P. 1
How should people be paid?

How should people be paid?

|Views: 37|Likes:
Published by Frank Calberg
How should people be paid? 19 questions.

How should people be paid? 19 questions.

More info:

Categories:Types, Presentations
Published by: Frank Calberg on Jan 22, 2013
Copyright:Traditional Copyright: All rights reserved
List Price: $2.99 Buy Now

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
See more
See less

09/28/2015

$2.99

USD

pdf

text

original

How should

people be paid?
Question # 1
Should a fixed price be set?
Using single fixed prices is economically inefficient.
To the extent that there are variations in how
different customers value products, selecting one
number implies that those prepared to pay more
in effect receive a discount; those willing to pay
less - but who are still profitable - are turned away.
http://sloanreview.mit.edu/article/when-customers-help-set-prices/
h
t
t
p
:
/
/
w
w
w
.
m
c
k
i
n
s
e
y
.
c
o
m
/
i
n
s
i
g
h
t
s
/
m
a
r
k
e
t
i
n
g
_
s
a
l
e
s
/
s
e
t
t
i
n
g
_
v
a
l
u
e
_
n
o
t
_
p
r
i
c
e
For which
services would
you like to pay
more – and why?
Question # 2
Can the customer pay
what he / she thinks the
service is worth?
h
t
t
p
:
/
/
s
l
o
a
n
r
e
v
i
e
w
.
m
i
t
.
e
d
u
/
a
r
t
i
c
l
e
/
w
h
e
n
-
c
u
s
t
o
m
e
r
s
-
h
e
l
p
-
s
e
t
-
p
r
i
c
e
s
/
http://paneracares.org/what-we-do/
http://qz.com/94447/how-a-restaurant-with-no-cash-registers-and-no-prices-makes-money/
http://youtu.be/1ju8-agpCAQ
At One World Café, people pay
what they think the food is worth.
http://www.innovationexcellence.com/blog/2011/11/27/pay-what-you-like/
http://online.wsj.com/article/SB10001424052970204358004577030412609729608.html
Example # 2
The British band Radiohead offered their album
"In Rainbows“ on their website according to the
principle pay-what-you-want.
About 37% percent paid. And they paid so much
that the band was satisfied.
http://www.brandeins.de/magazin/das-gute-leben/zahl-doch-was-du-willst.html
http://sloanreview.mit.edu/article/when-customers-help-set-prices/
Example # 3
http://mashable.com/2013/03/01/amanda-palmer-wins-ted/
Ask ”how do we let people pay for music”
instead of ”how do we make people pay
for music.”
Further inspiration
http://www.scribd.com/doc/36200010/questions-to-discover-your-values
http://www.scribd.com/doc/34862800/Values
Question # 3
Should the customer
pay for time?
How much per hour?
http://www.imagebase.net/Concept/Evanston-006-copy
Sources
https://www.car2go.com/
http://www.mobility.ch/
http://www.zipcar.com/
At the cafes Tsiferblat
and Anticaf’e, people
pay per minute / hour.
Sources
http://ziferblat.net/
http://www.anticafebabochki.ru/
http://www.psfk.com/2014/01/pay-per-minute-cafe-london.html
http://operationsroom.wordpress.com/2013/01/14/paying-by-the-minute-at-a-coffeehouse/
http://www.npr.org/2013/01/10/168632183/rubles-for-minutes-not-mochas-at-russian-cafe-chain
http://www.business-opportunities.biz/2013/03/21/free-coffee-at-a-pay-by-the-minute-cafe/
http://blogs.hbr.org/cs/2013/03/why_we_pay_all_our_employees_a.html
At the company Fishbowl, everyone works on
commission.
A developer or member of a support team may
go to the sales department, for example, to say,
"I have an extra half hour. Is there anything I
can do to help you finish a sale?"
Question # 4
Should the customer
pay per task?
Sources
http://www.jacando.com/
https://www.mila.com/
http://www.renovero.ch/
http://www.rentarentner.ch/
https://www.taskrabbit.com/
Question # 5
Should the customer
pay for use?
http://hbr.org/2011/05/how-to-build-risk-into-your-business-model
Caterpillar charges construction
companies according to the
amount of earth moved.
Airlines pay Rolls-Royce for an engine’s
flight hours rather than for repair time
and materials.
http://hbr.org/2011/05/how-to-build-risk-into-your-business-model
Question # 6
Should the customer
pay for weight?
When flying with Samoa Air, flyers declare
their weight - including luggage - when
booking their tickets and pay an amount
per kilo.
http://www.economist.com/blogs/gulliver/2013/04/heavy-passengers
http://samoaair.ws/
Obesity is far less under individual control than
generally assumed. It is a result of complex and
diverse drivers of weight gain, including genetics,
medications, stress, depression, addictions,
eating and sleeping disorders and gut bugs – to
name just a few.
http://www.kevinmd.com/blog/2013/06/charging-passengers-pound-unfair.html
Problem with charging for weight of people
Question # 7
Does the customer get
some services for free?
Skype has thrived using the freemiummodel:
 A large base of users use the free, basic platform.
 Some users pay for additional options, for
example the option to call landline numbers.
http://www.mckinsey.com/insights/business_technology/competing_in_a_digital_world_four_lessons_from_the_software_industry
Question # 8
Can people pay
with other services?
The Merit shop accepts payment for the
objects in the shop in the form of video
submissions showing a particular talent.
http://www.psfk.com/2013/12/merit-shop-pay-with-talent.html#!qf8Pl
On skillharbour, people exchange
skills with other people.
http://www.skillharbour.com/
Question # 9
