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AN INTERNATIONAL ORGANIZATION OF CEOs
RESOURCE PRESENTATION SUMMARY
-+-
COMPENSATION PROGRAMS THAT
INCREASE YOUR PROFITS AND
IMPROVE MORALE
RON FLEISHER
employee so that everyone has to work at least 20 of the time in another department. The
amount of things an employee is crosstrained for determines how many additional days off they
get during the slow summer season. The CEO gets more. productivity without raising costs and
his people get more time off. Plus, employee morale has dramatically improved.
It has also fostered an environment where people really pull together to help each other. When
incoming phone calls outnumber the sales staff, a computer automatically sounds an alarm. An
announcement goes out to the entire company and every employee stops what they are doing to
help out with incoming phone calls. How many companies have that kind of culture?
COMPENSATION AND HUMAN NEEDS
Compensation programs are not the sole determinant of change. But they are a rallying point
to bring attention to the needs of the company. Suppose you asked every employee, “If there
was one thing I could do for you, what would it be?” Most would likely say, “Give me a
raise.” But that isn’t what they really want. What they really want is to be challenged and to
know that they are making a worthwhile contribution. A good compensation program addresses
those mostly unspoken needs.
According to Maslow’s hierarchy of needs, people have different levels of needs, and you need
to satisfy the lower ones before they can move to the higher levels. In the U.S. we don‘t have
much problem with physiological need (the lowest level of need) in the workplace. Our
workplaces are relatively safe and comfortable.
The next level, fear and anxiety, wasn’t a problem 15 to 20 years ago. Today it is because of
layoffs, downsizing, and reengineering. People grew up believing if they showed up and did
well, they would have a job for life. That expectation is no longer valid. When people
constantly worry about their jobs, they can’t focus on getting the job done. But when people
have input into their jobs and can focus on results, they feel less anxiety.
The third level is giving and receiving affection and a sense of belonging. If you do a good job
of building teams and making people feel like they have a say in their future and can dictate
their own outcomes (as long as the company and the customer benefit), you can start to focus
on self-esteem. When you reach this level, people are capable of producing tremendous results.
If you outline a compensation program that meets the needs of customers, the company and
employees, you start to fulfill the highest levels of people’s needs.
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Fleisher, Page 3 of 8
it is to the greatest benefit to work as a team, not as individuals. People begin to take pride in
the work that gets done and you begin to get great customer feedback.
Three rules for making decisions:
1. The customer is the center of the universe.
2. Underpromise and overdeliver.
3. Revenue minus expenses equals profit.
When an employee comes to you with a question, say, “I will help you with the answer. But
before I do, I want you to evaluate the question in terms of these three issues.” Invariably, they
will give you the right answer on their own.
Make your “profit pot” payoffs as frequent as possible–once a month at minimum, and weekly
if possible. The closer you get the reward to the behavior, the more effective it will be.
If frequent payments seem too small to be of real value, pay them in a separate check and have
a column on the pay stub that tracks year-to-date compensation for bonuses. That way
employees can see how much they are getting in total. It also has a big impact if you personally
hand out bonus checks.
If you decide to move toward pay for performance:
Evaluate your current compensation program by answering the questions outlined In
Fleisher’s booklet (handed out during the presentation).
• Review the compensation program continuum and decide how far you want to travel.
• Identify your company’s financial requirements.
• Initiate your own program based upon these steps, or create something brand new.
If a compensation program is going to work, it must align with the customer, the company and
your employees. Create a plan that works for you, then create the culture that allows it to work.
There is no one way to structure a compensation plan. .But if your plan meets the needs of the
customer, the company and your employees, and you can create a culture that empowers and
motivate employees to perform, everybody will win.
4/97
dgm
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Fleisher, Page 7 of 8
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TEC – Compensation Programs That Increase Your Profit and Improve Morale – Ron Fleisher