March 25, 2018

But We Cannot Afford To Pay Our Employees

A company generates $50,000,000 in annual sales. This company pays marketing vendors a whopping $15,000,000 to generate sales.

The Executive Team is frustrated. They have a hard time keeping talent in-house. "We cannot compete on salary."

I offer the company an option ... how about a bonus structure that rewards employees when the company has a good year. A Director earning $120,000 a year could make a 40% bonus, earning an additional $48,000 if the company has a good year.

There's an interesting response to this proposition.
  • "We can't let the employees earn a disproportionate amount of pay if the company does well."
Of course you can!!

You do this with your vendor partners all the time. 
  • What happens when Search performs well? You invest more in Search, and your Search vendor gets paid more.
  • What happens when Catalogs perform well? You invest more in Paper, Print, and Postage. A veritable plethora of vendors get paid more.
  • What happens when Merchandise performs well? The vendors you bought the merchandise from get paid more.
  • What happens when the Employees who hired the vendors to perform well cause the Company to perform well? They don't get paid more than maybe a cost of living increase.
How you pay your employees says a lot about who you are. A traditional company that rewards vendors for doing well but does not reward employees for hiring the vendors who do well will have perpetual talent challenges.

How The Great Eight Fit Into This Story

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