…..someone else will” was something that an old boss of mine (Percy Jackson at DEC) used to drill in my head many moons ago and it has stuck with me since then. His point was that he would rather make sure he took care of his best people and not just spread the bonus pool around. Years later, another boss at DEC took the entire bonus pool that he received for his group and gave it all to just 1 individual ( 🙂 ). I was reminded of these incidents as I recently read about Gravity Payments and how the CEO had decided to pay a starting salary of $70,000 to ALL his employees while taking a pay cut himself. A noble gesture with the best of intentions that obviously meant highly motivated employees and increased customer loyalty – or not!
He ended up having some of his best employees leave, lost a number of customers, faced a lawsuit from his brother and got lots of publicity – not all good. You would think that a boss who does that would be the best loved boss ever? It turns out that while everybody wants more money for the intrinsic value of money, there is a lot more associated with motivating employees (Maslow). His best employees suddenly felt that they were not being acknowledged for their contributions – even though their compensation was not reduced at all! The meritocracy was being disbanded in favor of equality and that sense of accomplishment and self-worth based on one’s superior performance was eliminated. Social stature was therefore being compromised, regardless of the fact that there was no change in their absolute compensation – only in their relative compensation. Turns out people are motivated by more than money – go figure!!
They also lost customers because for some, it was a radical change and they were just not comfortable, others felt it might give their employees ideas while others anticipated price increases that never happened and left. The founder is facing a lawsuit from his brother and yet continues to insist that he did the right thing, is sticking by it and is confident that in the long run, he will be proven right.
Do our compensation and reward systems assume that money (its’ intrinsic value) is the dominant motivator? There have been many studies at a meta level that have proven that “satisfaction” is measured by many other things – we all remember Maslow. You may also recall this (Bhutan) and this (happy countries) where we clearly think that data indicates otherwise. One of the most powerful motivators is the continued investment in employee competencies and skills – turns out employees see that as being recognized for what they do and their future potential and their employers willingness to invest in them – go figure!! Many a manager struggles late into the night during annual review time trying to figure out how to divide a very small pool of increases or bonuses amongst their employees. Those of you who have attended Strategic Sourcing/Supply Chain “U” will remember a simulation called Project Colossus where you were forced to confront this very issue. Most managers end up taking the easy way out and try dividing the pie as evenly as possible while still differentiating based on merit – a failed attempt. They also fail to acknowledge that there are many other things that they can use besides money. To keep their best employees motivated. As Percy said, “if you don’t take care of your “A” players, someone else will” and you will be playing in the professional leagues with a team of B and C players – not the path to the championship.
If you are intrigued, I would be happy to email you more material (case studies,decks, etc.) on the topics we cover.
Latest posts by Dalip Raheja (see all)
- Category Management of Professional Services – Part 3 – A Case Study - May 23, 2019
- Category Management of Professional Services – Part Deux Applying Value Drivers to Sourcing/Supply Chain - May 9, 2019
- Category Management of Professional Services: How Would YOU Measure Value When Hiring a Service Provider? - May 2, 2019