Does Your Pay System Encourage Your Best Employees to Quit?


Part 1 of 5 on Employee Pay

After receiving notice of his merit increase, Maddox said to Julian, his manager, “I really like working here, but I guess I don’t understand why my increase is so small.”

Julian responded, “You are an excellent producer but you are already one of the highest paid members of my staff.”

“I’ve heard we’re paying a couple of new employees at salaries that are pretty close to mine.”

“There may be some salary compression due to a tight market for skilled recruits.”

“Then it seems like the rational thing for me to do would be to quit.”

Most merit pay systems are zero sum, meaning that if you give higher percentage increases to some employees, you have to balance that by giving lower percentages to others.

Zero sum systems encourage managers to avoid high percentage increases.  Managers do not like explaining to disappointed others why their increases are only average or perhaps below.

Most internal pay systems compound the issue by setting upper limits for particular skills and by paying more for new hires.

Laszlo Bock, author of WORK RULES, says “In a misguided attempt to be ‘fair,’ most companies design compensation systems that encourage their best performers and those with the most potential to quit.”

Act as a Catalyst to Motivate Others


“I work hard to motivate my employees,” lamented a manager. “I pay them well, they are trained, and I express my appreciation frequently.”

The manager continued, “I expend a lot of energy pounding the pavement in search of fresh motivational events. We do holiday events, celebration parties, landmark events, hams for the holidays, and end-of-the-year awards.”

Perhaps there is an easier way. Researchers Buckingham and Coffman suggest that managers think “catalyst” as a way to create “ooh” and “ah” performances. From your basic chemistry class, you recall a catalyst is a substance that speeds chemical reactions in other agents.

Actions of catalyst leaders might include asking for opinions, listening, encouraging, energizing, removing obstacles, and ensuring that employees have the tools they need.

Of course, training, recognition and financial rewards are important. However, these tools are ineffective for employees who lack the talent and drive to perform.

Try rolling the cosmetic dice. Find people who want to do what you need and clear the path for them to proceed. As one manager said to a recruit, “If you are looking to me to motivate you, you are probably not the hire I’m looking for.”

Use Nudges to Influence Reluctant Responders


“I want to tell you a success story.  I became frustrated with an employee in another department.  I had to complete a monthly report which required information from the employee.  Often, the information was late or incomplete—frequently, both.”

“What did you do?”

“I talked with my boss, the employee, and the employee’s boss.  (I also complained to my spouse, in-laws and kids.)  All were supportive and the employee agreed to do better and did—but improvement was short-lived.”

“OK, what did you do next?”

“I heard a lecture on the value of professional nagging.  So I began sending the employee frequent, reminder texts and voice messages. Occasionally, I just dropped by to visit.  I was always pleasant and offered to help.  The employee has become much more responsive, and I think we actually get along better.”

Professors Richard Thaler and Cass Sunstein, in their book NUDGE, describe how we can influence others’ behavior by gently reminding them of choices.  Managers at Google use nudges to help their employees eat healthier foods, invest better and improve teamwork.

Nudges are not shoves.  They are not demands.  Nudges high-light choices and may take the form of texts, posters, emails, signs, voice mails, drop-ins, seat-belt dinging and other forms of professional nagging.

 

Play “Hard Ball” with Competitive Negotiators


A vendor explained, “I have a customer who always insists on haggling over price.”

“How do you deal with that?” I asked.

“I simply add about ten percent at the beginning.  We exchange messages, do our little dance, and I agree to knock off eight or ten percent.  Eventually the customer agrees, with a sense of satisfaction I’m sure, gained from haranguing me into submission.”

After reviewing negotiation research, Georgetown University professor Jeremy Yip and others concluded that gratitude and forgiveness in competitive relationships can be costly.

As in the example above, aggressive stances with competitors are more beneficial. Understand there may be some unnecessary posturing and babbling.  It’s not personal.  Leave room for compromise.  Aggressors expect this.

Competitive negotiators will likely see grateful, cooperative negotiators as naive–opportunities to be plucked.  Cooperatives often get their feelings hurt and strive to avoid the sordid mess.  Many stalled negotiations are of this mix.

Whatever the approach, both parties must eventually see the final agreement as beneficial.  It is delusional for one party to see him/herself as smart enough, big enough or bad enough to consistently take advantage of another party.

 

Employee Motivation is Not Rocket Science


When asked to identify his strength as a leader, Steve responded, “I’m a motivator.”

“How do you motivate your team?” I asked.

“I encourage my employees to push themselves.  I tell them how important their jobs are. I applaud their efforts. I’m always trying to build them up.”

“How is that working for you?”

“I think it works pretty well.  Not everyone responds the way I would like but I keep encouraging them.  I think most appreciate my efforts.”

Employees said they liked working for Steve.  They described him as “helpful,” “energetic,” and “caring.”

I applaud the efforts of leaders like Steve, and I’m confident that most employees would appreciate working for him.  However, I think a highly motivated work team also requires two additional ingredients.

One, employees’ motors need to be running when they come to work.  It is near impossible to kick-start a low-energy employee into spirited performance.

Second, employees’ must have the natural talents and acquired skills to perform the tasks well.  Long-term commitment to a job requires earned pride that comes only from doing something well.

When these two elements are present, Steve’s methods work great.  If one or both are missing, Steve’s well-meaning approach will likely whiff on motivation.

The Leader–Boss? Servant? Partner?


I’m a servant leader,” declared Braylon.

“What does that mean to you?” I asked.

“It means that I put my people first.  I identify their needs. I want to help people grow, to reach their potential.”

“What do you do if there is a conflict between a member’s priority and the company’s mission?”

“I advocate strongly for my people.  I take care of them; they will take care of me.”

Robert Greenleaf coined the term “servant-leader” in the 1970’s.  Some, still today, invoke the concept to argue against what they see as top-down power.

Effective leaders utilize many servant leader concepts, for example:  listening to, empowering, and developing employees.  However, full-blown servant leadership may not sink employee efforts to a common mission.

Teams require members to bend some of their needs to achieve teamwork, as in, subordinate personal aspirations to team goals.  Effective leaders strive to make all better off by influencing, persuading, cajoling, and evening requiring employees to seek first the mission.

Perhaps it is better to think of leader-employee relations as a partnering, as in–we both have skin in the game and we both have a lot to gain, but it is my responsibility to ensure that we strive together in this journey.

 

 

Do You Over Value Loquacious Staff Members?


Although Estes attended every board meeting and did a great job auditing financials, I don’t remember him saying six sentences in twelve meetings.

In the midst of discussing a complex fund raiser involving multiple chefs, donated food, and unpredictable weather, Estes said, “I’d like to chair this project.”

Estes’ seemingly bold statement shocked eight other confident board members into silence. After a pause, Estes repeated, “I’d like to lead this effort.”

Because I had judged Estes as the classic, withdrawn introvert, he would have been the last member I would have chosen for this purpose. But since no other members seemed anxious to tackle the challenge, we reluctantly accepted Estes’ offer. As you might guess, Estes did a superb job planning, coordinating and executing the event to great success.

I think managers and peers often over value talkative extroverts while short-changing quiet, unassuming introverts. Recent research by Professor Cameron Anderson and others suggests that extroverts tend to lose status over time as their performance falls short of expectations.

By contrast, while they may have fewer opportunities, the status of anxious and withdrawn introverts tends to increase over time as their unrealized talents produce above expectations.