Actually it could be quite the opposite, so long as you are paying for performance. I recently was interviewed for an article on pay for performance systems, and so I’ll provide the link when it comes out. In the interim, I wanted to comment on a recent article in CFO magazine which touched on this subject.
Costco was referred to as the anit-Wal-Mart because it pays its employees more and offers more generous benefits – and it does quite well. According to their CFO, they have a different business model which is based on high volumes and caters to businesses and more-affluent customers. They’ve figured out an efficient way to pay their people more and still drive down expenses as a percent of sales.
If you think creatively, innovate and focus on what’s important to your business (which, in Costco’s case, they obviously consider their employees to be valuable assets), it’s my experience that you’ll be far more likely to succeed.