'Henry Ford's $5 workday' Essay Example | Topics and Well Written Essays - 250 words

Henry Fords $5 workday - Essay ExampleWhen employees are contented, they would tend to put in more effort in their work, producing quality in a sustainable manner. This also positioned the company strategically to outwit competition by increasing production at cheaper price owe to economies of scale.An employee who is paid well is more likely to put in more effort in the daily endeavors and tasks within the organization (Mankiw, Kneebone and McKenzie, Principles of Microeconomics). Compensation is directly comparative to the amount of effort an employee puts in their work.An employee who is paid well is more likely to have a balanced and healthy diet. This is because disposable income determines an employees expenditure limits. thence by paying workers better, the company reduces incidences of sick leaves, ensuring continual production.The better pay at Ford attracted high quality and even experienced employees. This availability of sedulousness motivates the contracted employees to work at their optimal level as they can be easily replaced (Mankiw and Scarth, Macroeconomics Canadian edition). This is known as adverse selection.In conclusion, by increasing employee compensation, Henry Ford strategically increased his production, output, sales and profits, while mitigating employee turnover. This concept is largely employed in the modern business world, where employees offer stipend above the equilibrium