The Prosperity Conversation
This post is part of the series “Communication,” a weeklong effort co-hosted by Switch & Shift and the good people at SmartBrief’s SmartBlog on Leadership. Keep track of the series here and check our daily e-mail newsletter, for all posts. Don’t subscribe? Sign up.
“What would you do if money were no object?”
It’s a great question, but it’s useless. Why? Most people just can’t imagine it.
Ask anyone why he or she has a job. Go ahead, do it—I dare you. Ask some more people. Get a big sampling. Go to the cafeteria. Go to the after-work pub and the weekend BBQ. Check your results.
You may run into a few people of any age that will tell you they’re following their dreams and their passions, but the majority of the working population will tell you that they work for the paycheck. Money is the object.
Now ask the same people if they believe that they are paid fairly compared to their employers’ pay and profits. Here’s the problem with this question: in most companies, people don’t know what the C-level managers and the boss are paid. They don’t know or understand how profits are derived, or how their own pay is represented in the big picture. What they will tell you is that they believe their own pay is not a fair slice.
This belief may or may not be accurate, but it is prevalent. Whether working at a low-pay, soul-sucking job, in an amazingly creative culture, or in a setting where they’re paid in stock options, most people are ignorant and in the dark when it comes to pay and profitability. And yet, they probably have an opinion about it.
Whether working at a low-pay, soul-sucking job, in an amazingly creative culture, or in a setting where they’re paid in stock options, most people are ignorant and in the dark when it comes to pay and profitability. And yet, they probably have an opinion about it.
Imagine the new workplace as a place where everyone talks about and understands how each person impacts the bottom line. Imagine every employee engaged in a conversation about why others have impact in their companies. Imagine every worker appreciating that compensation is relative to the results that are created. Then, all together, they create better results.
Within the ongoing debate of the organizational design crowd, there are missing pieces: access, understanding, and discussion about financial information and how people are compensated. But this important aspect is much bigger than the labor movement before it, because it requires a willingness to share openly rather than be adversaries.
In the transparent workplace, everyone prospers. Until we decide to talk about this, workers will continue to feel that they are cogs in the industrial machine built to feed “fat cats.” Until we embrace the money conversation as the new norm, we cannot transcend compensation issues in the workplace. Compensation is at the very core of integrity in business. How we are compensated is just as important as the structure, values, and mission of any business—if not more so.
Open-book management has been around for decades. Ownership thinking is the newer, safer way to discuss it. Why aren’t more people talking about and implementing this fundamental change?
Here’s why: it’s because our beliefs about money seem insurmountable. They are deep and resonant. They exist on all sides of the equation, and they beget each other. Here are just a few of the beliefs that we are up against.
Until we embrace the money conversation as the new norm, we cannot transcend compensation issues in the workplace. Compensation is at the very core of integrity in business.
On the ownership side:
- I take the risk, I get the result.
- They don’t care as much as I do about my company.
- They feel entitled.
- They don’t understand how hard I work.
- They think I make too much money.
- Employees are lazy, needy whiners.
On the labor side:
- I work too hard for too little.
- My opinion isn’t appreciated.
- I’m not paid enough to care.
- I have no more time to give.
- It’s not my job.
- Business owners are greedy, evil pigs.
There is a method to end this seemingly complicated madness. And like most of the changes that the world demands from us, it requires a high level of communication and a new leadership role. Business owners and CEOs know that they are paid based on the profitability of the business. They understand the risk they take each day. Business owners understand net profits, assets, and liabilities. They learn the language of business.
The leader’s new role is to teach these fundamentals to their employees. When leaders know their own numbers, share their numbers openly, and teach the language of business, a few amazing things can happen. Employees get smarter. They see how they are critical to the bottom line. They start to understand how they can move the needle. Additionally, entrusted and smarter workers ask better questions, create better solutions, and make better decisions. At the end of the day, they make more money for the companies they work for. This has been proven time and time again.
The new business leader must become a teacher and embrace these five elements of prosperity thinking.
- Know and understand your own financial numbers.
- Openly share financial information with your employees.
- Teach the principles of business and what the numbers really mean.
- Together, identify key performance indicators and goals.
- Create compensation plans tied to the profitability of the business.
When leaders know their own numbers, share their numbers openly, and teach the language of business, a few amazing things can happen. Employees get smarter. They see how they are critical to the bottom line. They start to understand how they can move the needle.
When you create a profit share based on results and you know how to generate profit, you create an explosively powerful combination.
Instead of instituting these outdated methods…
- A complicated compensation plan that no one understands (e.g., tiered stock plans)
- A penalty culture (e.g., get paid only for meeting company metrics, get docked when you don’t)
- Individually competitive incentives (e.g., commissions and bonuses)
…you can use a simple, company-wide profit share that’s tied to profitability. It’s not only scaleable but a plan that employees can understand and impact.
The real outcome: more money for everyone.
We must address the elephant in the room and talk openly about compensation. As you implement a better process, structure, or culture, notice if you are avoiding this conversation. When discussing leadership, purpose, and values, are you aware of the beliefs that are keeping you from critical financial communication? Let’s change the conversation in the workplace and choose prosperity thinking.
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