A discussion regarding the compensation for value provided
is something that I think we can all relate to, it is something that I think we
have all discussed amongst our peers (even though we aren't supposed to), and it
is something that is taboo in the world of business. You just don't talk about it and I think that
is a mistake.
The lack of discussion leads to ambiguity concerning if
value provided is even a measure of the compensation you are due. It leads to tension, arguments, bad feelings,
and all the fun stuff that happens inside the office walls when we aren't
actually being productive. Sometimes
it's as if the creation or maintenance of a product or service becomes
secondary to the politics of business. When
that happens you know things are out of control and yet it happens constantly.
This lack of discussion I believe also leads to something
that is a bit more insidious and in fact is of course the reason for the lack
of discussion in the first place, the practice of paying as little as possible
for as much value as can be possibly produced.
This is a cornerstone of business, the organization that can cut costs
while creating more wealth will be successful, everyone else will not be, at
the least, as successful, if they succeed at all.
The problem lies when this thinking is taken to heart in
every facet of the business' operation, when every short term report is more
important than the long term health of the organization. When this happens employees are no longer assets;
they are no longer thought of as the future of the company, they are merely
pawns to be moved and discarded in the larger game of chess being played in the
minds of executives. When the perception
of the value an employee brings to an organization is taken as a commodity to
be bought and sold, traded and discarded, the organization will expend every
effort to squeeze every last ounce of value out of an employee for the least
penny paid. This in my opinion is
unethical.
In my mind I see little difference between a con-man and a
team of executives that conspire to steal the value provided from their
employees without due compensation, employees who do not know and will probably
never know what their true productivity and value is worth.
This begs the question, how do you measure value? This is really the hardest question to answer
and it is different in practically every scenario. My experience is in the Information
Technology field, so that is where my point-of-view derives. In this field it can be very difficult to
measure the value of your contribution, particularly when the product is a service
that supports the true core competency and revenue generating arm of the
organization, but measured it must be.
I have a few ideas on measuring value in I.T., one of which
is by comparing the level of expectation in correlation with the actual mission
of a person's title. What I mean by that
is what are you asking a person to do on a daily basis, is it in-line with what
the expectation one would have for a particular position, or does it far exceed
that mission based on past success and graduating expectations without
commensurate promotion? This of course
requires positions and groups to have missions, often this is not the
case. If a detailed mission is assigned
to a group, how often is the group meeting the expectation of this mission and
what role has each person in the group played in meeting or exceeding this
expectation, etc... These are just ideas
and off-the-top-of-my's-head ones at that, the point is that productivity and
value must be measured. If it is not
measured, how do you know if you aren't wasting money rather than creating
value and how to you spur your employees on to creating more value for your
internal and external clients? I see it
as requisite so success, it simply must be done.
Once you have measured productivity and value you have to
take the next step and share it. Sing it
from the mountaintop, everyone in the organization should know what value they
provide and what the expectations of them are.
This just seems to blow me away when I see time and time again that
there is absolutely no communication between management and employee concerning
value creation, that is, not until the employee is let go due to lack of
ambition, productivity, value, etc...
Don't get me wrong, I'm not saying that there aren't times you let someone
go, there are so many times that is the best decision to make, but you must
communicate before that step is even considered and when the decision is made
you have to reflect on the fact that you chose that person to fill that
position with the expectation they would be successful. What lessons can you learn from that
experience and what can you look for in the future that might warn you about
future potential employees that you are interviewing? What are some new ways you might squeeze the
information you need out of them, before you hire them, to make the best
decision possible? That is an entirely
different conversation so I will leave it at that. But, please, communicate. Communicate every day, without fail and
without reservation. Candidness without
attitude and contempt is a lost art-form.
This brings me to my final point. I don't think many can disagree that we must
measure value and also communicate, but if you do these things, how can you
continue to squeeze value from people without paying them commensurate compensation,
that's really the catch, isn't it?
I've often thought that when I start my own company I might
make every person's salary or hourly rate available internally to every
employee. Everyone's pay schedule would
be posted, from the lowest position to the highest and all in between. So much of the internal strife in an
organization deals with what my neighbor is making in comparison to me and how
they don't do half as much as I do. I
would nip that in the bud from the start.
Everyone would know what everyone else was paid and it would be
blatantly obvious as to why they are paid what they are. If I were a bottom rung employee and I wasn't
happy with my current situation, I would know that all I have to do is up my
game to the next level, learn a new skill in demand, start making changes in
the way I conduct myself in particular situations, and once I do that, once I
am creating the same value, I will be compensated accordingly.
To get back on track, it is my opinion that once value is
measured the thought of making more than 50% profit from the value created by
an employee is the ethical equivalent of theft.
Even that number is pretty high in my opinion. It would be my goal to keep it around 20%
profit, after all overhead is considered.
Then again, how many companies really know the overhead each employee
brings in comparison to the value they contribute? I don't know the ratio but I imagine there
are quite a few companies that don't even think about these numbers and just go
on gut.
The only way it is possible to swindle so much value from
someone without compensating for it is when the numbers are hidden, when there is
no transparency or communication, and when the organization is really looking
at making next quarter's numbers better than ever rather than looking to the
future. That person you are robbing that
is creating so much value, one day, they will realize they have been robbed and
they will leave you to provide that value to someone else. No one is irreplaceable, but everyone has a
cost associated with their replacement and sometimes that cost is very high
indeed. The cost of pride, prejudice,
and greed really knows no bounds. I
think the real questions to ask is are you looking to succeed, to grow, to
learn, or are you looking to feed your ego?
The two have rarely co-existed in my experience. I know personally, when I grow, when I
succeed, when I face a challenge and overcome it, I typically have to lay my ego
down at the altar of growth as a sacrifice to take that next step.
I want to generate wealth and it just doesn't seem right to
not reward the people that have taken my vision and made it into reality. I don't live in a world of limits, so I lose
nothing by sharing my pie. The pie is in
fact infinite.
My wife records Oprah every day, typically I will catch snippets here
and there as she watches the recorded show in the evening. Today's
Oprah was no exception and in the process I was fortunate enough to
catch a pearl of wisdom so simple and so profound it prompted me to
write about it.
