Best Articulation of Compensation
I stumbled into a gem of a book recently: How Will You Measure Your Life by Clayton M. Christensen. This book will be mandatory reading in the Powell household. 10/10!
Century is rolling out a new compensation program later this year. Compensation for our teammates is top of right now for me. I found a great chapter in this book about motivation and fulfillment in one’s job that is so applicable to us as leaders.
I’ve written and reflected on compensation in the past: The ART of compensation.
A compensation program should and must provide so much more to the human experience.
There is no one size fits all approach. Every team is unique and every company has its own time horizon for what is best. Christiansen wrote: “The hot water that softens a carrot will harden an egg.” [82]
Owen Robbins, successful CFO & board member who chaired compensation at CPS Technologies, shares: “Compensation is a death trap. The most you can hope for (as CEO) is to be able to post a list of every employee’s name and salary on the bulletin board and every employee say, ‘I sure wish I got paid more, but darn it… that list is fair.”
Frederick Herzberg wrote an incisive article in Harvard Business Review on the topic of motivation theory. His theory brings to life that you can love your job and hate it at the same time.
There’s two distinct factors that leaders must address:
HYGEINE FACTOR: eliminates job dissatisfaction
a.Compensation *
b. Status
c. Job Security
d. Work Conditions
e. Company Policies
f. Supervisory Practices
MOTIVATOR FACTOR: drives love of work
a. Challenging work
b. Recognition
c. Responsibility
d. Personal Growth
* Herzberg suggests compensation is not a motivator it’s a hygiene factor. Leaders NEED to get it right. Not getting it right is like transplanting cancer into a company. All you can aspire to is that employees will not be mad at each other and the company because of compensation.
I think Herzberg brings to light a great point of long-term fulfillment is so much more than just the cash. Problems stack up when compensation is only focused on hygiene factors.
Anecdotally, I picked my first job out of school solely for compensation & status. The conversations with my direct report was solely on compensation. The job lasted a little over a year before I realized I wanted fulfillment in addition to financial security.
What you structure is what you get.
I’m thinking about how does Century continue to build toward checking all the boxes Herzberg highlights to create a job that checks both HYGEINE & MOTIVATOR factors.
When you are building a company that is measured in centuries it’s worth the effort to be thoughtful beyond cash.
I think one of the most miserable types of humans are those who are cash rich and joy poor. I’ve met a couple over the years.
The ART of compensation for leaders is found in the challenging work, recognition, empowerment, and fostering personal growth throughout the organization.
Onward,
Matt