I remember being told at my first university economics lecture that we have to assume human beings always make rational choices. That seemed like a very bad start to me, to most people I imagine. Nevertheless, doing the opposite, assuming that most people are irrational, seems worse.
Like when some business owners think less of employees because they don’t want to be entrepreneurs. Assuming they’re mad for wanting a life devoid of worrying about cash flow and pipelines. Wanting to just work and live a good life.
Trying to force people, by using incentives, to pretend to care, with the same enthusiasm as you do, about the financial performance of the firm often just produces perverse behaviors. Particularly for talented creative or professional people. Obviously that’s different for C Level, but for most people the finances are a hygiene factor. As long as there is enough cash left over in the business for it to be a safe place for them to work – that’s what it’s all about for them.
There are lots of ways to reward people, that use varying levels of complexity. I particularly like employee share schemes and often recommend them. They are much easier to run these days than they used to be. Obviously, they are also dependant on profits but for most staff it’s a long term play. For most staff, it’s about what’s in their salary month to month and sometimes short term incentives. And the best way to negotiate salaries is to compare them to salaries paid in similar businesses.
The big question is, do you have a set range of salaries for particular roles and let all the staff know what they are? Or do you keep then secret? Most people know what other jobs like theirs pay in the market. Should they know what their colleagues get?
I’ve seen both approaches succeed and fail. I’d love to know your thoughts. So I’ve done a quick survey. It’s only a few questions. It would be great if you could spend 2 minutes answering the questions by clicking on this link https://www.surveymonkey.com/r/T2SSSTZ
Thanks in advance guys.
Thomas