Tomicide Solutions September 2008: The Fine Art And Science Of Employee Compensation Management In Technology Business Development Careers

By Tom "Bald Dog" Varjan

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I have written in several articles about the big problem technology business development departments are facing when they try to have their people work together as a teams as opposed to a bunch of individuals.

While money is not the strongest driver of performance, lack of it or the unfair distribution of it is a powerful driver of demotivation for folks in business development careers.

Employee compensation management, just like the other main money issue, pricing, is almost always treated as a backburner issue, and handled on a haphazard basis.

It seems management is so obsessed with cutting costs and hiring cheap people that they don't have time to work on increasing revenue and hiring truly talented people who could produce borderline miracles in their positions.

And one of the main reasons why these companies end up with the wrong people is incorrect compensation. And here I don't necessarily mean the incorrect amount, although many companies would make Ebenezer Scrooge look like a pretty generous and charitable chap.

The bigger problem is really the method of compensation.

Even in the knowledge age and the age of the knowledge worker, many technology companies want to compensate their business development folks as if they were manual labourers. As a result of this retarded approach, these companies keep missing out on the best and brightest people who could make the greatest difference to their revenues.

And who to blame for the retarded approach? HR for one. Traditional HR practices have created so much incompetence and misery that the biggest favour you can do to your people and your bank account is to dissolve your HR department, fire your HR "experts" and get involved personally with talent attraction and development.

I have no idea why senior executives are not interested in finding good people. I guess they are just too important to deal with such a "low-level" issue as acquiring good people.

Look at most companies and who do you see in their boardrooms? A technical director, a sales director, a marketing director, PR director.

Whom you don't see is a talent director. A person whose sole job is to scan the horizon for talented people, attract them to the company and help them to settle in.

Instead, who do you find? Some HR folks with fancy credentials who are undisputed experts at... hiring industrial workers to perform manual labour in an industrial age that is basically as good as gone.

In the words of Eric Hoffer in The Ordeal of Change...

"In times of change, learners will inherit the earth, and the learned will find themselves beautifully equipped to deal with a world that no longer exists. The illiterate of the 21st century will not be those who can't read and write, but those who cannot learn, unlearn and re-learn."

What 99.9% of HR "experts" don't know is how to engage knowledge workers and help them to do their absolute best for the company.

So, as we see, the issue is pretty broad, but this time let's focus on compensation. But it's fair to say that highly talented and qualified people get turned off by the way HR folks treat them during the recruitment process.

As prospects we can assess how we get treated as clients from the sales process. How you sell me is how you serve me.

Similarly, how you treat me as a candidate for your position is how you'll treat me as an employee.

But before we can appreciate good HR and compensation practices that attract and inspire top talents, we also have to look at the dark side and understand...

The Huge Price Technology Companies Pay For Using "Industrial Age" HR Practices In Business Development Careers

In his book Conversations on Customer Service and Sales, author Ken Edmundson writes...

"Mathematically we have a 52% chance of hiring the right person if we just flip a coin, and studies reveal that we only increase that by a whopping 8% by using our wonderful interviewing skills."

A recent Gallup Poll study indicates that 59% of the workforce is disengaged, that is, they don't pay attention to their work. 14% of the workforce is actively disengaged, that is, they actively do non-work-related work at their workplaces. Only a mere 27% are engaged.

In a company of 100, this is 27 people.

We also know the 80/20 rule, which means that about five people (20% of 27 people) create 80% of the results and 22 people (80% of 27 people) create some 20%. And the majority, 73 people, are dead weight pulling your company down. 59 people are actively using company resources to do non-work stuff.

But before we accuse these people, let's see why they work this way. They are the victims of obsolete HR practices. They merely create dysfunctional working practices to match companies' dysfunctional HR practices, so they can keep dysfunctional HR departments happy and have a chance to get good ratings on their dysfunctional annual performance reviews, so they can be promoted.

Paraphrasing Harris Interactive's survey, based on 23,000 people, using soccer language and a soccer team...

And if we want to change these results, first we have to change the HR practices we use to acquire talents.

Measurement vs. Judgement

Business development is knowledge work at every level, thus cannot be equated to clearly measurable elements.

