Out of the Crisis.Org

[Louis Altazan]

Part Four

I feel a big step in restoring intrinsic motivation is to stop using pay, or lack of it as a management system. Rather pay a person enough, so that their needs are met. In this manner money is no longer a desperate need. People are comfortable and free to concentrate on greater things. A person who is starving or thirsty will think of little else. A person that has their financial needs met can concentrate on higher qualities in life.

This can be really scary for some managers, because it removes a great deal of what they feel is power. It also places responsibility for removal of obstacles to performance, with management. It means that a person is paid enough so that their needs are met. They are then TRUSTED to do their best. Management must work to discover and remove the things that keep them from achieving their best.

Management would have to work with employees to improve the system. This means a manager is also responsible for hiring people that will not take advantage of the situation. In my experience taking advantage is rare. I have found, when treated well, recognized for their achievements and well paid, employees accomplish far more, because it pleases them to do so.

Does this mean there should be no guidelines or controls? Of course not, management can teach employees to monitor their performance by statistical means. An employee’s performance could easily be compared to THEIR OWN previous levels, when on incentive pay. If performance is below previous level, the reason should be found and corrected.

When performance is above previous levels, the reasons should be shared and implemented throughout the system, as possible. What would be wrong is to compare the performance of one person to that of another, particularly when they are not doing identical work. The point is to measure personal improvement.

This also does not mean that everyone should make the same amount. Some have greater ability, some work harder than others. How can we determine the proper pay? This is a very personal matter and has to be worked out by each manager, individually, depending on their situation. Taken with other considerations, improvement of personal performance is one consideration. As a general guide, but not limited to:

1.) A person must be paid based on the market rate for their skills, (a diagnostic technician can expect to make more than a tire changer).

2.) How well their performance meets the aims of the company, (quality, customer service, etc.)

3.) How well the company does as a whole, (this may be the toughest for management to accept.)

I believe workers should be paid the most the company can afford, rather than the least they will accept. Simple accounting methods could easily determine the figures. Once determined improvement could be plotted statistically. Confirmed improvement should result in raises in pay.

Now, will this work without other changes? Absolutely not! If incentives are removed without replacing them with leadership chaos will be the result. People that have been extrinsically motivated for years will not trust, and may not be willing to work any other way. In cases removal of incentives could be seen as attacking their self esteem, if they are inclined to believe this way. It requires absolute honesty on the part of management and trust on the part of employees. It requires a basic knowledge of statistics, and it will require time.

This should not keep a business from working toward a better system. It is not easy, it will take a huge amount of effort. Things may even get worse before they get better, but it can be done. People can enjoy their work, do their best everyday and work to improve the system, because it pleases them to do so. I believe removing a pay system that is a substitute for management is the first step.

(End part four)

Part three: http://www.outofthecrisis.org/forum/viewtopic.php?t=55
Part five: http://www.outofthecrisis.org/forum/viewtopic.php?t=57

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA