Wonder if You're Paying the Right Amount for the People You Hire?
19th Century poet and critic John Ruskin
said, “It’s unwise to pay too much, but
it’s worse to pay too little. When you pay too
much, you lose a little money – that is all.
When you pay too little, you sometimes lose
everything, because the thing you bought was
incapable of doing the thing it was bought to
do.
The Common Law of Business Balance prohibits paying a little and getting a lot – it can’t be
done! If you deal with the lowest bidder, it is
well to add something for the risk you run, and
if you do that, you will have enough to pay
for something better.”
He wasn’t talking about hiring people, but think
about it.
The average employee in the United States earns
something like $25,000 per year (or about $12
per hour). Over the average tenure of 4.7 years,
that’s $117,500.
If you’re paying them to write correspondence,
make small but important decisions, deal
successfully with customer complaints, up sell
while interacting with customers, count cash or
correctly calculate payments, is $12 per hour going
to buy you someone capable of getting done what you
need to get done?
I know you think it should, but what does your
history with employees tell you?
How about at a higher level – a sales person,
an engineer, a manager? Will an average or
below-average wage buy you an above-average
performer? And if so, for how long?
Is it important enough for you to get high
performance in these kinds of jobs to pay more?
Employers everywhere are afraid to pay well, and
the reason is they know very little about hiring or
setting and managing expectations. They aren’t really
hiring, they’re just “trying” people out hoping to
find one high-performer out of 10 (the infamous top-10% isn't really that 'top' in a lot of places), and dealing with
the rest. Those employers think paying more to get better
performance isn’t really feasible – but they’ll end
up paying more and not getting more.
Some extraordinary employers
understand the talent proposition. They understand
that the average high performer out-produces the
average performer by 40-70% (according the American
Society for Training and Development).
They understand that the primary way to get
higher performance is to hire more talented
people and then manage them well – primarily through
clarity of expectations and immediate feedback. They also understand that the worth of an
individual isn’t based on cost alone. Worth is
the value received from something divided by the
cost. So if an individual produces 55% more
(the middle of the 40-70% range) but costs only
10-20% more, then they are of higher worth to
the business than the individual who produces
55% less but costs 10-20% less.
How do you make sure you’re not getting fleeced?
Measure. When you hire, develop job expectations
and make them clear during the hiring process.
Don’t hire anyone who hasn’t met them in similar
situations in the past (hiring people you think
can do the work is a sure way to fail).
Once you’ve hired them, constantly remind them of
and update expectations as necessary. If they
over-perform, reward them. If they under-perform,
correct them. If they under-perform and can’t or
won’t be corrected, get rid of them.
Hiring performers is what we help you do. Our
system teaches you how to know and spot performers
based on YOUR job and company.
Email us if you need help or just want to
chew through a hiring or compensation issue.
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