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How should people be paid?

How should people be paid?

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Published by Frank Calberg
How should people be paid? 19 questions.

How should people be paid? 19 questions.

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How should

people be paid?
Question # 1
Should information
about what people are
paid be shared openly?
http://qz.com/209685/abramson/
An increasing number of companies
are releasing all salary information
to the public.
At Menlo Innovations,
everyone can see what
everyone else is getting
paid
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At Whole Foods, everyone knows
what everyone else earns.
http://online.wsj.com/article/SB10001424127887324235104578243673073627726.html
http://www.youtube.com/watch?v=gJkOPxJCN1w
People working for Semco have access
to information about the company’s
revenues and costs – including wages of
everyone who works for the company.
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 who’s making
the biggest contribution to Gore’s 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 person’s 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?
There is no
correlation
between
CEO pay and
company
performance
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Financial incentives may reduce an person’s
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/
http://www.faz.net/artikel/C31151/bmw-personalvorstand-unsere-leute-brauchen-keine-karotte-30029080.html
Wenn man die Boni zur
Motivation braucht,
fördert das eine
schädliche Entwicklung
für das Unternehmen.
Harald Krüger
BMW
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
http://bigthink.com/garyhamel/the-problem-with-employees
Initiative, creativity, and passion, that create wealth
in the creative economy, cannot be commanded
Question # 8
How are people praised
for results in non-
financial ways?
For a player - for any human being - there is
nothing better than hearing “Well done.”
http://hbr.org/2013/10/fergusons-formula/ar/4
Sir Alex Ferguson
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.
http://www.bqf.org.uk/innovation/2010/04/06/praise-the-behaviours-you-want-to-see/
Paul Sloane
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
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Further inspiration
https://www.teacherspayteachers.com/Product/How-do-we-give-feedback-1761017
Question # 9
How are people praised
for effort in non-
financial 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.

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