On 1 January the governments of the City of Macon and Bibb County, Georgia consolidated.\u00a0 As a result, we have a host of employees now working for a single new governmental entity, where two once existed.\u00a0 But this isn\u2019t the case with our law enforcement employees.\u00a0 On 1 January the Macon Police Department ceased to exist, and their staff was absorbed into the already existing Bibb County Sheriff\u2019s Department.\u00a0 As they were planning for this absorption of employees, there was a lot of discussion about differences in pay between Sheriff\u2019s deputies and police officers.\u00a0 It wasn\u2019t that they started off so differently, as starting pay was similar, but over the years deputies were paid more, and officers were paid less each year.<\/p>\n
These two organizations fell into the trap that so many organizations fall into — paying for time instead of value.\u00a0 Now don\u2019t get me wrong; I\u2019m not talking about the occasional adjustment of base wages based on the increase of the cost of living.\u00a0 What I am talking about are two fairly common practices of paying people for time:<\/p>\n
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The first issue is not that easy to deal with, as there are federal and state laws that pretty much establish that organizations are forced to pay employees by the hour unless they are \u201cexempt.\u201d\u00a0 But these laws only cover \u201cbase pay,\u201c and does not preclude the ability of the employer from paying those employees who provide greater value greater pay.<\/p>\n
For example, I had the opportunity to visit the corporate headquarters of Cracker Barrel a few years ago and learned about how they pay their wait-staff.\u00a0 If you have ever been to Cracker Barrel before you probably have noticed that wait-staff wear aprons, and on those aprons they have their name stitched on them, and maybe some stars. \u00a0Some have the stitching in gold, and some in red.\u00a0 No, the stars are not for how long they have been at the store or with the company, and the colors are no accident.<\/p>\n
All wait-staff start out at the same base pay per hour, but from there on out they get paid for value.\u00a0 As they complete their onboarding training they get a pay increase, because they now can do their jobs without another staff person having to accompany them to each table (an increase in value).\u00a0 As they learn additional responsibilities they are given a corresponding increase in pay and a star for their apron.\u00a0 And if they learn how to train new wait-staff, then they get additional pay for that, along with different colored stitching.\u00a0 It doesn\u2019t just stop at pay, either.\u00a0 Cracker Barrel also provides additional perks for the increase in value, as well.<\/p>\n
What happens if a person loses the certification that caused them to earn that star or different colored stitching?\u00a0 They lose the star or color from their apron, but they also lose the corresponding increase in pay and benefits.\u00a0 Why?\u00a0 Because they no longer provide that extra value because they can\u2019t do whatever they were being paid extra for.<\/p>\n
How can other organizations apply this principle?\u00a0 Simply look to what provides value to your organization and then as employees can learn to do those things, insure that they get that pay.\u00a0 For example, if you are a service organization and someone gets cross trained on another job, then pay them extra because at any time they can step in and fill an absent co-worker\u2019s job and help customers.\u00a0 If you are a manufacturing organization then the cross training also applies.\u00a0 Whether it is a separate job, or the ability to operate a different machine, paying people for being able to help the organization is the key.<\/p>\n
What we definitely do NOT want to do is pay them extra money per hour simply because they have been at the organization one more year.\u00a0 This sets the stage for inequalities in the future.\u00a0 After all, why should one employee who produces more, can fill more job functions, and provide a greater value to the organization be paid less than another employee, simply because the second employee has been with the organization a few years more?<\/p>\n
I am often told that having an employee stay with the organization another year is valuable, but that assumes several things that often aren\u2019t true.\u00a0 The assumptions are that because they have been there longer they know more and can do more, and that if they don\u2019t leave then the organization won\u2019t have to spend money to replace them.\u00a0 The fallacy is that many employees don\u2019t learn that much after their first year because most organizations don\u2019t encourage them to do so.\u00a0 Secondly, if someone is only marginally performing then it might be beneficial for the person and the organization if they actually left that position and you hired someone who could perform exceptionally well.<\/p>\n
This is just scratching the surface of a well-designed and operated compensation system that will help your organization become exceptional.\u00a0 Remember, you can\u2019t do what everyone else is doing if you want to be the best; you have to do things differently.\u00a0 You have to pay attention to research that shares that pay for performance doesn\u2019t really work, but pay for value and impact does.\u00a0 In other words, we wouldn\u2019t necessarily want to pay someone individual bonuses and commissions, as these are based on individual performance only, and not on the overall impact and organizational performance results.\u00a0 Too often individual performance benefits only the individual, but simply doesn\u2019t translate into achievement of the organization\u2019s goals.\u00a0 But we would want to pay someone for their education, training, skills and ability to provide options, and reward them and their team for helping the organization realize great results towards achieving the organizational goals.<\/p>\n
Whatever you decide upon, get yourself, your fellow managers, and your employees out of the mindset that you are paying for time.\u00a0 Time isn\u2019t money; organizational results is money, and what an employee provides towards achieving those results is value.\u00a0 Pay them for that and manage around value, not time.<\/p>\n
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On 1 January the governments of the City of Macon and Bibb County, Georgia consolidated.\u00a0 As a result, we have a host of employees now working for a single new governmental entity, where two once existed.\u00a0 But this isn\u2019t the … Continue reading