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Q:
Bonus time just came and went at my company, and once
again I got less than I expected, especially considering
my performance review. Do I say something to my boss, or
just accept the fact that companies will always try to
give you as little money as possible? Name
Withheld, Valparaiso, California
A: If
there is one topic that unites employees everywhere, it is
compensation. Almost no one thinks he’s paid enough.
Interestingly, compensation also unites employers. The
vast majority will tell you they pay their people fairly,
if not better. Plenty of people like you fall into the
gulf between those two viewpoints. They wind up confused,
frustrated and even cynical about the whole pay game.
Indeed,
there are few issues that do more to disenfranchise
employees from management like complaints over
compensation. Which is too bad, to put it mildly. Because
you simply cannot be a great leader and get great results
in today’s marketplace without paying people the right
way—with no nonsense and with tons of differentiation.
That
doesn’t sound like it’s happening at your company. Why
exactly, we can’t tell from your e-mail. But we do know
that when people feel underpaid, it’s usually because
their bosses deal with compensation all wrong. That is,
they’re either skinflints or sprinklers.
Skinflints
first.
These
types scrutinize expense reports with Scrooge-like
vigilance. They look for the errant umbrella charged to
the company or, God forbid, the meal receipt with a
dessert. Worse, when it comes to giving out raises and
bonuses, skinflints practically writhe in pain. Many are
expert in delivering the “It’s been a rough year” speech
even in good times.
Unfortunately, these jerks are everywhere and we can only
guess what makes these people tick. But from our
experience, most seem to have a constitutional paranoia
about being taken. Whatever. Their psychosis is deadly for
motivation, creativity, productivity and just about
everything good in an organization.
Some
bosses are sprinklers. They aren’t necessarily cheap, they
just give everybody on their teams about the same size
raise or bonus—regardless of performance.
Many
sprinklers will tell you their approach is fair and
promotes teamwork. Indeed, some even use that argument to
defend across-the-board pay cuts during tough financial
periods.
With very
few exceptions, however, such so-called shared sacrifice
is just evidence of a manager too weak to make the hard
calls. No wonder it’s a practice that invariably drives
top performers toward the door.
Other
sprinklers aren’t about fairness as much as they are about
phoniness. They distribute equal chunks of change, whether
the bonus pool is $2 million, $200,000 or $20,000. They
just can’t bring themselves to tell their employees where
they really stand, particularly underperformers. It’s just
so much easier.
Some
sprinklers will tell you it’s kinder, too. Why not just
let everyone think they’re doing OK? Again, this is merely
weak management and inevitably sends good people packing.
So how can
a boss get compensation right? It’s actually very easy.
Step one:
Stop the nonsense. Conduct performance appraisals that
leave no ambiguity as to where each employee stands.
Step two:
Pay accordingly. That means if someone isn’t delivering,
don’t give him a little smidgen of a bonus just to keep to
his nose in joint. Pay him nothing additional. If someone
is performing so-so, make him feel it with a so-so sized
check, and not a dollar more.
But most
important, make your compensation system really mean
something.
Compensate
your stars as much as you can. Use money—big money—to make
a resounding statement about the payback of delivering
superior results. Maybe giving your top employees
bigger-than-ever-before checks won’t come naturally to you
at first, especially when it comes in tandem with giving
other employees smaller-than-usual ones.
But fight
the discomfort.
Part of
being a truly effective leader is embracing a spirit of
financial generosity. Indeed, the act of making your best
people feel richer than they ever imagined should excite
you as much as it does them. It should thrill you. If not,
keep giving until it does.
Look,
money talks. Of course, as a manager, you have to create a
work environment that is exciting and challenging. But
never underestimate the power of cash to deliver results.
When you
pay your people the right way, you don’t just get your
stars to stay. You build a team that trusts you and wants
to win for you. They know you put your money where your
mouth is.
*****
Jack and Suzy Welch are the authors of the international
bestseller “Winning” (Collins). Their latest book is
“Winning: The Answers: Confronting 74 of the Toughest
Questions in Business Today” (Collins). They are eager to
hear about your career dilemmas and challenges at work and
look forward to answering your questions in future
columns. You can e-mail them questions at winning@nytimes.com.
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