Intellectual capital, thus client value, is not dispensed linearly. It's non-linear and not subject to traditional measuring methods of manual workers. Intellectual work can only be judged and discerned by professionals who have a significant understanding of the discernable topic.

HR people can match the obvious, but they don't have the expertise and experience to judge and discern the value a new employee can bring to the table.

And using efficiency is a lunatic factor to judge effectiveness...

Salesperson A: He works in a most technically up to date call centre. Superbly trained salesperson with two MBAs from leading business schools, making cold-calls. Sharply dressed. Everything is professionally streamlined and very impressive. He makes 140 very sharp cold calls every day. No luck. No one buys.

Salesperson B: He gets on his bicycle and pedals to the local farmers market. He buys a carrier pigeon. Then he goes home, and writes a letter. He straps it on the pigeon and sends the pigeon off into the sunset. After one week he receives a call and lands a $250,000 contract.

Salesperson A is impressively efficient. No time is wasted. Everything is streamlined. All inputs are maximised. But no output, no results. Nevertheless, HR is impressed and this person is guaranteed to gain a perfect 10 on his annual evaluation.

Salesperson B is amateurishly inefficient and is likely to be fired from the job.

But he produces good output with minimum input.

And do you know what? HR will advise management to get rid of this person because he's too problematic. He can't colour within the lines.

In their book, A Simpler Way, authors Margaret J. Wheatley and Myron Kellner-Rogers write...

"Playful and creative enterprises are messy and redundant. Human thinking is accomplished by processes that are messy and redundant. When computer scientists first tried to mimic the lavish parallelism found in human thinking and all of nature, they had to link together more than 64,000 computers working on the same problem at the same time. Parallel systems are dedicated to finding what works, not by careful stepwise analysis in the hands of a few experts, but by large numbers of a population messing about in the task of solution-creation. They come up with better solutions, but they are based on a different kind of logic: trying thousands of things simultaneously to find what works."

The other important point is that parallel systems are riddled with errors because errors lead to the next level of thinking which in turn leads to the ideal solution. Also, in parallel systems the errors are not related. In serial systems errors are caused by each other, and one small error can lead to a disaster.

Think of daisy-chained Christmas lights. If one bulb blows, the whole system gets killed and dies to death.

And this is how knowledge workers work. And therefore their work cannot be correlated to the passage of time.

And here are a few differences between knowledge workers and manual workers.

Manual Workers... Knowledge Workers...
Are hired to perform tasks Are attracted to advance their careers to their own and their companies' benefit
Retained for another day's work Inspired to follow a path of professional growth
Managed to perform more tasks Led to be the best they can be
Work for money Work for fulfilment

The Basic Premise For Finding Hot Talents Not Merely Hard Workers

In a 1997, organisational psychologist, Dr. Amy Wrzesniewski of Yale University School of Management, did an extensive study, and categorised employees into three groups. This categorisation becomes even more important for knowledge workers, since their productivity can't be monitored as easily as a person who is shovelling shit from one pile to the other.

Group #1 folks view work as jobs. For these people the motto is, "Fair work for fair wage." They don't care about what they do as long as it earns them enough money to pay their bills. There is no pride and fulfilment in the work. It's merely another chore to make some money to live on. Loyalty is non-existent. The turnover and the price of turnover are astronomical.

Group #2 folks view work as careers, but the main focus is still on promotion and personal financial advancement. These people work because it gives them social status, prestige and title power. They also make significant investments in their careers and keep advancing their skills to reach the next promotion and pay scale. But their work satisfaction still depends on external circumstances, like regular promotion and pay increases. When the external stimulus stops, so do they.

Group #3 folks view work as a higher calling. They do the work for the sake of work and because they enjoy the process. These people also have happy, healthy and fulfilling personal lives. They work to serve a higher purpose, and make their societies and the world a better place. Using fellow Hungarian, Dr. Mihaly Csikszentmihalyi's definition from his book, Flow: The Psychology of Optimal Experience, these people operate in flow, that is...

"being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you're using your skills to the utmost."

I believe technology companies should focus on hiring "talents" from group #3, not "workers" from Group #1 or #2.

But if you look at most job ads, I almost called them career opportunities, you can clearly see that those ads are calling for people in Groups #1 and #2.

