August 06, 2008

The Lifetime Value Of The Employee Who Identifies A Key Issue

We've never been able to measure so many different things.

And we've never wasted so much time measuring things that don't matter.

But every once in awhile, one of our employees hits on something clever. Maybe an employee figured out how to improve the productivity of e-mail marketing by ten percent. If your e-mail marketing program generated $1,500,000 last year, your employee just added $150,000 of volume, maybe $75,000 of gross margin and $60,000 of profit to our coffers.

How do we reward the garden variety employee who makes this kind of difference?

We know how to reward CEOs and Executives. We toss money at these folks like we toss fertilizer on our lawn.

Increasingly, metrics allow employees to make differences that were either unquantifiable in the past, or result in fundamental differences that truly increase sales and profit. Our reward system for garden variety employees lags far behind the potential our employees now possess.

Going forward, we will need to identify reward systems for users who generate content, for bloggers who voluntarily promote our brands, and for employees who make contributions disproportionate to the salary we pay them. Until we figure out how appropriately compensate these individuals, we'll run sub-optimal organizations.

And by the way, compensation does not necessarily imply financial compensation.

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