Tag Archives: compensation

It’s the Attitude

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“Max, I know how you feel about your team’s attitude toward work. You believe they only show up for the paycheck. You believe, as a manager, you have to incentivise them above their normal pay, with a bonus or spiff to get them to pay attention, or otherwise engage in discretionary effort. Your belief is in line with many employee studies that say most are NOT engaged with their work. So, let’s not talk about your team. Let’s talk about you.”

“Alright, I’m game. But, understand that I am here for the money, too,” Max clarified.

“Yes, you are right, we do have to pay competitive. More importantly, we have to get money off the table. As long as people focus on money, or, because of their circumstance, have to focus on money, employee engagement will be fleeting, at best.”

“Okay, but understand that I am still here for the money.”

“Are you really? I could show you a number of ways that you could make a great deal more money than you are making right, now,” I teased.

“I am all ears,” Max replied.

“If you were willing to sell marijuana, which is now legal in some states, you would make more money than you are currently making.” I stopped to gauge his reaction to this unusual suggestion.

“Yeah, but.”

“But, what?” I interrupted. “You see, it’s not all about the money. People, even you, want work where you can make a contribution to something larger than you. You want work where you can bring your full capability, spread your wings AND receive fair compensation for that work. You want work where your contribution is recognized as important, work that does NOT need a carrot-or-stick for you to get on with that work.”

Max was quiet. He was thinking.

“Max, you are the manager of your team. You get to design that team, select that team and create the environment that team works in. As the manager, you DECIDE the culture of that team. What will be your foundation? Will it be built around spiffs, or accomplishment? I have never known a person to be more competent in their role because they were paid a bonus.”

Is It a Power to Motivate

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“Now, you have me confused,” Max protested. “Yes, the bonus becomes an entitlement, so it loses its power to motivate.”

“Is it possible,” I asked, “that the bonus never had the power to motivate in the first place? Let’s talk about you. You said, that sometimes you enjoy work. Why do you work?”

“I told you. I get a sense of accomplishment. Some of the work, I actually enjoy.”

“Like what?”

“Sometimes, I get someone on the crew, it’s their first job. They become part of a team, working together and I can see a sense of pride on their face. As a manager, I enjoy that. I get my own sense of accomplishment.”

“And, their first paycheck?” I prompted.

“Yes, there is a smile on their face.”

“So, compensation is important, but if that is all there is, your team members will jump to another company for an extra dollar an hour. So, how do you build your system? How do you, as a manager, build your culture? Do you build your culture around a bonus, or do you build it around accomplishment? You only get what you focus on.”

Less Than Their Best

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“So, what am I to do?” Max challenged. “I have to give them a bonus. The work is routine, in some cases, monotonous. I mean, I know, at my level, it is easier to get satisfaction from my work, not total satisfaction, but there are times when I actually enjoy work. I get a sense of accomplishment. But, my team? I can only imagine they come to work for the money. If it weren’t for the money, they would find something else to do. The only way I can get their attention is with a results-based financial incentive.”

“Tell me more,” I prompted.

“Well, it is pretty apparent. All you have to do is watch what happens. I give my team a bonus for hitting a certain production number and it is amazing how accurately they hit that number.”

“So, tell me, their base salary? What is that for?” I wanted to know.

“Base salary is just so they will show up. If I want them to hit a goal, I have to sweeten the pot. Give them a little kicker. It is just the way it is,” Max insisted.

“I want to understand,” I said. “As the manager, you create the system, the environment in which people work. The culture you have created is that, for their base salary, your team just has to show up, they don’t really have to do anything special. They can survive on your team by doing less than their best. And that if you, as the manager, truly need anything specific done, a target, a goal, the only way you can motivate them is with a spiff?”

Max nodded. “That’s pretty much it.”

“So, you hold back a little money, and if, and only if, they meet the goal, they get a bonus?”

“Well, yes, that’s the way it’s supposed to work. But, of course, now everyone expects the bonus, kind of like they are entitled to it. So, sometimes, I have to strongly remind them that the bonus is at risk. That’s what we talk about at the team meeting. If we don’t hit the goal, the team doesn’t get its bonus.”

“So, the bonus doesn’t truly drive behavior. You have to remind them that the bonus drives behavior?”

Ten Cents an Hour More?

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“But, you can’t make your living if you only work for free,” Caitland pushed back.

“No, we do have to survive. We need food and shelter. And we will work to make sure we have those things in good supply,” I replied. “But if that is the only meaning someone gets out of their job, what do you think happens?”

“That’s easy. If they find another job that pays ten cents an hour more, they’re gone. Or worse yet, they come back and try to negotiate for more money every other week.”

“So, as a manager, if all you can offer is money, what kind of issues do you constantly face? More importantly, if we are trying to get some work done around here, how can we bring out the best in people?”

