How Should We Pay People?

It’s an interesting article on how to pay people from Dan Ariely at Business Week. It’s a look at some of the issues with paying for knowledge work, or work that isn’t well defined. The short version is that you don’t want to specify too tightly what you expect people to do, but then you have to motivate them to work in the best interests of the company.

I think this is one of the fundamental problems in management today. We still have this mentality from the blue collar factory worker and piecemeal or easily measurable work items being applied by management to knowledge workers. It doesn’t work well, and somehow we think that the hours work in some way relate to the output.

I blame lawyers. They tend to use this model, since they often bill by the hour. However the end result, the quality of that they produce, which is usually research, isn’t easily quantified in anything other than a win or loss. That often comes down to not only the soundness of the argument or the logic, but the charisma of the lawyer. That’s not even close to the way we do business in many other industries, especially technology.

More than money

I saw someone post a tweet during the recent hurricane that hit the East coast that essentially questioned the decision by Home Depot to stay open 24 hours. The tweet essentially questioned the business sense of paying employees when there wouldn’t likely sell enough materials to pay for the cost of electricity and staff. I was surprised, mostly because the person posting the tweet typically has more compassion for people than companies.

This decision isn’t about profit and loss. From an accounting, or MBA standpoint, this isn’t worth doing. However it isn’t about profits. It’s about serving the community and going the extra mile. It’s about being available to help your customers if they need it. I doubt anyone will come, but someone that gets damage at 10pm just might want to come get some wood, buckets, tarps, etc. for repair.

I’m sure some PR benefit accrues from the decision, but in my mind, this is more about being part of the community and understanding that there is more to business than straight profit.

Users first

I like this philosphy, Users First, Brands Second. It’s a piece from Fred Wilson, a VC investor in NYC. He makes great points that you want to make sure you are building a service users want first, and then worry about the branding and partnerships.

Ultimately you want a great service or product, and that comes from building something for your customers, clients, users, not your partners.

Distance Yourself with Emails

One of the things I’ve always done in a small business is publish my email. I want customers, or potential customers to email me, especially if they have issues.

As my companies grew, however, we learned that there are definitely tasks that we farm out to different people. An example of this is the problems with our website. It’s customary to have a “webmaster@” email address, and while we didn’t mind people pinging us, we didn’t want me, or my partner, to be stuck answering all of the emails.

So we added the webmaster email to our list. We both had passwords, and could check (and respond), but it gave us a layer of abstraction. Over the years, when we had an email for some specific function, we added an email, even if it was an alias to one of our accounts. It enabled easier workflow, and it allowed us to publish a standard email people could use.

I’ve suggested this to a few friends, especially those that do events with their small business. Having an “events@” or”webinars@” is an easy email to give to people and it prevents their emails from clogging your inbox. You might alias it to yourself, but if there are enough emails, you want to be able to send those to someone else, and having an abstraction through a separate email works out well.

Fire Some of Your Customers

An interesting read from the HBR: It's Time to Fire Some of Your Customers

I worry that this is taken too literally by some people. It makes some sense, focus on those customers that provide good revenue, but this could easily be taken too far by the MBA crowd, and trying to be too efficient to limit yourself to certain customers.

Your customers will change over time, and you need a wide variety of them. The best customers are those you want to cater to, but offending or pushing away too many average customers might leave you without enough good customers over time. It’s also easy to make mistakes about who are the best customers if you don’t ask the right questions of your data. Make sure that you examine the “best” customers from many sides, many points of view, and analyze the data in multiple ways.