When it comes to people, objectivity is over rated

I worked my way through college a long, long time ago selling high end men’s clothing at a small retail chain in Cincinnati. Well, that was the theory, anyway. In fact, I am so hopelessly color blind that I was perhaps the most unqualified person on the planet to do that job. I was able to do OK by sheer rote memorization – watching the people who were good at it and memorizing which suits were which color and which ties went with which suits but what I really did was settled into a role of picking up all of the non-selling work. The pay was less because I missed out on the commissions for selling, but I needed the job and enjoyed taking care of the inventory, closing out the cash register and so forth – the business end of things that no one else wanted to do – and, as a result, was greatly appreciated by the rest of the staff. They didn’t have to do any of that work and could concentrate on doing what they did best – selling. The manager (who was the best sales person in the place and abhorred the business drudgery) too very good care of me, throwing a lot of bonus and extra money my way as best he could.

According to an article in the Financial Post, the United States has the highest correlation between skills and wages of any of the big developed nations … and, as far as I am concerned (and contrary to the glowing praise of the author) and from my personal experience we should be ashamed of ourselves for it.

What people get paid is a tricky thing, but the normal approach of ranking people according to some set of objective measures, slotting people into pay grades based on prevailing local markets for people in comparable jobs and giving raises, bonuses and promotions based on their contribution to departmental performance all are very problematic.Culture Capability Matrix 2

I have shown this graph of skills versus cultural attributes a number of times and it illustrates the problem. All of the traditional theories of compensation – the sorts that lead to this high correlation between skills and pay – are seriously biased toward the Y Axis. Technical ability is easy to measure and easy to compare among employees or job candidates, but cultural values … not so much. It is also easier to draw lines between technical contribution to financial results, but like so many things in business, the fact that the accountants have a hard time hanging a dollar value on something doesn’t mean it isn’t a big driver of financial results.

Don’t get me wrong. Technical ability is great. Ideally people will be both technically great and great contributors to the advancement and strengthening of the culture; but given the choice between someone who is technically good but completely bought into the company culture and strategy, has a great work ethic, and is solidly committed to contributing to the team instead of worrying about him or herself; and someone who is technically great but has few of those cultural attributes take the good technician who advances the strategy and culture every time. The manager I worked for back in college would be the first to tell you that good sales people were easy to find, but people like me who were willing to take a back seat – to serve in a supporting role that enables everyone else to succeed – are almost impossible to find.

You see, technical skills can be trained and taught, but cultural contribution is more of an attitude and a reflection of values. They were pretty much drilled into someone’s head and heart by their parents and teachers a long time ago … or not. How do you establish the prevailing wage in the community for someone who has completely bought into the company culture and strategy, has a great work ethic, and is solidly committed to contributing to the team instead of worrying about him or herself?

Executives and HR folks will read this and say, of course you are right, but how to we establish an objective pay system that puts appropriate weight on those cultural attributes? To that I say, objectivity is greatly over-rated. It is a fool’s errand to seek to hang a number on everything. Can’t be done so don’t waste your time trying. In fact, managers get paid the big bucks to make subjective decisions. Chimpanzees can be trained to make good decisions if all of the criteria can be boiled down to numbers and formulas … maybe not chimpanzees, but computers certainly can be programmed to do it.

In the end, management has to decide what is important: Good people who can support and elevate everyone around them, or people who can do their job well without regard to whether they contribute to or detract from the organization or not. Then they have to do the right thing for the people and the business in terms of how much people are paid, and there is no magic evaluation or pay grade system that will do that for them.

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