Are You Getting What You are Paying For? by Kevin McManus
My basic definition of work is simple - people spending time and money to make money. Since you have to spend the time to earn the wages, benefits, and other forms of compensation, the equation is even simpler - you spend money each day to make money each day. While this seems simple, many organizations fail to really make sure that the dollars paid out each day are returning an even higher amount of dollars back to the company.
For example, I have worked in organizations where supervisors doing essentially the same type of work received drastically different levels of pay. I have seen differences as great as 50%! It is true that such discrepancies emerge over time, especially when it is much tougher to reduce someone’s wages once you have already set a precedent for paying them at that wage rate. You don’t have to accept this discrepancy however - you can expect greater daily contributions from those supervisors that are getting more money each day.
In a similar sense, I really question at times the justification that exists for the daily wages we pay to our middle and upper managers. I struggle to see the added value that someone is providing to justify the additional $25,000 a year they are making in comparison to their direct reports. Sure, you might always have to leave the cell phone on or you might have to endure increased stress levels, but is the difference as great as the 4 to 1 or 6 to 1 pay differentials that exist in today’s workplaces?
This waste potential is concerning enough, but we also must consider the efficiency and focus factors that apply to managerial positions. We pay these people much more per hour, but we lack the mechanisms to make sure that we are getting consistent contributions from these people for each hour that they work. We operate largely on trust, and all too often, we pay people for getting results that they really did not personally have that much to do with getting.
You don’t have to, and probably won’t, blindly accept my opinions, which some would see only as cynicism. I don’t expect you to. I would however ask that you watch your people - look at what they truly give you each day for what you are giving them. Are you really getting what you are paying for?
Has Your Recognition System Expired?
I continue to be amazed by the number of organizations that either fail to recognize employee efforts at all on a consistent basis or fail to improve their recognition processes over time. Giveaways, such as free t-shirts, gift certificates, and coffee mugs are nice, but they cannot represent the only extra forms of saying ‘thank you’ that you will use over the next five to ten years.
Recognition systems have an expiration date. From a motivational theory perspective, this is supported by the work of Herzberg. Herzberg’s work explored the concept of satisfiers and dissatisfiers - what works as a motivator now will become only a dissatisfier in the future if it is taken away. In other words, over time people begin to take for granted the things that once wowed them. If your recognition process does not evolve over time, it will lose its effectiveness.
I have seen this happen in real life, in more than one organization. This is especially true if the organization achieves consistent success in improving performance. For example, if your site’s cost reduction efforts regularly save a million dollars or more each year, people will begin to expect more than a meal or a $25 gift certificate for helping you to achieve this level of consistent savings. If you don’t believe me, ask and listen to your people.
Do Your People See Value in Their Work?
I’ve been both a front line manager and a corporate office person. I’ve spent hours working on the front lines as well doing the same thing minute by minute, hour by hour. Each job is hard in its own way, but there are significant differences in these types of work. Office people can usually go to the bathroom whenever they want, take a break for a few minutes when things get stressful, and bask in the air conditioning when the weather gets hot. I struggle to comprehend why the people that get the most money per hour also get the best working conditions. Are they really contributing that much more added value to their organizations?
When you do the same thing day in and day out, it becomes difficult to see the value that you give to the company each day. If you rarely see your external customers, it becomes even tougher to determine if your daily efforts are making a difference or not. It has essentially become an accepted norm however that we endure work to get money for enjoying the things we really like to do in life. Work is a necessary evil, not something we look forward to doing each day.
When you consider the fact that we spend the majority of our waking hours at work, this situation becomes a pretty depressing one. Not all organizations are like this however – workplaces still exist that people enjoy coming to and contributing to. Sure, the work might be hard and stressful, but the compensation, work environment, and recognition make the work worth it. In other words, the work systems are designed to show people the value they provide each day and to reward them for helping their company sustain a balanced approach to performance improvement over time.
What makes these workplaces different than the norm? A lot of it has to do with how their compensation systems create a perception of fairness and focus. The great workplaces are also fun, or at least more fun to be at than the average factory or office. These organizations work hard to help people see what they are getting in exchange for their daily contributions. They want their people to brag about their compensation, not complain about it.
Would You Like Some Help?
Over the past 20 or so years, I have been involved with helping to improve compensation systems in five different companies - both small and large - in the manufacturing and service arenas. This experience has helped me discover value added, simple ways to help pay your people for their efforts in a more effective manner by installing profit sharing processes, stronger formal recognition approaches, and pay for skills learning programs. Failing to answer the 'what's in it for me?" question is the primary power restrictor for this power system - redesigning your compensation system helps you better answer that question on a daily basis, and if done properly, will minimize the number of times you are asked that question at all.
If you are interested in the compensation system ideas that I have to offer, send me an e-mail at firstname.lastname@example.org. Better yet, give some thought to working further with me to help you improve your approaches to paying people for their efforts through my interactive compensation system improvement workshop. If you don't want to go after the big system, consider working with me to help you install an effective recognition process that will grow over time and really send a great 'thank you' message.
Keep improving! -- Kevin McManus, the Systems Guy
Would You Like to Learn More?
Click on one of the following links to learn even more about Great Systems! and the types of systems improvements I can help you make:
“The only thing I know is that I do not know it all.” -- Socrates