How should

people be paid?

Question # 1
Should information
about what people are
paid be shared openly?

An increasing number of companies

are releasing all salary information
to the public.
http://qz.com/209685/abramson/

http://nymag.com/news/features/bossless-jobs-2013-6/index1.html

At Menlo Innovations,
everyone can see what
everyone else is getting
paid

At Whole Foods, everyone knows

what everyone else earns.

http://online.wsj.com/article/SB10001424127887324235104578243673073627726.html

People working for Semco have access

to information about the companys
revenues and costs including wages of
everyone who works for the company.
http://www.youtube.com/watch?v=gJkOPxJCN1w

Whether a person is satisfied with his or

her relative value mainly depends on how
his or her compensation compares with
the compensation of his or her peers.
http://www.managementexchange.com/hack/simply-practical-model-compensation-management

Question # 2
Who should decide how
much people are paid?

At Gore, people are asked to indicate whos making

the biggest contribution to Gores success.
No specific criteria are provided.
An associate typically is evaluated by 20-30 peers and
will evaluate 20-30 peers.
http://www.mixprize.org/story/innovation-democracy-wl-gores-original-management-model

The energy company AES has tested a system that

sets salaries through peer review.
In the experiment, each person sent a proposed
salary for himself or herself to everyone else in
the group.
Malone, Thomas W.: The Future of Work, p. 67.

A possibility is to let each person in a group

assign a percentage of the total compensation
budget to all the others.
The average of these numbers then determines
each persons actual compensation.
Malone, Thomas W.: The Future of Work, p. 67.

Question # 3
Should people be
paid per task done?

At the company Fishbowl, colleagues are paid

on commission for doing tasks:

They can, for example, ask each other: I have

an extra half hour. Is there anything I can do to
help you finish a sale?
https://hbr.org/2013/03/why-we-pay-all-our-employees-a

Harvard University Professor Roland Fryer, Jr. has

conducted large-scale studies paying students for
reading, grades, various behaviors, and test scores.

The results indicated positive outcomes, especially

for paying students to learn specific skills.
http://www.psychologytoday.com/blog/who-we-are/201005/motivating-students-learn

Question # 4
Should people be paid
an individual bonus?

http://www.businessweek.com/articles/2014-07-22/for-ceos-correlation-between-pay-and-stock-performance-is-pretty-random

There is no
correlation
between
CEO pay and
company
performance

Financial incentives may reduce an persons

natural inclination to complete a task and
derive pleasure from doing so.

Analysis by Bernd Irlenbusch of 51 separate studies.

http://timesmediamw.com/more-pay-equals-less-work/

Wenn man die Boni zur

Motivation braucht,
frdert das eine
schdliche Entwicklung
fr das Unternehmen.

Harald Krger
BMW

http://www.faz.net/artikel/C31151/bmw-personalvorstand-unsere-leute-brauchen-keine-karotte-30029080.html

When I taught 7th grade English, I frequently gave

stickers to my students. One day I ran out, and informed
my students that there will be no stickers for a few
days. A riot ensued. Where's my sticker? I want a
sticker! I won't do anything without a sticker!
I discovered they had become addicted to stickers.
http://www.edutopia.org/blog/reward-fraud-richard-curwin

Studies by Edward Deci show that strategies

that focus primarily on the use of extrinsic
rewards do, indeed, run a serious risk of
diminishing rather than promoting intrinsic
motivation.
http://www.rug.nl/gmw/psychology/research/onderzoek_summerschool/firststep/content/papers/4.4.pdf
http://blogs.hbr.org/cs/2013/04/does_money_really_affect_motiv.html

Several studies show that there is less

than 2% overlap between pay and job
satisfaction levels.
In other words, you cannot buy
engagement with money.
https://hbr.org/2013/04/does-money-really-affect-motiv
http://www.timothy-judge.com/Judge,%20Piccolo,%20Podsakoff,%20et%20al.%20(JVB%202010).pdf

External rewards work well for routine,

mechanical tasks, such as those found
on a 20th century assembly line.
Analysis by Bernd Irlenbusch of 51 separate studies.
http://timesmediamw.com/more-pay-equals-less-work/

Further inspiration
https://www.teacherspayteachers.com/Product/How-do-you-motivate-yourself-1378486

Question # 5
Should peple be paid an
individual bonus that must
be given to others?

National Australia Bank gave money to people

working for different companies and asked them to
give gifts to each other.

Teams that received pro-social bonuses performed

better after receiving the bonuses than teams that
received money to spend on themselves.
http://blogs.hbr.org/2013/10/the-bonus-employees-really-want-even-if-they-dont-know-it-yet/

Question # 6
Should all managers be
paid the same salary?

