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Pay and Performance

08 February 2012

First we were told to pay according to performance. Now we are told to de-link pay from performance since it doesn’t work. What is right?

To say that pay is not a motivator is partly right and partly wrong. Once we understand that money is only symbol of goods and services then we can see that possession and acquisition become desirable because they demonstrate success. If you are very rich you are very successful according to the world’s current standards. The standards may be wrong but the consequence of having them is simple. He who ends up with the most toys has won.

On the other hand to say that people only want money in life and that they work exclusively for pay is equally rubbish. If that were true we’d all be running casinos or brothels since they have the best return on investment. So why don’t we?

We have mixed motives for doing what we do. Need to eat is high on the list but so is satisfaction at doing things we enjoy, and doing them well. Many work at the jobs they can get first and with the greatest ease; it is not a sensible course of action but it gets a job. The desire for power – once described by Henry Kissinger as the greatest aphrodisiac – is a motivator. Income security, satisfying working relationships with colleagues, suppliers and customers, achievement and simply making someone else happier or better off are all reasons for working.

Running a casino – and that includes investment funds – is about the most boring job in the world. Attributing spurious brilliance to picking winners is a great challenge for a week or two; as a lifetime’s work it is one down the boredom index from watching paint dry. Running a brothel is, I imagine, more interesting but I suspect only marginally.

Pay is only one of the rewards of work, albeit an important one. How then do we evaluate what people are worth? Not by relating their pay to others, for sure. That way we end up comparing apples with iPads. Anyway, how do you know that your job is worth twenty times someone else’s? The man who saves your life in an emergency is worth a lot more than the Chairman of a multi-national corporation to you.

Someone came to pour his heart out to me the other day. He didn’t want advice. He didn’t want ‘counseling’. He didn’t want consoling. He wanted to cry. So I let him cry. He felt better. I didn’t charge him any money because I reckon crying ought to be free but if I had asked him for $1,000 he would cheerfully have paid up. He would have regarded it as worth having a friend with whom to have a good cry.

How then are we to value top jobs and lesser jobs? I suggest in exactly the same way that we value Granny’s Victorian Silver Teapot, by auctioning them. An intelligent group of stakeholders could assess the applications – sorry, ‘bids’ – and interview those who seem to be most suitable. They won’t necessarily appoint the cheapest but they will weigh pay sought with expected outcome.

Big problem – won’t the pay of their subordinates then be related to the top guy’s wages?

Certainly, but then we could auction those jobs, too.

Auctions are the best form of valuation; let’s apply them to the jobs market.


John Bittleston writes and records The Daily Paradox each day Monday to Friday. You can receive free daily alerts to the URL or weekly updates of all the articles / voicemails published to date. Ask him at www.TerrificMentors.com.

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