Episode #243: Team Member Compensation

People have value, not jobs. You price people, not jobs.

So why do people work?

  1. Intrinsic rewards—inherent in the work itself (volunteers)

  2. Opportunity to grow—education, invest in HC

  3. Recognition of accomplishments—storytelling (FedEx Bravo Award)

  4. Economic rewards—Extrinsic, pay, benefits

From Dale Dauten, The Gifted Boss: How to Find, Create, and Keep Great Employees:

Old school is hire someone by offering 20 percent more money. Well, try offering 100 percent more freedom or 100 percent more excitement…Gifted bosses and great employees want the same things from a workplace: 

            Freedom from…management, mediocrity, and morons

            A change

            A chance 

And there are other examples as well:

  • Steve Jobs said Apple was a culture that runs on ideas, not hierarchy (or seniority).

  • Thomas Jefferson: “There is nothing less equal than treating nonequals equally.”

  • Nordstrom: “Your performance is your review.”

In Get Rid of the Performance Review!, Samuel A. Culbert writes that “pay and performance don’t have much to do with each other. Lumping them together is a needlessly stupid, alienating ritual that produces phony posturing, and inhibits straight talk.” 

Here is a summary of Culbert’s theory on what determines pay:

  1. Whether the boss wants to retain the employee

  2. The amount of raise that boss thinks is necessary for doing so

  3. The department’s budget

When a valued employee decides to leave the boss will ask: “What will it take to get you to stay?” There’s no game-playing, or pretense, just the raw truth (of course, people don’t leave companies, they leave managers). 

Ed’s Compensation Model (read more at Ed’s blog post)

  1. Salary

  2. Profit-sharing (team vs. firm)

  3. On-the-spot bonuses

  4. Enhancement of intellectual capital — Knowledge Matrix

There’s an old military saying: “A man wouldn’t sell his life for $1 million, but would gladly risk it for a ribbon or Medal of Honor.” Purpose, probably more than any other factor, drives performance and discretionary effort. If people believe in what the organization stands for, they will pour their heart and soul into their work.