Group #3 have excellence carved into DNAs, and whatever they do they do it to a high standard but not because of the money. They work for fulfilment not for money. They also happen to be the most trusted, respected and the highest-paid professionals.

There is only one snag: Group #3 people, being drastically different from groups #1 and #2 folks, view career opportunities differently and approach the whole recruiting process differently. Well, they don't even reply to 99.9% of traditional job ads because they know the job application would be an uphill struggle with some HR goon who would try to fret their non-existent power over them during the whole hiring process.

Since I've been a volunteer career management facilitator for a few years now, from time to time I respond to some ads just to see what's happening out there. It's sad how much damage HR departments cause among highly talented people.

A few weeks ago I sent off an application for a Business Development Specialist position to a local firm called MEA Forensic Engineers & Scientists. I quickly received a response from the HR manager...

"How many pushups can you crack out?"

I wrote back and told her. And that was the application process. I've never heard of the firm or Julie again.

There was another HR woman who reprimanded me for sending an "improper" resume with full of results I've achieved in the past. She said she didn't care about what results I could achieve. She cared only about whether or not my resume matched the job description which she had been given.

And there was a third woman who insisted that I tell her what hourly wage I would expect, although she refused to tell me even the name of the company let alone the details of the job.

So, we didn't take the applications too far. And this experience has confirmed to me that most HR professionals are actually hindering their companies' success. But if this is the case, they should be fired rather sooner than later.

What these three women have in common is that they lose a pile of money for their companies, and they even get paid for that. Why their employers don't fire their arses is beyond me. But I guess, as HR experts they know how to stay on the payroll without actually performing in their positions. And their bosses fall for their tricks.

While group #1 and #2 people are sellers, selling their time, credentials and work history, #3 people are really buyers. That is, they are buying your opportunity of being part of your investment vehicle (company), so they can invest 100% of their best and brightest for a financial (above average compensation) and a psychological return (professional fulfilment).

Don't get me wrong, These folks require significant compensation for their expertise. But not because they need the money. They require the money because they understand the value they offer to their employers, and they believe in fair value exchange.

Maybe HR folks could learn a bit about this value stuff too.

Inside Reality and Outside Perception

Every technology company has an inside reality and an outside perception.

And this outside perception applies both for the marketplace and the talent pool. The better we can align the company's inside reality and outside perception, the more successful the company becomes to attract top talents.

Just imagine two partially overlapping circles, one representing inside reality and the other representing outside perception. The bigger the area of the overlap, the more profitable the company is.

And since we know that being inside the company, we can't fiddle with the outside world. The only way of improving the outside perception of the company is by improving the inside reality.

It's like a tree really. If we have small fruits (outside perception), we have to fiddle with the roots (inside reality).

So, we have to create an inside reality that attracts the crème of the crop of the talent pool, so we can end up with top-notch talents.

Results Based Environment For Business Development Careers

I believe any work environment where knowledge workers work must be a ROWE (Results Only Work Environment) environment. You can learn more about the benefits of ROWE at CultureRx (www.culturerx.com).

That means people have the freedom to do their work when, where and how they see fit as long as the work matches the company's quality standards and the work process doesn't violate the company's core values and Code of Honour.

In a ROWE workplace ...

And yet you get...

So, why don't more companies do it? Because it requires a different kind of thinking, and mid-level managers who would be the implementers of such an initiative have a vested interest in remaining married to the status quo.

Hey, we've all heard Peter Drucker's phrase...

"90% of what we call 'management' consists of making it difficult for people to get things done."

See the traditional industrial age work environment.

Other ROWE attributes we can't find in traditional workplaces...

Living By A Code Of Honour As Opposed To Bible-Thick Rulebooks

It's important that knowledge workers have high levels of discretionary latitude to perform their work. The problem is that when you see a knowledge worker sitting back with his feet on his desk and his eyes closed, he may not be goofing off but formulating something in his head that could be the next million dollar idea for the firm.

I've found over the years that in a culture of excellence, trust, respect, honour, commitment, accountability and discipline people don't goof off. They simply don't. Remember, every person is the extension of the firm's culture, which is the extension of the owner(s)'s values.

