I read an article in the Straits Times today (an extract from an upcoming book called The Price of Everything) on how talent in itself may not come to much, if you were born in the wrong era. Today’s era, with its array of mass communication technologies, allows sports stars and the like to have much greater reach, and therefore, earning potential.
Which is why Pele, perhaps the greatest footballer of all time, earned far less than Cristiano Ronaldo (even when Pele’s wages are adjusted to today’s rates) although he may be a better player.
This trend creates a greater income disparity, if you compare the top performers with those at the bottom end. It may not mean much to most people, but when looking at the vast bonuses paid out to Wall Street before the last crash, it explains why people at the top are even more incentivised to take foolish risks. The article calls for a review of such schemes to discourage careless behaviour. But I think this is unlikely to work…
Sadly, many systems today do not reward prudence, or long-term commitment. Call it the ‘bailout’ mentality. Avid job hunters may know that frequent switchers stand to benefit more with every pay bump - if you don’t mind your CV looking like Casanova’s little black book for a while. Books have been written on how the newest generation to hit the workforce, otherwise known as Mllennials, are used to changing jobs frequently.
This is bad news for the ecosystem. As we move towards a Conceptual Economy, switching costs become far more expensive. New frontline staff need to be retrained to handle customers. New account managers need to familiarise themselves with their clients’ needs. Companies with long-term strategies and brands need people with long-term commitment. But are companies doing enough to keep good employees?
Every month, companies lose a small fraction of their workforce, resulting in lower morale and productivity, extra burden on the remaining team members, more time spent by bosses and HR to recruit and train a replacement and loss of client confidence. In some cases, the client moves to the ex-employee’s new company.
Even with proper handover procedures, subtle nuances in handling more sophisticated jobs cannot fully be transferred to the new employee, who often has to hit the ground running.
One conundrum is whether to standardise pay across the board, or reward superstars and ditch poor performers. The latter approach could lead to short-term gains and a more aggressive culture which takes calculated risks. The former approach would probably create a more conciliatory environment but attract only average performers.
Either system could work, depending on what type of business you’re in - commercial sales or federal agency. Or, in many cases, a merger between the two systems is used.
What’s important is being consistent with what the company stands for. If the company vision and culture is not backed up by the right support systems, there will always be a mismatch in employee expectations and therefore, their commitment levels. People who are told that they are highly valued should be given what they’re worth (this may be financial or intangible, depending on what they want most at this stage of their lives), or else they will be disappointed and leave - or worse, they will start to underperform.
If you want superstars who can push the envelope, you have to attract them and keep them engaged. If you want to groom diamonds in the rough, you have to make them stay long enough to be polished and showcased. Just as you expect them to be committed to you for the long term, it’s a two-way street. Put something on the table to let them know that you are equally committed and have a plan for them. Be so good to them that it’s difficult to leave for a rival.
But if you want monkeys, keep paying peanuts (low wages) and feeding them bananas (instead of teaching them how to feed themselves)! And… don’t have the guts to improve the system.