Commentary: Low-cost operation is not the best way for business

(US) Human resource guru/Lawler (Marshall Business School for the It times) retailing is not the only industry with low wages and low costs, with the continuation of offshore production trends and the continued adoption of high technology, the United States and other developed countries can rely on low wage operations to obtain successful enterprises , less than ever, the management model that has been widely adopted in the past decades is the management model centered on organizational structure: hierarchical bureaucracy. Such management patterns are clearly discernible in some industry-leading enterprises, such as IBM, ATT, etc.　　In addition, most large enterprises in the United States and Europe adopt such management models. Today, the organizational structure of the core management model, still in some industries.　　In recent years, however, because of its high cost and operational rigidity, the management model has fallen out of favour and lost a lot of market share, and will continue to lose market share. Low-cost low-cost business management model is not the best way, because it does not develop and utilize the full potential of employees. Human capital as the core of the management model, more in line with the attention of the whole society and learning.　　Of course, in reality, if properly designed and operated properly, a Low-cost operating management model is indeed suitable for certain industries. Wal-Mart often argues that its low-cost mode of operation is entirely due to the demand for low-priced goods. Its chief executive has said there is no alternative, the only way to provide low-cost goods is to maintain low labour costs.　　One of the main reasons why Wal-Mart can recruit employees by paying low wages is that it is willing and qualified to hire low-skilled workers, and that there is no need to ask employees how much innovation, product knowledge, or customer service skills. Of course, Wal-Mart employees also need to meet the minimum requirements, just because it does not need to highlight their distinctive customer service.　　Therefore, it does not need to be with human capital as the core of the organization, the competition of high-end talent. The industry that obtains the competitive advantage through Low-cost labor cost is not only the retail trade and the fast food industry, other, such as agriculture, cleaning industry, security industry, food processing industry and so on, also present the same competition situation. These industries have a common feature: the content of the work is relatively simple, repetitive, low value-added.　　This kind of work, it is difficult to increase the value of space, of course, there is no need to accommodate high-end talent, to gain competitive advantage. The key is how much value an individual can bring. For example, in the traditional automotive assembly line, each production worker mechanically repeats the same simple task every 30 seconds to 60 seconds. Now, in some businesses, the value of individuals is unimaginable. At some point, the entire organization needs only a "conductive body" to repeat tasks that are relatively easy to learn.　In such cases, attracting, employing and training high-end talent will only result in wasting money, and even the performance of employees is irrelevant to the overall performance of the Organization.　The problems that have been concealed. Some of the projects in the automotive industry have been successful, but none of them has managed to make the core management model of human capital a success in the automotive industry and become the dominant management model in the industry. BMW's business strategy includes providing consumers with a wide variety of accessories. BMW specifically set the product quality production incentives. However, in the car itself is highly complex today, to achieve diversification while maintaining high quality, it is a difficult thing.　　This not only requires the manufacturing process to obtain advanced technology, but also requires staff with superb skills and a high degree of flexibility. In recognition of this, in 2005, BMW in Leipzig, Germany, opened a very different production base from the traditional car factory. From the date of the founding, the new factory staff recruitment principle, it has always been stressed high quality. The candidate's ability to survive in a team environment, and the ability to work in a team, will be the first step in screening. In addition, the applicant's ability to learn and solve problems will be the second step in the screening.　　After a day of rigorous testing and elimination of those who are unable to work in a team, the remaining elites will be given the opportunity to interview. The physical layout of the new plant is also very different from that of other car manufacturers. It uses an open pattern to build strong links between management and production, and makes the work structure more resilient. Finally, the company provides employees with substantial, unprecedented, and generous job security.　　And these are the reasons why many Germans see BMW's work as the ultimate career goal. Over the past few years, offshore production has received great attention. It's important to that is, not only low-skilled jobs are being carried out on the offshore transfer production, and more and more highly skilled jobs are also being carried out offshore because, in developing countries such as India and China, they are able to engage in complex intellectual work and are willing to accept far less than the wage levels of developed countries. Some question how long such a low wage level can sustain, because such a supply of talent is limited.　　But in any case, offshore production is, in a way, an effective option. It sounds as if most companies that are unable to automate or offshore production have a way out of a low-cost operating management model. That is not the case. I think that only a few enterprises are facing the situation of Huashan Road.　　In many cases, the Low-cost operating management model seems to be the best choice, simply because the efficiency of the cost is not accurately calculated. In general, organizations tend to pay too much attention to the labor costs of unit time when considering the cost of manpower, and ignore the additional costs caused by low wages. Careful analysis will find that the human capital as the core management model is more economical. An important example comes from the retail industry, Wal-Mart's low wages and low welfare operating model, not the best way to get low cost. In all of the costs of Wal-Mart, we found that its total operating costs, not less than the high salary of the good city (Costco, GlobalThe largest number of chain members of the warehouse-type volume shop. We have to make a choice. Wal-Mart has the best operating performance, but it is only one of many companies seeking to gain a competitive advantage by paying low pay and low benefits. Many executives believe that Wal-Mart must adopt a low pay strategy in order to satisfy customers ' demand for low-priced goods. Wal-Mart's chief executive has openly pleaded "no choice".　　However, a recent survey suggests that such a perception may not be correct. Along with low wages, there will be a series of negative employee behavior and lead to an increase in the overall cost of the enterprise. These additional negative costs will eventually result in substantial huge costs. For example, staff turnover in low-wage companies is significantly higher, with Wal-Mart approaching 50%, and many fast food, retail and service companies higher.　　The researchers found that the turnover of unskilled workers would result in the equivalent of two months ' salary, while the turnover of skilled workers would cost more than 1 years ' salary. High absenteeism is also a situation that low wage companies often need to face. Because of low pay, absence does not cause too much loss, the staff does not let people too much nostalgia. If there is a shortage of customer service staff, or if the customer cannot find the same employee who has helped them, absenteeism will inevitably result in lost business or reduced customer loyalty.　　In addition, this strategy will ultimately only be able to obtain the ability of employees, and have to be closely monitored staff, which is undoubtedly cost-intensive. Due to the high cost of low pay, the precise calculations and studies show that companies that have low overall operating costs are not companies that take minimum pay. For example, pilots in "cheap" Airlines (Southwest America) are generally treated at a higher level than their rivals, the "High-cost" operating United Airlines. The difference in the two companies that have trade unions is that they manage people differently.　　Southwest Airlines to take effective training and work design, effectively motivate the staff's work enthusiasm, so as to achieve the efficiency of the independent work of employees, and at the same time avoid artificial supervision. The good city pays more than $17 per hour, while its rival Wal-Mart's Sam's Club pays only 10 dollars. In addition, more than 85% of the good city employees can enjoy the health insurance provided by the company, while the staff members of the Sam Club can enjoy the same treatment rate of less than 50%. Interestingly, the good city employees of the generous pay and benefits of the cost, does not affect the city's multi-shareholder wallet thickness.　　In fact, over the past 5 years, good cities have outperformed Wal-Mart in the stock market: The former soared 55%, while the latter fell 10%. Here, the truth is clear: the vast majority of companies do not need to make tough choices between employees ' high wages and low prices. The real need to choose is whether to continue to follow the traditional mode of management, or venture to adopt a new management model with high salaries and participation. The latter has noDoubt is a great boon to shareholders, customers and employees.