Can a 3rd party pay for
what the user uses?
Example
Question # 10
Can the customer
buy a subscription?
With the CUPS app, you can walk into any
one of the cafes and use your smartphone
to get a great deal on a cup of coffee.
http://cupsapp.com/
Question # 11
Should the customer
pay a license fee
http://sloanreview.mit.edu/the-magazine/2011-summer/52402/the-business-models-investors-prefer/
Disney has dramatically shifted its business model
over the last 20 years from renting physical assets
like theme parks (65% of revenue in 1984 but only
30% in 2009) to licensing intellectual property
(15% of revenue in 1984 but 63% in 2009).
Question # 12
Should people be paid
an individual bonus?
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
http://www.ted.com/talks/dan_pink_on_motivation.html
When I taught seventh 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
The more you reward
students for doing
something, the more
they tend to lose
interest.
http://www.youtube.com/watch?v=EQt-ZI58wpw
http://www.alfiekohn.org/teaching/tcag.htm
Alfie Kohn
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
I don’t agree that CEO compensation
should be linked to share prices, because
too many different variables can affect
the stock price.
For example, it is very important for us to
reduce our carbon footprint dramatically.
In the short term, however, the market
won’t understand.
http://www.strategy-business.com/article/10410?pg=all
Vineet Nayar
There is no
correlation
between
CEO pay and
company
performance
h
t
t
p
:
/
/
w
w
w
.
b
u
s
i
n
e
s
s
w
e
e
k
.
c
o
m
/
a
r
t
i
c
l
e
s
/
2
0
1
4
-
0
7
-
2
2
/
f
o
r
-
c
e
o
s
-
c
o
r
r
e
l
a
t
i
o
n
-
b
e
t
w
e
e
n
-
p
a
y
-
a
n
d
-
s
t
o
c
k
-
p
e
r
f
o
r
m
a
n
c
e
-
i
s
-
p
r
e
t
t
y
-
r
a
n
d
o
m
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
http://www.timothy-judge.com/Judge,%20Piccolo,%20Podsakoff,%20et%20al.%20(JVB%202010).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.
Further inspiration
http://www.scribd.com/doc/42321299/Tips-to-Increase-Motivation
Question # 13
Should people 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 prosocial 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 # 14
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 # 15
How valuable is it
to praise people?
h
t
t
p
:
/
/
w
w
w
.
p
s
f
k
.
c
o
m
/
2
0
1
3
/
1
1
/
n
o
t
e
s
-
f
o
r
-
a
n
y
o
n
e
-
b
i
l
l
b
o
a
r
d
s
.
h
t
m
l
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
Non-financial incentives are more effective than financial incentives
http://www.mckinsey.com/insights/organization/motivating_people_getting_beyond_money
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/
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
or organisation.
 Taking a risk.
 Making something happen.
http://www.bqf.org.uk/innovation/2010/04/06/praise-the-behaviours-you-want-to-see/
Paul Sloane
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.
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/
Writing handwritten notes
may seem like a waste of
time. But in my experience,
they build goodwill and lead
to higher productivity.
Sources
Douglas R. Conant, former President and CEO of the Campbell Soup Company.
http://blogs.hbr.org/cs/2011/02/secrets_of_positive_feedback.html
http://youtu.be/9buGE_vKxcc
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
Question # 16
Who should decide how
much people are paid?
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.
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.
It's interesting that the
people most involved with
compensation planning are
the people least involved in
innovation efforts.
http://innovateonpurpose.blogspot.com/2010/07/why-compensation-models-work-against.html
Jeffrey Phillips
Question # 17
When should
people be paid?
Many construction firms charge a project
fee and require that
 1/3 be paid up front,
 1/3 be paid at the half-way point, and
 1/3 be paid upon completion.
http://www.inc.com/guides/price-your-services.html
What if restaurant guests pay in advance?
https://www.nextrestaurant.com/
http://www.businessweek.com/magazine/content/11_15/b4223098867567.htm
Question # 18
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
h
t
t
p
:
/
/
n
y
m
a
g
.
c
o
m
/
n
e
w
s
/
f
e
a
t
u
r
e
s
/
b
o
s
s
l
e
s
s
-
j
o
b
s
-
2
0
1
3
-
6
/
i
n
d
e
x
1
.
h
t
m
l
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.
Question # 19
How large should
differences in pay be?
At Whole Foods, the top 7 executives
get the same pay and bonus.
And total cash compensation for those at
the top is capped at 19 times the average.
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
Further sources of inspiration
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.innosight.com/images/BMI%20Chart%20063008.pdf
http://www.zeit.de/2008/21/III-Kunst_-Interview-Anderson?page=2
http://rcs.seerinteractive.com/money/
http://www.resultsfromcrowds.com/wp-content/uploads/2011/12/Crowd_Business_Models.pdf
Thank you for your interest. For further inspiration
and personalized services, feel welcome to visit
http://frankcalberg.com/
Have a great day.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->