prosperity conversation

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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Image credit: sergeypykhonin / 123RF Stock Photo

Ruth spent 25 years in the music industry. In that time she created a $10 mil distribution company where everyone was a contributing partner in the business. After selling that business she became a business coach, speaker, trainer and enthusiast for working with successful entrepreneurs and business leaders who are tired of task and employee management are ready to lead the work revolution. Schwartz chronicles her success in the book, The Key to the Golden Handcuff’s – Stop Being a Slave to Your Business. Tthe book gives entrepreneurs and executives a recipe to create a transparent, open-book company of their own design. Ruth is a member of Toastmasters, the National Speakers’ Association, The International Coach Federation and The Experts Association.

  • reply TedCoine ,

    Ruth, this is an absolute home run! Like most everyone else in our culture, I was raised not to discuss income, politics, or religion. The second two – I’m still on board there, at least till I know someone better. But income, and money in general? Give me a break! Year ago, as a new entrepreneur, it only took me a couple of weeks to get comfortable talking about all manner of money: how much our services cost (when speaking to prospects and clients), how my employees made (to those employees), how much a vendor’s services would cost us (to the vendor)… everything. Now I feel like a misfit, because I still want to know stuff like that all the time, about everything, but those I talk to are often uncomfortable – that old Western conditioning I grew up with. It’s dysfunctional.

    We’re turning a corner in this Social Age, fortunately. You can go to Glassdoor and see how much your peers make at your company (at least in aggregate), or in a company you might want to work for. If it’s a public company, you can find listing of the 5 highest-paid executives on many sites, including salary.com and Morning Star. You can go to Zillow and see how much someone’s house is worth. Little by little, whether we individually like it or not, we’re getting there. Companies will be more transparent even if that transparency is against their will!

    …But as you say, there’s so much more! Employees need – and deserve – education in reading the books. Once they understand the numbers, trust is bolstered, and mission buy-in is virtually assured. In addition, knowledgeable employees can bring their full brains to work, and find new ways to save and/or make the company money.

    I love this post. You’re a rockstar, Ruth! So glad we can share your brilliance with our community of purpose.

    • reply Heather Kinzie ,

      Excellent post…so true that we MUST start having the right conversations! What is HR afraid of by having it? What is leadership afraid of by having it? What are the employees afraid of by having it?

      Accountability…gets us every time!

      • reply This Week’s Links « Timothy Siburg ,

        […] Schwartz shared recently this reflection on “The Prosperity Conversation,” looking at our beliefs about money as individuals and organizations, general madness […]

        • reply Marketing Lesson #100 (I love Switch and Shift – Part 1) | High Performance Advocates ,

          […] The Prosperity Conversation […]

          • reply 5 Employee Questions Every Company Should Answer ,

            […] few companies are open about their approach to compensation. Yet, employees want to know what to expect in return for their contributions. You have nothing to lose by being clear and open about your reward system […]

            • reply MorningGiggle ,

              Heather, the “abilities” are a great starting point. Too many employees don’t recognize their own abilities and therefore stay in the “sucked in” mindset. If we create an environment where ALL abilities are recognized from “the employee- out” (begin with the person/employee and grow to include HR, U.M, Exec Levels) we would all win. RESPONSibility, RELIAbility, ACCOUNTability- These character traits all lie within us, and if we recognize that they aren’t quite where they should be – we all have the option to assess the situation for greater change from within. Once that happens, the abilities are recognized from the outside, as well- WIN/WIN forever.

              • reply MorningGiggle ,

                Heather, the “abilities” are a great starting point. Too many employees don’t recognize their own abilities and therefore stay in the “sucked in” mindset. If we create an environment where ALL abilities are recognized from “the employee- out” (begin with the person/employee and grow to include HR, U.M, Exec Levels) we would all win. RESPONSibility, RELIAbility, ACCOUNTability- These character traits all lie within us, and if we recognize that they aren’t quite where they should be – we all have the option to assess the situation for greater change from within. Once that happens, the abilities are recognized from the outside, as well- WIN/WIN forever.

                • reply MorningGiggle ,

                  Heather, the “abilities” are a great starting point. Too many employees don’t recognize their own abilities and therefore stay in the “sucked in” mindset. If we create an environment where ALL abilities are recognized from “the employee- out” (begin with the person/employee and grow to include HR, U.M, Exec Levels) we would all win. RESPONSibility, RELIAbility, ACCOUNTability- These character traits all lie within us, and if we recognize that they aren’t quite where they should be – we all have the option to assess the situation for greater change from within. Once that happens, the abilities are recognized from the outside, as well- WIN/WIN forever.

                  • reply MorningGiggle ,

                    Heather, the “abilities” are a great starting point. Too many employees don’t recognize their own abilities and therefore stay in the “sucked in” mindset. If we create an environment where ALL abilities are recognized from “the employee- out” (begin with the person/employee and grow to include HR, U.M, Exec Levels) we would all win. RESPONSibility, RELIAbility, ACCOUNTability- These character traits all lie within us, and if we recognize that they aren’t quite where they should be – we all have the option to assess the situation for greater change from within. Once that happens, the abilities are recognized from the outside, as well- WIN/WIN forever.

                    • reply MorningGiggle ,

                      Heather, the “abilities” are a great starting point. Too many employees don’t recognize their own abilities and therefore stay in the “sucked in” mindset. If we create an environment where ALL abilities are recognized from “the employee- out” (begin with the person/employee and grow to include HR, U.M, Exec Levels) we would all win. RESPONSibility, RELIAbility, ACCOUNTability- These character traits all lie within us, and if we recognize that they aren’t quite where they should be – we all have the option to assess the situation for greater change from within. Once that happens, the abilities are recognized from the outside, as well- WIN/WIN forever.

                      • reply ruthschwartz ,

                        That is why I produced the short list of beliefs… there is so much fear. Transparency means vulnerability. But once vulnerability is shared, the fear evaporates. Help me bang this drum.

                        • reply ruthschwartz ,

                          Thank you so much for your comments, Ted.
                          It is amazing to me that salaries are still handled as a back room deal.

                          It is one thing to know what your peers make. It is another to know what your coworker makes. If I have a skilled job but I rely on less skilled people to be successful, knowing what we make can change our relationship to advocacy. And not just that.

                          In my experience, when employees are facing challenges they will often resort to asking for resources. But when they understand resources they often become more “resourceful.” Even when their thinking is “Don’t spend my profit share.” I think that is thoughtful. For employers to wonder why their employees only care to a certain point is simply ignorance.

                          Let’s get rid of buy-in forever. Weigh in, knowledge and transparency will beat persuasion and carrots and sticks…ANY day. The social age should be called the time to grow up age. XX

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