Last week I wrote about how companies that don't invest in people don't grow, using advice that an unemployed friend provided about trusting in the flow of money. This is a bit of a "no duh" conclusion--one of the first rules of business building--but companies in the early stages of growth often forget this bit of wisdom. After all, it's tough to put money into new hires when you aren't paying yourself, just as it must have been tough for my out-of-work friend to take people out to dinner in his quest to find work. But he invested in the squishy, people side of business, trusting that by spending time and money on getting to know people, others would eventually spend time and money on him. He ended up finding a business partner for his new venture.
Still, companies that are more established (and supposedly wiser) also forget to invest in people--witness the company that goes public and must forego long-term investment in talent to make its quarterly numbers. Then there are companies--even whole industries--that unwittingly undervalue talent because managers forget that there are other ways of investing in people besides paying them. Here's what I mean...
My husband, a landscape architect, loves what he does. Since he started in his field he's told me of the challenges of keeping a project within budget. Often he and his colleagues must work beyond budgeted hours--with no additional pay--in order to complete a project. Promotions and salary increases happen, but slowly. He expects to work for up to several years before his next significant promotion.
Being the annoying bystander, I make snarky comments when he works long hours, "I hope you're getting PAID for this..." I say, knowing full-well how he's going to respond: "Regardless of how many hours we've budgeted for this project," he'll say, "it's got to get done."
Then I think of my friend, an attorney, whose firm bills by the hours he puts in. Sure he works hard--there's pressure to bill a specified number of hours, but he gets paid well, and there's continual incentive of promotion. This room for growth pushes him to keep working hard. Established law firms often invoice by a retainer or billable hour model, which typically provides pay proportional to effort. Like most firms in his industry, my husband's firm uses a project-based model, which often results in keeping costs contained, undercompensating employee hours and, in the longer term, undercutting opportunities to offer incentives such as raises and promotions.
My husband is not motivated by salary, but by loving what he does. Still, I often wonder, how much will love sustain him? In situations where I've not expected pay to match my efforts I worked for start-ups, which often require huge amounts of "love," or faith that a lower salary and/or longer hours will pay off financially or in an increased ability to personally impact the company. The opportunity to impact outcomes at a start-up have justified the trade-off for me.
However, in more established, mid-sized companies, employees have less impact on outcomes; they are compensated to build value in more limited ways. This can be a turn-off for more driven workers. A friend of mine, a successful entrepreneur, had to leave her first career with a consulting firm because the work offered her too little control over her chances for growth. She couldn't bring in new projects until she had X years under her belt, so she took a gamble and started anew. At first the money wasn't there, but the autonomy motivated her to stick it out with her small business until it paid her more than consulting. Companies that don't provide attractive pay or autonomy are in jeopardy to losing enterprising people like her.
How can companies entrenched in industries that don't immediately (or adequately) offer monetary compensation for performance maintain an edge? Two words: autonomy and control. Even if your company is midsized, you can offer incentives that translate to more of both. Some that come to mind:
1. Providing finder's fees and bonuses for business that employees bring into the company. Even if the fees don't add up to a significant monetary increase, you've given your employees a means of controlling their compensation and impacting the company.
2. Award "comp" days to employees who work beyond a project scope to complete work. My husband recently took a comp day after a 70-hour week; an avid cyclist, the ride he took that day more than made up for the uncompensated hours he put in the week before.
3. If you can't pay more, award more time--flex time, telecommuting capability, or time for outside pursuits.
At the end of the day, money means a lot but it isn't everything. There are other currencies you can use; whichever one you choose, you have to invest it in your people.