In Santiago, Chile, drivers, who are

compensated with a fixed wage have
approximately 67% less accidents
per kilometer driven than drivers who
are paid per passenger transported.
http://www.nber.org/papers/w11744

At Whole Foods, the

top 7 executives get the
same pay and bonus.

http://online.wsj.com/article/SB10001424127887324235104578243673073627726.html

In the USA, emotional well-being levels

increase with salary levels up to a salary
of USD 75,000. Afterwards, they plateau.
http://www.pnas.org/content/early/2010/08/27/1011492107.abstract
http://blogs.hbr.org/cs/2013/04/does_money_really_affect_motiv.html

Question # 7
Is paying people to be
creative a good idea?

Edward Deci has found that money does

not work very well to motivate people
over the long term, particularly for tasks
that involve creativity.
http://www.time.com/time/nation/article/0,8599,1978589-2,00.html#ixzz0krFBzRx8

Initiative, creativity, and passion, that create wealth

in the creative economy, cannot be commanded

http://bigthink.com/garyhamel/the-problem-with-employees

Question # 8
How are people praised
for results in nonfinancial ways?

For a player - for any human being - there is

nothing better than hearing Well done.
Sir Alex Ferguson

http://hbr.org/2013/10/fergusons-formula/ar/4

Thank you. Great job. I really appreciated your

work on that project.

These words take less than 10 seconds to say.

http://www.forbes.com/sites/victorlipman/2013/02/09/in-praise-of-praise/

Non-financial incentives are more effective than financial incentives

http://www.mckinsey.com/insights/organization/motivating_people_getting_beyond_money

People reported that recognition of their

ideas was a reward in itself. They wanted to
be engaged and to participate.
We therefore involved people in presenting
their ideas to senior management.
http://sloanreview.mit.edu/the-magazine/2011-winter/52210/the-5-myths-of-innovation/

At your next department meeting, see if you

can find someone to praise for:
Coming up with some great ideas.
Trying something new.
Challenging the conventional way of thinking.
Bringing an external idea into the company.
Collaborating with a different department.
Making something happen.

Paul Sloane

http://www.bqf.org.uk/innovation/2010/04/06/praise-the-behaviours-you-want-to-see/

Indra Nooyi, CEO of PepsiCo,

sends the spouses of her top
team handwritten thank-you
letters.
http://www.mckinsey.com/insights/organization/increasing_the_meaning_quotient_of_work

http://www.psfk.com/2013/11/notes-for-anyone-billboards.html

Further inspiration
https://www.teacherspayteachers.com/Product/How-do-we-give-feedback-1761017

Question # 9
How are people praised
for effort in nonfinancial ways?

Study shows that it is much better to

praise a child for effort than

for their intelligence.
http://www.nytimes.com/1998/07/14/science/praise-children-for-effort-not-intelligence-study-says.html

Praising
students for
what they did
and did well
is a good
motivator

http://youtu.be/RzkwtIMPkrs
Minute 36.

http://www.youtube.com/watch?v=HhxcFGuKOys minute 9.

Writing handwritten notes

may seem like a waste of
time. But in my experience,
they build goodwill and lead
to higher productivity.
Sources
http://youtu.be/9buGE_vKxcc
https://hbr.org/2011/02/secrets-of-positive-feedback

Douglas R. Conant

Further sources of inspiration

https://www.alumni.hbs.edu/stories/Pages/story-bulletin.aspx?num=4992&sf43327163=1
https://hbr.org/video/4093719303001/change-the-way-you-pay-your-sales-force
http://blogs.hbr.org/2014/06/dont-offer-employees-big-rewards-for-innovation/
http://blogs.hbr.org/cs/2012/09/how_to_find_out_what_customers_will_pay.html
http://blogs.hbr.org/cs/2010/01/is_your_business_model_a_myste_1.html
http://blogs.hbr.org/2013/11/when-selling-digital-content-let-the-customer-set-the-price/
http://blogs.hbr.org/cs/2013/02/why_good_better_best_prices_are_so_effective.html
http://www.happinessresearchinstitute.com/download/i/mark_dl/u/4012080374/4605335061/TheH
appyDanes%20%28Webedition%29.pdf
https://hbr.org/video/4093719303001/change-the-way-you-pay-your-sales-force
https://hbr.org/2014/10/capture-more-value/ar/1
http://www.innosight.com/images/BMI%20Chart%20063008.pdf
http://rcs.seerinteractive.com/money/
http://www.resultsfromcrowds.com/wp-content/uploads/2011/12/Crowd_Business_Models.pdf
http://youtu.be/1ju8-agpCAQ
http://www.zeit.de/2008/21/III-Kunst_-Interview-Anderson?page=2

Thank you for your interest. For further inspiration

and personalized services, feel welcome to visit
http://frankcalberg.com/
Have a great day.