So what is the difference between rulebooks and a Code of Honour.

Rulebooks are usually written in an anal retentive manner to scare people shitless.

A Code of Honour is written in such a way that it moves something at the readers' very core to inspire them to step up to their higher selves and give their best to the cause they're engaged in.

One example is the military. Since human life is on the line, the tolerances are pretty tight and the rules are pretty strict. But the reason why soldiers adhere to the rules is not because they are afraid of being punished. No, they adhere to their Codes of Honour which are in alignment with the Uniform Code Of Military Justice (UCMJ).

It's not a new fact that people cannot be ordered around, let alone forcing them to do their best, using rules and rulebooks. The reason why Al Qaida is so successful (sad but - let's get real - true) is because they have a cause: The hatred of America and its allies; and a Code of Honour: The Quran.

The other difference between rulebooks and Code of Honour is that while rulebooks require compliance with rules and regulations, Codes of Honour inspire and empower people to dig deep into their core values and step up to higher levels performance.

And while rulebooks are full of legalese, Codes of Honour are written in plain English. Remember, in ancient Rome, when Cicero spoke, people marvelled and admired him.

But when Caesar spoke, people marched.

This is the difference. Rulebooks may make people scared, but only the Code of Honour can make them march.

Using Instant Feedback Not Annual Performance Review

In the employment world it has become common - among other traditional retarded HR practices - to hire people, let them struggle and stumble for six months or a year, and only then to tell them at their annual appraisals they are not up to snuff or what their weaknesses are.

It happened to me a few times when I was an employee. I got the smiles of satisfaction for six months and then the feedback that I had to improve here and there. They could have told me that when I was making a mistake but most of my bosses saved up the feedback. How moronic.

At this point many people lose their jobs because their bosses believe that next time they can hire better people and the same lunatic hiring process starts all over again. Of course, traditional HR practices make certain that the best and most qualified people have no more than a snowball's chance in hell to ever get hired by the companies where they could add the most value.

Back to annual appraisal. The problem is that by the time the appraisal comes up, people have established new habits of doing things the wrong way. Also, offering only annual performance appraisal is like driving somewhere but looking at your instruments and at the road only once a day. The problem is that by the time you've driven a whole day - and haven't crashed yet - you've made quite a bit of progress in the wrong direction, so you have to go back and start from scratch. And this undoing process is costly both in time, energy and money.

So, what is the alternative?

It's instant feedback on your people's behaviour and performance that matters, and taking the appropriate action based on what you see. And of course, let's forget about the traditional annual performance review. When people have instant feedback, there is no need for annual reviews.

Collegial No Promotion And No-Competition Environment

When we look at most business development departments, what we find is that most people work in their positions not because they really love it, enjoy it and want to give their best and brightest in those positions to become world-class, but because working in those positions is part of the path that leads to higher positions in their firms.

What they call career is nothing more than a never ending climb on the corporate ladder, and staying on each rung for as short of time as humanly possible, thus reaching the top as quickly as possible. Hey, this is why most people do their MBAs. I dare to say, maybe 5% do MBAs for the knowledge they gain. For 95% it's a political move to reach the next rung on the corporate ladder.

With this attitude there is a constant and never-ending battle for getting promoted. Instead of giving their 100% to their current positions, people start playing political games and pushing their personal agendas in order to win the next promotion and hop on the next rung of the pecking order ladder.

Personally I believe that business development departments should be an absolute non-promotion environment. If a young woman starts out as a technical writer, she will remain a technical writer. And before you say this is restricting and typical glass ceiling, here is the twist. She remains a technical writer because she wants to become the world's best technical writer. She loves her position and wants to become a master technical writer.

And as the company is getting more and more profitable, her salary keeps going up, regardless of so-called competitive going rates for technical writer. Remember, you don't want to condemn her to be merely a competent and competitive technical writer. She's inspired to be world-class, and as her manager, you have to support her inspiration and ambition.

You hire people who want to stay in the position they get hired for, and want to become world champions in those positions, be it webmaster, telephone support person, diagnostician or documentation specialist.

It's totally amazing that when you remove internal competition and have your people work as a team, overall performance goes through the roof. People stop rivalling with each other and start collaborating to achieve more together.

