousand bucks if you send one over here and they stay. If they come over here and they stay 90 days and they came here because you referred them, and you tell me that, I’ll give you a thousand bucks.”
Ramsey believes skilled workers tend to know and attract others like them. “Thoroughbreds hang out with thoroughbreds. They also know what a donkey looks like and they’ll tell you to stay away from them.”
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Create A Culture People Want To Join
Ramsey also stressed the importance of company culture. “We run that kind of an environment. We don’t hire people that want to do drugs. We hire people that don’t want to do drugs,” he said. A clean, safe, non-toxic workplace with solid leadership is something workers look for.
Lastly, Ramsey suggested having in-house recruiters who actively reach out to skilled workers through LinkedIn and phone calls. But he cautioned that outside recruiters haven't worked well for his team.
In the end, if a new hire boosts productivity and profit, then bringing them on makes sense even with debt on the books. “The more profit you make, obviously, we can throw it at the debt,” Ramsey said.
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