Scenario: "Dude, we'll motivate them with money. We'll keep all of them! High-five!" Think back to something you did spectacularly well.
- You entirely enjoyed the process.
- You felt inherently motivated.
- Money played barely any role.
Yet, you see managers/execs thinking: "Hey, I can drive performance if I motivate people with $. Yay!" Bull-oney. If you keep your superstars financially happy, they'll kick ass -- regardless of how much you pay them.
The Purpose of Compensation
The purpose of compensation is not to motivate people with money. As a Jim Collins study goes, superstars are inherently motivated to excellence regardless of pay. Instead according to the study, compensation's purpose is to:
- keep the best
- reject the worst -- immediately
When you have a compensation system that keeps the best people, and drives out those who suck quickly -- you start building a superstar team that feeds off of each other. Result: You get one kick-ass mutha-!@^^% team that's about to rock the world like it ain't no thang.
Sidebar: The Rock Star Paying Guide
- A. You pay them too low: They'll bolt.
- B. You pay them enough: They'll kick-ass
- C. You pay them more than enough: You'll see no performance change from B.
Say you're building a compensation system for your sales team. Ultimately, you want a team fully packed with super-all-stars who can generate tons of sales. So, you build your compensation program this way:
- Base pay among lowest in industry.
- The rest of compensation is determined by ^ sales they close -- where those who thrive earn substantially more than industry averages.
That helps you (1) keep those who'll rock, and (2) quickly eject those who suck.
- If someone rocks: They'll be super happy knowing they're compensated among the best in the industry.
- If someone sucks: They'll leave quickly to a suckier company, knowing they can make more with less effort.
Ta-da: You've just automated your system to retain only all-stars for today/tomorrow/next-year/yadda/yadda. Yay for yo badass.
Divide, then conquer.
Posted on April 12