Page 137 - (DK) The Business Book

MAKING MONEY WORK 135

See also: Changing the game 92–99 ■ Organizational culture 104–09 ■ Understanding the market 234–41 ■ Focus on the
future market 244–49 ■ Make your customers love you 264–67 ■ Maximize customer benefits 288–89

workers dissatisfied, and pushed Household spending
labor turnover to higher than 370 data from 2011 shows
60 that US spending on
percent—the average employee
luxury goods (such as
stayed for only three months before chocolate) outstripped
quitting. To counter this, Ford 50 spending on essentials
announced that wages at the (like toilet paper). The
company’s factories would be more 40 data from China shows
than doubled, to $5 a day. His that as an economy
actions made headlines around $ (US) PER CAPITA, 2011 30 develops, spending
the world, and in the factory, labor on essential items
rises the most.
turnover fell to 16 percent annually, 20
helping the output per worker (a USA
measure of overall productivity) 10
to rise by around 40 percent. China
By 1914, it took a Ford worker India
0
just three months to save enough Toilet paper Chocolate Fragrances
money to purchase a Model T. By
1924, the price of a Model T fell
again to $260, making it possible stumble upon an important fact: in helping to generate the 400,000
to buy a brand new car with a when your workers earn enough work force suggestions per year
month’s pay. By 1924, the Ford to afford to be your customers, on how the company might improve
Motor Company sold more than there can be huge benefits for the production efficiency and quality.
50 percent of the world’s cars. business. Along with increases
in staff pride and commitment, Emerging markets
Learning from employees managers are likely to be given In 1924, the US government
Although Henry Ford generated valuable insights into the company’s published a report titled Cost of
excellent publicity by making his products and processes. Living in the USA. It showed that
policy of paying high wages sound In Toyota City, Japan, more than the average family spent 38 percent
like altruism, his practical need to half the work force owns a Toyota of its $1,430 annual expenditure on
lower the labor turnover helped him vehicle. This is a significant factor food. This is interesting because,
in the past five years, India’s family
spending pattern has slipped below
this level, to 36 percent, indicating
that the average wealth of Indian
families is increasing. When China’s
proportion of spending on food fell
toward 30 percent of income,
households could afford to increase
their wider spending on nonfood
items, such as consumer goods.
In the US today, just 7 percent of
household income is spent on ❯❯

Farm wages in India increased by
17.5 percent annually from 2007 to 2012.
Since farm labor is at the bottom of the
economic pyramid in India, this signifies
a very fast overall rise in wages.