Week 35, 2021—Issue #167

Reading Notes II: Grove on Motivation, Bahcall on Contribution, and Pfleaging on Teamwork

Photo by James Tarbotton on Unsplash

Each week: three ideas on the future of work. This week: three quotes from three books by three authors… on compensation.

I’ve been thinking and reading about compensation systems. How and why an organization compensates its people is one of the most important decisions an organization will ever make. And yet the more I read and learn about the topic, the more questions I have. Consider the following:

1. Grove on Motivation

Have you ever heard the saying “organizations should pay enough to take money off the table”? I think that’s true… to an extent. Yes, organizations do need to pay enough for people to eat and provide for their families, etc. But money is important beyond those basic needs as well. As Grove points out, money is an important social cue. And depending on your cultural context, this can have far-reaching implications.

2. Bahcall on Contribution

Money is important. Both in terms of amount and rationale. Because as Bahcall points out, the closer the tie to individual contribution the better. A profit-sharing scheme that pays everyone the same might seem fair and equitable. And it can be. But it can also be de-motivating for the high-achievers who feel they’re getting less than their fair share. And again, depending on your cultural context, this can be a big problem.

3. Pfleaging on Teamwork

But wait! Less you think that the solution is to simply give high achievers what they want, consider the above quote from Pfleaging. By definition, organizations are a team effort. Sure, some people will have a higher impact than others, but it’s usually attributable to leverage (see workmatters_134) as opposed to time or effort. Not always, but often enough to warrant serious consideration.

There’s no such thing as the right compensation system. There are several options to choose from and most organizations end up with a mix tailored to their specific context. Still, the more I read and learn about the subject, the more convinced I am that Bahcall and others are closer to the truth than not. I think compensation should be tied to individual contribution in some ways, shape, or form. The question is how that’s done fairly within a specific organizational context.

I don’t have the answer to that question. But judging from examples like Haier’s Rendanheyi model (see workmatters_119) and Zappos’ Market-Based Dynamics (see workmatters_156), I’m increasingly convinced it won’t be found in traditional structures such as pay grades and broadbanding, etc. Such systems were designed for a bygone era. And as we look forward, we’ll likely need to do what Haier and Zappos have done; a complete rethink of how compensation works. It’s the fair and equitable thing to do.

That’s all for this week.
Until next time: Make it matter.