3 Factors in Managing Employee recognition Vs pay hikes

I don’t pay good wages because I have a lot of money, I have a lot of money because I pay good wages

– Robert Bosch

This quote has a very beautiful impact in the aspects of recognition, reward and a beautiful long term which some businesses miss out in the realm of achieving short term goals. We talked about short term decisions in a previous post. Employee management also feels like one such area for me.

It is very difficult to identify the appropriate price, value and pay checks. They can often get very contentious – how does one determine the right value?

The pay hikes also have a  very strong connection to how valuable a person feels for an organisation. In effect, the pay debates tend to touch upon multiple subtleties and can get easily very contentious.

The view however, I would like to explore in this quote is the long term view as opposed to a short term profit approach.

1. Short Term Vs Long Term

We have seen this in the recent past where some businesses have tried to take advantage of the situation. Some have gone on to increase costs of simple items and have clearly encouraged criticisms of profiteering.

Others have taken a slightly subtle note of cost reductions, reducing overheads and focusing completely inward. Both of these approaches have a much far reaching consequence in the loss of trust from people. For the former, it is about lack of trust which directly translates into customers moving away with time – People will remember how a business made them feel and nothing worse when customers feel that a business has taken advantage of them.

The same appears to employees as well. I remember my first few years of employment where we hit a recession. Job switches were not that easy back then and most companies were not offering considerable pay rises.

We were one of the businesses which had done very well in recession but yet during the review, the entire organisation had no pay hikes. It was baffling because the company had made 10% more profit than the previous years.

Then again – it was just a waiting game only to see a huge attrition when recession eased and people moved. I can still remember the days of feeling awful for working with such ethics. But then again, if businesses take advantage of a situation, it is not very easy to come back. The long term losses are much larger than a short term gain it proposes.

2. Collaborative Working

This might be me speaking in the tone of collaboration. Often during the earlier days of startup, we used this phrase – small part of a large cake rather than a large part of nothing.

Although cliched, it still is something I would hold on to as  a driving thought. We cannot consider business as a zero sum game i.e someone doesn’t have to lose for us to win.

If we keep going through that game based approach, it is an awful motivator to consider our everyday thought process. The vision for a startup/ any business needs to start from a  large one. Vision, mission are precious entities for a business. If we get this translated across an organisation, that is possibly one of the biggest achievements a company can hope for.

Just to imagine that everyone in the organisation knows how they add an incredible value for the big hairy goals of an organisation is a fascinating goal to achieve. The size of this challenge increases with the size of a company which makes it even more daunting.

But equally – such a beautiful moral to work for and be a part of. I don’t want to go on and explain why we should all work together – I would take that as a given at this point in the discussion, but I would certainly like to focus on achieving bigger, mightier goals which can take us a long way.

3. Employee Recognition and Trust!

The title sounds very lofty. But we all know how expensive it is to gain trust of the people we work with. Money, rewards act as a short term motivator, but trust is more internal. If we want to gain that from our fellow team, we will need to meet more than half way.

This doesn’t necessarily mean that it comes at a compromise of goals. it means that we trust that people want to do make a difference and trust them with it. The only role of a manager or leader is to ensure that the team has adequate resources to help them achieve their goals.

We talked about ceding control and micromanagement in a startup. We also talked how dangerous it can be when trust is lost and the detrimental impact it can quickly snowball into.

I would say both the price and cost of trust and massive. If we are not careful, these things can easily erode the entire organisational culture and lead us into anarchy.

None of these we talked about are easy. And that’s probably why there are very few companies which do this well. The strength in this quote is not just about the money, it is about the translation into trust and the value of collaboration which is so easily missed often.

On that note, a food for thought:

I don’t pay good wages because I have a lot of money, I have a lot of money because I pay good wages

– Robert Bosch