Many people assume that high salaries are a company’s biggest expense. They are not. A high salary for a good employee is often an investment that pays off many times over. Far more costly is the employee who has long since stopped contributing but continues to occupy their position. Not because they make a single mistake. Mistakes are an integral part of any serious business.
The trouble comes when laziness, irresponsibility, or a bad attitude become the norm. Then the damage is no longer contained. It spreads throughout the company.
People notice very quickly when the rules aren’t the same for everyone. They see who’s constantly late. Who doesn’t fulfill their obligations. Who fails to deliver results for months, yet faces no consequences.
At that moment, you’re not just losing your standards. You’re losing trust.
Not everyone pulls back immediately. First, they stop proposing new solutions. Then they stop taking on additional responsibility. In the end, they do only as much as they have to.
On the surface, everything still looks the same. Paychecks come in. Projects are completed. The company keeps running. But from the inside, the most valuable thing is slowly disappearing—the energy of the people who carried it. While trying to keep one employee, the owner may lose the trust of the people who consistently fulfill their obligations. That’s why the most expensive salary isn’t the highest one.
The most expensive one is the one you pay for months to a person whom everyone in the company has long known should no longer be in that position.
From the manuscript of the book *The Philosophy of Entrepreneurship*.
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