How to Pay Your Contractors

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Scenario: "So, listen up maggots. This is how you ignite performance: pay the contractor $50,000. Then you'll get fantastic performance from her. Oh yeah. Yeah. Yay!" Blah. Paying your contractors a fixed amount of cash to ignite performance is a bad move for three reasons:
  1. If they suck, you're out of luck.

    Spend a chunk of change on your contractor, and if they can't accomplish what you need -- you're screwed. Why? (1) You'll have minimal money to restart, (2) you'll lose your motivation to kick-ass, and (3) you'll waste precious time to build your business.
  2. You restrict them from seeking the best approaches.

    It's a "stick-to-the-script-and-I'll-pay-you" approach. Likely, if you're using a contractor, s/he'll know better approaches than you ever will. Yet, a fixed pay won't motivate your contractor to produce the best results that wow you.
  3. You get mediocre results.

    Giving contractors a fixed amount drives them to produce "just enough" to fulfill your requirements. There's no added incentives to do much more. Why would they bother?

Here's how we approach pay at Trizzy.

Instead of paying fixed amounts to our contractors, we use the "cover-our-asses" approach: We give our contractors a conservative base pay (i.e. one that won't kill the project and our motivations), then guarantee them hefty bonus if they Wow! the mutha flucka out of us. That ensures we attract and retain the best, and drive the rest away.

The "cover-our-asses" approach rocks.

The approach works because it sends signals to your contractors that results matter. If you talk to most contractors, they'll typically tell you that the hardest part is finding the client. Once the client signs their contracts, it becomes smooth sailing for them: there's no added incentive for them to kick-ass -- as long as they fulfill the requirements of the contract. To avoid contractors becoming complacent about your projects, incorporate the "cover-our-asses" pay approach. You'll get your contractors to produce results that, how shall we say: Wow! the mutha flucka out of you.

It's in the research.

Delaware psychology Professor Robert Eisenberger and his team conducted a study to explain why the pay-on-rockin'-performance method works:


[They] conducted two subsequent surveys among two separate samples of more than 300 employees of a chain of large discount electronics and appliance stores.


The results of the surveys indicated that employees who expected that high job performance would bring increased pay perceived greater control over how they carried out their jobs than employees with lesser performance-reward expectancies.


This perception of autonomy was in turn positively related to employees' belief that the organization valued their contributions and cared about their well being.


Thus, employees who expected that high job performance would bring increased pay reported that they felt more active, enthusiastic, and energetic in a typical day at work.
Try the pay-on-performance approach, and see what results you'll get -- then tell us about it. It'll surprise you how a simple change in pay structure will ignite contractor performance. So when you're deciding how to pay your contractors, remember:

Base pay + "Wow" bonus = Contractors that rock like a mutha flucka.

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Posted on August 31

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