Cogs & Clockwork
Suzanne “Evil HR Lady” Lucas answers questions about people frustrated with their employers. In the first case, the letter-writer was frustrated because they’d been slipped into a promotion without the compensation bump that would have come if they had applied for it. In the second case, an employee had their scheduled pay bump deferred because they had mentioned that they might be leaving the area (and therefore the company). She closes:
The employers in both these situations thought they were being so smart in saving a few dollars. By denying raises to two employees, they can pat themselves on the back. Smart moves! Except that they’ve set up a situation where employees know they aren’t valued. And not just for these two employees–all the employees will feel that way.
Remember, turnover is very costly–you can spend 150 percent of the salary just the replace the person–and, you’ll have to replace the person at the higher salary that you’re withholding from your current employee. And it’s not just these two employees that will have negative feelings towards you after the raises are denied. Their co-workers will hear about it and not be happy either.
I remember a case several employers back. The standard pay schedule for the sales staff involved a percentage of the business they brought in. This created a “problem” when one salesperson, Ahab, brought in a customer that was such a whale that management simply couldn’t fathom paying the salesperson his due. So they went to the salesperson to redefine the compensation, and the salesperson agreed. Even a fraction of the original percentage was a good amount of money, I guess he figured.
Shortly after that, there were a round of layoffs. Somebody in management got the bright idea that if they let this particular salesperson go, they could keep all of that money for themselves. And so the whale-catcher was among those who were let go. They got to keep their money, but they didn’t just lose one of their top salespeople. They lost all of them. In fact, within a month or two (about as long as you would expect it to take salespeople to find a better job), almost all of them were gone, faster than they could be replaced. Account management had to double for sales. There was a lot of talk as though this had been a managerial decision, and the power of “Word of Mouth.”
What salespeople would want to work for a company that lays off its top salespeople to avoid paying them their commissions?
This was an ongoing issue at that company, which was located in a part of the country where it was a fair assumption that employees would have a hard time finding better work elsewhere. They had little trouble turning the screws on the employees on that basis alone. There was one problem with this, however. While it was true that most of the work staff wasn’t going to be able to find better work, it was least true for the employees who had the most impact. The top performers, it turned out, did have other options. Those were the ones we lost. The marginal ones who couldn’t find work elsewhere, of course, stuck around.
The benefits of turning employees into replaceable cogs are manifest. When I was the team lead, I was very much a part of trying to streamline the job description of the team to require as little as possible. With high turnover rates, it was pretty necessary. But few companies actually achieve that. Treating all of the employees as though they are the marginal ones makes it a pretty self-fulfilling prophecy.
When a coworker and I invented a bunch of tools that made the job a whole lot easier (and faster), the end result was that management wanted to drop the pay of incoming personnel. But even easy jobs can be done well or poorly, quickly or slowly. And, of course, reducing pay makes it considerably less likely that you will attract people who will create tools to make the jobs easier and faster.
You can only treat employees like cogs when your company works like clockwork.