Efficiency Wage Theory

I believe that the wages set by a firm are very crucial to a company’s well-being. If workers are not being treated fairly financially then they are not likely to do an efficient job in the work place. It creates a bad environment for both worker and customers. Eventually that will lead to a decrease in profit for the firm because the customers are not happy with the services provided, but the workers have no real incentive to give their best work because they aren’t being taken care of financially.
Unions benefit workers because they are collective and allow individuals certain protections in their job that they would not have alone. Unions allow low-wage workers the opportunity to progress to positions that provide more stability financially. Wages are better for union members than for non-union members and are given a greater span of benefits. As a group, unions have the benefit of ‘collective bargaining’. The strength of having a great number of people to back decisions gives unions much more authority than individual, non-union workers have.
There are also consequences in belonging to a …show more content…
Efficiency wage theory is basically the thought that raising a worker’s wages will benefit a business because it encourages the worker to work both harder and more efficiently. This earns many benefits for employers as happy workers begets happy customers leading to successful productivity and more profit. By testing the effects of a wage increase in their work places, both Ford and Greely Qdoba were able to show to the world that there is proof and much benefit to the efficiency wage theory. The results of Qdoba’s risks proves successful for the most part. Workers are more enthused to work for better incentives. These positive results have shown other businesses in today’s times that there is much benefit in giving this practice a try, thus modernizing the efficiency