What Do Employees Seek In Their Careers?

"What workers want most from their employers beyond anything else is high wages." ~ Another incorrect assumption from Frederick Taylor, the founder of scientific management at 1911.

There are some misbelieves by managers, and these misbelieves keep losing them their best people. Here is an interesting comparison about what managers believe employees are seeking in their works, and what employees are actually seeking.

For instance, managers believe that "Full Appreciation for Work Done" is only at 8th place on employees importance list. Well, it's number 1. Managers believe money is the number 1 criteria for employees. No, it's only No. 5.

And in my experience, people for whom money is the number one factor have their other priorities messed up. I've found this table at Employee Retention Headquarters where Principals Sheryl and Don Grimme help companies to master the art of attracting, retaining and developing star performers.

Factors Managers Employees
Full Appreciation for Work Done 8 1
Good wages 1 5
Good Working Conditions 4 9
Interesting Work 5 6
Job Security 2 4
Promotion/Growth Opportunities 3 7
Personal Loyalty to Workers 6 8
Feeling "In" on Things 10 2
Sympathetic Help on Personal Problems 9 3
Tactful Disciplining 7 10

Sources: Foreman Facts, Labor Relations Institute of NY (1946); Lawrence Lindahl, Personnel Magazine (1949), Repeated with similar results: Ken Kovach (1980); Valerie Wilson, Achievers International (1988) Bob Nelson, Blanchard Training & Development (1991)Sheryl & Don Grimme, GHR Training Solutions (1997-2001).

Hourly Wages

Hourly wages entice people from Dr. Amy's Group #1, the people who only want jobs, reasonable paycheques, and the ability to "drop and forget" work at 5:00pm. Most of them are also the people with a socialist entitlement mentality. See labour unions' "Pay me well but don't expect much" approach.

It's plain retarded to pay hourly rates to business development folks who are generating new business that keeps the company alive. And business development, just like the technical experts at the company. is knowledge work. It would be dumb to hire minimum wage (minimum skills and minimum loyalty and commitment) people to make cold calls trying to sell premium technology solutions and paying them $10 per hour.

Also, I've recently read a study somewhere in which hourly workers were told they could go home after doing their normal daily - eight hour of - work. Well, on average, they completed their daily work in three hours and 19 minutes. This is a pretty loud message if we keep our ears open.

According to the Aberdeen Group's, some 60% of the U.S. workforce is hourly workers. I reckon the ratio is pretty similar all over the world.

And according to the Bureau of Labor Statistics, this percentage is likely to grow in the future. So, the deeper we go into the knowledge age, the more companies compensate their people as manual labourers. I think this is rather sad.

Here are also some interesting facts about hourly workers.

They are costly to manage which makes hourly workers the lowest ROI segment of any workforce. They need constant supervision, which consumes valuable management time. In really tyrannical organisations, you can see one supervisor for every 2-4 people.

I've heard of a company here in Vancouver, where the cleaner lady goes around doing her job with a supervisor in tow. Now this is communism. One person does the job and one supervises it. Of course, in communism the system doesn't trust people to do their work. They must be closely scrutinised.

Also, hiring hourly workers is driven by emergency and often is misaligned with the company's strategic plan.

Companies try to cut costs by using online recruitment sources, but this also cuts the quality of candidates. See the bottom feeder companies on Craigslist looking for "gurus" for minimum wage.

In Are Hourly Workers Professionals?, author David Creelman uses three factors to distinguish between mere workers and true professionals...

Duration: Commitment to stay in that profession for a fairly long time

Content: Having mastered a certain skill(s) which includes solid theory and extensive experience of applying that skill in the real world

Feeling: Pride in the profession, dedication to excellence and a sense of contribution to something bigger than themselves

It's also interesting to observe that while in Europe and Japan hourly workers are also regarded as professionals, in North America they are the "sludge" of the workforce. And this is largely thanks to Frederick Winslow Taylor who, with the help of his stopwatch and idiotic book called Scientific Management, single-handedly destroyed people's pride in their work. He regarded hourly workers as people with ox-like intelligence who should be micromanaged if we want to get anything useful out of them.

And here is an interesting consideration, the so-called Pygmalion effect...

