Question

Assume you are a shareholder in a publicly traded retail firm. Would you want that firm to raise pay rates for its employees to stay on pace with the inflation rate, even if doing so would drive product prices up and profit margins down? Can you explain why for me please?

Answer 1

Yes, I will go for the increment of the salary in order to accommodate or to match with the current inflation rate despite having the chances of the high price of the products and low-profit margin. The main logic behind this is that when the company increases the payments of all the employees in order to deal with the increased inflation rate, it lowers the economic pressure on the manpower and it makes the manpower to be more committed and involved with the company and they feel the pride to be the part of the organization that takes care of the needs of its manpower despite compromising on the profit margins. this upbeat motivation will improve the customer service or production quality resulting in better production quality, better customer services and creates a positive employment brand for the company and this will attract more talented individuals, and the existing manpower will put their best on their work and it will cause the overall productivity of the organization to grow that will offset the decline in the profit margin