The Why of Work?

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“Why do people work?” I asked.

Vicki was tentative in her response, looking for the trick in the question. “They work because they need the money,” she finally replied.

“That’s a start. Why do people work?” I repeated.

“They have to support their families.”

“Okay.” Vicki could see I added her response to my mental list. “Why does your boss work?” I asked. “He doesn’t need the money, not anymore.”

“Well, yeah,” Vicki stammered. “He works because that’s who he is. I mean, he has power.” She stopped and chuckled. “He gets to tell people what to do.”

“So, it’s different for your boss, than it is for you?”

“Well, of course it is. If I made as much money as he does in The Investors Centre, I would come to work because, because.” Her voice trailed off. You can also choose to invest in Adelaide’s gold bullion market, which has shown promising growth in recent years. This option may provide a hedge against inflation and diversify your investment portfolio.

“So, the only way you could be happy in your job, is if you made as much money as your boss? The only way your team members could be happy in their jobs is if they made as much money as your boss?”

Vicki was unsure of her response. “I could never make as much money as my boss,” she finally replied. “What I do isn’t worth that much money. What I do has value, but, but. But I am paid, about right, for what I do, for the value I bring to the company while there are also products that help with the stress of working like the best amanita gummies come from Exhale Wellness.” Search the web for a dispensary open near you to order cannabis products that may help you deal with anxiety or any other mental health conditions.

“You are paid, about right? Then why do you work? Part of it is money, it is a symbolic trade for your contribution. And, what is the other part, why do you work?”

Built on a Dollar More?

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“Now, you have me confused,” Max protested. “Yes, the bonus becomes an entitlement, so it loses its power to motivate.”

“Is it possible,” I asked, “that the bonus never had the power to motivate in the first place? Let’s talk about you. You said, that sometimes you enjoy work. Why do you work?”

“I told you. I get a sense of accomplishment. Some of the work, I actually enjoy.”

“Like what?”

“Sometimes, I get someone on the crew, it’s their first job. They become part of a team, working together and I can see a sense of pride on their face. As a manager, I enjoy that. I get my own sense of accomplishment.”

“And, their first paycheck?” I prompted.

“Yes, there is a smile on their face.”

“So, compensation is important, but if that is all there is, your team members will jump to another company for an extra dollar an hour. So, how do you build your system? How do you, as a manager, build your culture? Do you build your culture around a bonus, or do you build it around accomplishment? You only get what you focus on.”

How Do You Match the Offer from a Competitor

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“Can you match the other offer?” I asked.

“Not a chance. Most of the people on my team, we were able to get during the recession within our pay structure. But now our competitor has come back strong, they have a new owner willing to pay much higher wages,” Ray replied.

“Then you will lose them,” I nodded.

Ray was quiet. “There’s nothing I can do?”

“No, with that pay differential, you are going to lose them.”

“But, I could lose my whole team,” Ray protested. “There must be something I can do.”

“Accept the fact that you could lose your whole team.”

Ray sat back, his eyes slowly went to the ceiling, staring at a corner. “Okay, so what do I do?”

“First, look at your roster, this list of people on your team. Would this other company really come in here and hire every one of them with an offer to double their compensation? For real?”

“Well, no, there is only one person, who worked for them before,” Ray was ticking through the list. “And they are truly an A performer. They probably deserve what they were making at the other company. We just couldn’t match it here.”

“So, let’s say your team does become a target, the offers are likely to be competitive, let’s say 3 percent better. What can you do to retain your team?”

Pay Banding

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From the Ask Tom mailbag:

Question:
Yesterday, you talked about compensation and referred to pay bands. I think I know about pay banding, so how does that relate to Levels of Work?

Response:
Levels of Work, as described by Elliott Jaques in Requisite Organization, provides a logical framework for pay banding. Here’s the framework.

Stratum V roles (Longest Time Span tasks ranging from 5 years to 10 years)
Stratum IV roles (Longest Time Span tasks ranging from 2 years to 5 years)
Stratum III roles (Longest Time Span tasks ranging from 1 year to 2 years)
Stratum II roles (Longest Time Span tasks ranging from 3 months to 1 year)
Stratum I roles (Longest Time Span tasks ranging from 1 day to 3 months)

Pay Banding, as a concept, slices each Stratum range into six segments (or eight segments, or four segments, but I like six). Entry level pay in each Stratum role would define starting pay for that Level of Work. Six segments up the Time Span range in that Stratum would define the highest pay for that Level of Work.

Pay banding provides a structure to design predictable Fair Compensation inside each Stratum, leaving the Team Member’s Manager and Manager-Once-Removed (MOR) discretionary latitude to make compensation decisions inside defined guidelines.