It is a cold and very reasonable reality. I mean you are not going to pay a service provider more because of what they did for you previously. (ie your accountant, painter, roofer, tutor, etc) You may pay them more, but it will be because you were impressed with their past performance and assume they will repeat or improve on it in the future. You are paying them to secure their valuable time and for expected future results.
Some interesting stories I have heard were:
- the Car Sales Manager that once per month would fire the Salesperson with the lowest monthly sales.
- that when employees ended up in an elevator with Curt Carlson, he would ask them for details regarding how they were making him enough money to justify their compensation
- any other good related stories?
- should older employees be "paid currently" for "past successes"?
- should it be a competitive dog fight for your whole career to ensure you are earning that higher compensation? (ie right up to retirement day)
- as technologies or expectations change, what should happen to an older highly compensated employee that falls behind and loses productivity or quality compared to their younger high tech co-workers?
- how does this relate to my last post?
Most career salary trajectories "level off" after some number of years. Merit increases earned eventually push you to the top of your pay grade to where further increases would push you out of the pay grade and into one which you have not demonstrated sufficient ability. You are still making the contribution, so you will get cost of living increases, and your experience is valuable enough that we won't give you a zero raise, but face it, you're starting to coast towards retirement.
ReplyDeleteOne old fellow I asked at what point that occurred and he said there wasn't a "point." That is, he started planning for retirement very early, started thinking about it occasionally at age 50, and that it increased gradually until, at the point that it was most of his working hours, it was time to go. I think that's as it should be.
J. Ewing
I am not sure business wants to keep paying market wage or higher if the employee is starting to just work the 40 hrs, and a portion of that is spent looking at or thinking about retirement destinations... Especially when there is some young equally capable technologically advanced over achiever that has their eye on that compensation.
ReplyDeleteSo is it ok to let the older employee start slipping backward into retirement. Either through 0% raises or demotions? Which lead to 0% raises? (ie good comp plans push everyone except the exceptional towards market) I am guessing this is why older employees are often offered buy out plans or laid off. Their value began to slip while their cost stayed the same or increased. (ie they didn't listen to my Dad...)
As a young ladder climber I was so frustrated by the lack of energy and drive exhibited by my older employees that I finally took an Adult Psychology class to learn what you just said. At ~30 yrs old I was focused on exceeding expectations and rising through the ranks, so I worked a lot and very intensely. Whereas the older folks had shifted to a mind set where work was less important than their personal life. They still wanted to do quality work and do their job, however big raises and promotions were no longer as interesting.
I had a ~50 year old co-worker and friend who was complaining to me that all he was getting was a cost of living raise. Being me, I asked him what he had done in the last year to increase his value to the company? (ie justification for more than cost of living)
He of course looked very puzzled and frustrated until I explained that all an employee should expect is cost of living unless their value had increased in some way. (ie capability, effectiveness, etc) I explained that he wouldn't raise the amount he pays his Tax Accountant faster than inflation, unless he was getting additional value, therefore why should he expect it from his company? After this he just looked frustrated... (
Good news !!! He is still my friend some 16 yrs later and he recently retired !!!)
So he was frustrated by cost of living, I wonder how livid he would have been if he was losing ground capability wise and therefore started slipping backwards compensation wise...
Would it be his fault? or
Would the company be discriminating against the technologically challenged?
The correct answer is it all depends on the individual. I once heard a 50 YO tell his manager that he refused to work 50 hrs/week to get a job that required him to work 60 hr/wk. He had his priorities straight. He was valuable for the work he was able to do in his 40hrs, and for his experience and ability to train his youngers. Nothing wrong with that, but some companies don't recognize it, either. Their loss.
ReplyDeleteJ. Ewing
Let's say this ~50 yr old had typically worked 45 hrs/wk and had been very intensely focused. Beyond this they had been up to date with all the previous technologies. All this had led to them being in the top of 3 pay grades for their specialty, and being paid slightly above market.
ReplyDeleteThen due to the personal priority shift and maybe some health issues in the family, he cuts back to 40 hrs/wk and starts to get behind on some of the latest systems, therefore his output drops by ~15%. (ie 5/45 = 11% plus some distractions)
Should they be demoted back to the previous grade? (ie more in line with current output) Be kept in the current grade at a below market compensation? Fired due to their not performing as well as they did? Keep paying them the higher salary at the higher grade, because they earned it with their past efforts?
It still depends. Those pay grades move up with inflation. Maybe keeping up with the new isn't as important as maintaining legacy systems, for which you can't hire anybody new, and this guy is the expert. Carry him along, give him a cost of living increase every couple of years instead of every year, and hand him some travel brochures.
ReplyDeleteJ. Ewing
To my more Liberal or Union minded readers:
ReplyDeleteWhat do you think about these discussions? I was hoping to learn more about the rationale behind increasing wages automatically and guaranteeing job security based solely on seniority and degrees. And now with J going kinda soft on me, I am even more curious.
If you owned the company and wrote the paychecks out of YOUR checkbook, would you feel and think the same way? Because with public employees, technically you are...
I am not sure there is a right answer, but it is a good head scratcher. If you are willing to put yourself in the different roles. (employer and employed)
I think your views are entirely valid within an engineering and manufacturing setting.
ReplyDeleteBut there are many workplaces where the skills are different/softer/less quantifiable. One field where I've worked is all about relationships--the value you bring to your company or clients has much to do with your experience and connections and relationships. Yes, on some projects, there you can have "tote boards" where you add it all up, but more often it's about making introductions, opening doors, being a facilitator. When a project is over, your success is measured not in numbers but in satisfaction, groundwork being laid, and potential for future initiatives. Success is sometimes intangible, and all parties understand that fact. A young turk brings energy and fresh ideas, a seasoned veteran brings experience and sagacity. Ideally your team should have some of both and the latter, in the long run, is likely worth significantly more.
Which is to say, as I have before, I don't think you're wrong, I just think your view is understandably shaped by your own experiences.
--Annie
I think you are bringing up the objective vs subjective concept. Now all positions have varying degrees of this. Now that I am at a higher level, my criteria is much more subjective and harder to measure. (Ie people & relationship oriented)
ReplyDeleteYet my Supervisor is paid more and given authority to grade my success at least once per year. I think this concept goes across most industries. So the criteria may change, but not the concept.
I think your introduction of public employees into the discussion is a bit of a curve ball. We have no expectations of a public employee, no "payback" on their employment, in many cases, because they are doing things we don't even want done at all. Even those things we DO value, like road maintenance, aren't paid according to how much or how well. Not only that, but their direct managers don't care one iota about either what they get paid or what they produce. They get paid the same pretty much either way. In private business, these kinds of decisions have a self-enforcing, free-market sort of feedback at work. Let your experience walk out the door and your business suffers. Pay your highly experienced staff more than they are worth and your bottom line suffers. Government workers? Hah!
ReplyDeleteJ. Ewing
I am guessing many would like you to have replace all the "We' words in your previous comment with "J Ewing". Oh well, "we" will see if they call you on it...
ReplyDeleteJohn, I gladly leave responses to J up to you. While I found your comments on the last two topics interesting I only have enough energy to contribute a link to David Brooks column, which seems relevant to the discussion to me.
ReplyDeleteLaurie,
ReplyDeleteI used it for the next post....