In George Bernard Shaw's play Eliza Dolittle married Freddy Eynsford-Hill because she recognised something vitally important. She realised that in Professor Henry Higgins's eyes she has always been and will always be a cockney flower girl and be treated accordingly.

She knew that the arrogant Higgins would never be able to accept the positive changes in her. Eliza knew Higgins would always treat her the same way regardless of what she achieves. As she said to Freddy...

"The difference between a flower girl and a lady is not how she behaves but how she is treated. I have always been and will always be a flower girl to Professor Higgins, because she treats me as one. But I also know that I will be a lady to you because you treat me as one."

Now adding up 1 plus 1, we can conclude that all the problems with workers started with Taylor. It started when he simplified human pride, energy, passion, enthusiasm, determination, self-discipline, attitude, high self-esteem, good personal values and communication skills to specific unskilled motions anyone with ox-like intelligence can perform.

And what we have today is a huge group of talented people who act like brainless morons between 9:00am and 5:00pm because this is their companies' expectations of them. Then they go home and achieve amazing things in their spare times.

And I dare to say that society as a whole is still paying the price for Taylor's fatal error.

Then later came the McKinsey maxim...

"If you can't measure it, you can't manage it"

But before the McKinsey maxim, a pretty wise guy called Einstein discovered an interesting phenomenon...

"Not everything that can be counted counts, and not everything that counts can be counted."

I would say, good ol' Albert foresaw the knowledge age pretty well. An age where thinking and wisdom matter not the stuff we can count and measure with a stop watch.

But the disease is pretty deep-seated, and the "Taylor disease" will live on for many years to come.

Commissions

I believe the bottom of employee compensation in business development careers is the commission.

The commission structure's (full commission or small base pay + commission) inherent problem is that money becomes the main motivator for people to perform better. And what I've observed over the years is that money-hungry people are hardly ever the best in their crafts.

They never put in 100% because they know that there is always more money available and if they give 100%, they run out of bargaining chips to negotiate for higher commissions and better terms.

The other problem is that just because individual employees make good money, the company as a whole may still be heading to disaster.

When IBM was going down in the early 90's, the salespeople were still making huge commissions. It's common practice among commissioned salespeople to drop price in order to close the deal quickly. And they often drop the price under what is profitable for the company.

Now, if we say we want to find people who naturally do great work, we have to be dedicated to building a great team and must be willing to forego superstars with the "I do anything for money" mentality.

Of course, managers and business owners may cry...

"I pay only for results".

And to that message, people may cry...

"I produce results if I get paid first".

Clearly, someone has to give first, but who?

I believe it should be the party who enjoys most of the value a knowledge worker generates. And that is definitely the company.

What I find scumbaggy of companies is that they expect these commissioned people to take 100% of the risk, do 100% of the work, finance 100% of pursuing new business, and reward these folks with some 10-15% of the money they've just generated.

The way I see it, if I put in the cost and effort of hunting, why should I share the bounty with all the other people at the company who are just sitting comfortably at their desks and sipping their coffees? No point.

Let's look at the Employee Retention Headquarters' table again. What is important for people? "Feeling in on things" is No.2. Managers believe it's No.10.

People want to actually belong to their organisations. People who are not allowed to belong cannot be loyal. This is the reason behind the 43% annual attrition rate for business development folks.

The other problem of the commission structure is that it rewards the individual not the team. So, now people are chasing their own individual success even at the expense of their colleagues. This approach soon undermines the community nature of the business, and eventually while salespeople are making good money, the company may end up with money problems.

Business owners can rightly worry that when their commissioned people receive better offers, well more money essentially, they quit and take their clients with them.

Is it fair or is it not?

If we consider that commissioned folks invest 100% their own time and money to land those clients, then it's fair to say that those clients are theirs, and they serve those clients using their current employers' products and services.

Some sales folks go as far as clicking into broker mode, sending an RFP to their employers and some competitors, and then they select a company to do the work.

So, the final message to me is that commission-based salespeople work for themselves not for your company. They look out for their personal success and realistically (and rightly) don't give a damn about your company. You and your company are just a means to enable them to achieve their own ends.

