G&A expenses have gotten a bad rap. Whenever a new CEO is put in charge of a large company or when a company is struggling the first thing to get looked at is G&A and what can be cut out of it. Mainly the most looked at accounts are the payroll accounts. And while it may be good to trim some fat, removing all of it results in the destruction of the organization.
When salaries tend to be increased in a company it usually is given to the management (upper middle and middle management specifically), in order to buy loyalty and retain intellectual capital. However the problem with this is that middle management doesn’t really do all that much, I mean they do have to manage parts and deliver reports but almost nothing they do is tangible, it really is just managing people. However if you pay your lower level employees more money and let them actually be adults then they should be able to manage themselves.
Large innovation corporations have gaudy salaries for lower level skilled employees. The reasoning for this is that loyalty is built not bought. If you show your employees that you care right away then you stand a better chance of ensuring that valuable employees do not leave to go somewhere else. However believe or not employees are people and they have to feel like the company that employs them cares about them and the best way to do just that is to show them the money.