But you can't blame them. They take all the risk and want to maximise their rewards. The company forces them to work for themselves, and this is exactly what they do with amazing excellence.

In Street Smarts: The Sales Commission Dilemma, Norm Brodsky (Owner of an Inc. 100 company and a three-time Inc. 500 company) categorises sales folks into three groups...

Hotshots: These super salespeople thrive on commissions and perform well but they don't want to work in teams. They are after individual glory and their main motivation is the money they make.

Entrepreneurs: Salespeople who are already self-employed in their minds. They are driven by commissions and independence. They just want to learn whatever they can on the company's dime and then move on.

Normal folks: These are the people who love what they do and are good at it. Their focus is to contribute to something bigger than themselves and have no hidden agendas. Yes, they expect good compensation but they are really driven by contributing to their companies and they really want to belong.

So, if we want to attract these "normal folks"...

What Should Be The Solution?

So, the following is a rather odd approach but wherever I've helped to implement it, it's been successful.

First, I look at a team as an immune system, so when a bad cell, that is, inappropriate team member, manages to get into the team, the team will reject him without interference from management. What that means is that you have a team where members give their 100% by default. They don't need extra external motivation. Giving 100% is in their DNAs.

And the immune system kicks out the dead cells, the slacking team members. Or more likely, the immune system blocks dead cells from entering in the first place.

And since I believe in giving first, I like the idea of paying every team member the same. After all, I expect the same 100% contribution from each team member, just like in a military commando.

So, first we establish a base annual salary for every team member. And this annual salary is a fixed salary regardless of number of working hours. As we've already established, knowledge work is a 24/7 activity, so the compensation should represent that too. You want to make sure your people shift their focus from money and focus on more important matters. Matters that are the cause to the money the company makes.

Now add up the current salaries and divide the sum by the number of team members + two. The "+ two" is for the company's owner who can triple dip in return for the initial investment and risk she took to start the company remortgaging her home for starting capital. It's only fair.

Everyone else will get the same base salary.

But there is a problem...

Some egomaniacs won't understand this and start rebelling that their jobs are more valuable than others. Don't you believe that! Some guys may say they deserve more than a receptionist, but without a great receptionist, who is the first line for inquiring prospective clients, some guys wouldn't have qualified leads.

Also, anyone who has an issue with this equal money stuff, I know is mainly motivated by money and I want him off the team and as quickly as humanly possible.

In the next step you establish what percentage of the total revenue is to be put aside for bonus, and then split the bonus equally among team members.

Now I know many people rebel against this approach, but my objective is to build a peak-performing team and a super profitable company, NOT to create super rich team members. Look at governments and wonder how super rich civil servants can be employed by institutions in super perpetual deficit.

If you have a highly profitable company, you can, in turn, have super rich people, but just because some people are stinking rich, the institution can be dirt poor. See communism.

Now you may say that with this approach you can't get superstars. I try my damn best to avoid superstars like the plague. I need excellent team players. And they're not the same.

A tight-knit team of competent and dedicated people will always outperform a loosely-connected bunch of people that happen to include a few superstars. When you offer equal pay to everyone, internal competition and rivalry vanish, so people can dedicate 100% of their best and brightest to their visions and strategies of their companies.

Now some people may accuse me of being a socialist. Well, hell, yeah. Outwards to the marketplace I'm a capitalist, but inwards to my own people, I'm a bit of a socialist. Or more like a blend of a nurturing parent a hard-arsed drill sergeant and a cheerleader. I create a high-demand, high-support environment in which people are naturally inspired to do their best and constantly improve. And I've never motivated anyone in my whole life. Every time I was in such positions, I demanded a helluva lot of my people, but also did my level best to support them to pull it off at the highest level.

And people who are primarily motivated by money aren't suitable for this. So, why try?

"The essence of management: Pay your people well and fairly, and do your best to help them to forget about money." ~ Alfie Kohn in the Harvard Business Review (Nov/Dec 1993)

I reckon Alfie is right.

If we want to attract and keep people who we can rely on both when sailing on calm waters and in the fiercest storms, I believe we have to create some of the circumstances we've just discussed above and, as Alfie says, we have to help them to forget about money, so they can do their best and brightest, so both them and the company can benefit.


Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.