I’ll add to this post more as I study about the concepts and try and put it into place in my dealings.

I am hoping it will change your life?

ACS, was on the brink of losing their biggest customers, because they couldn’t complete work on time.

This account was bringing in over $10 million dollars a year. Needless to say, losing this customer would devastate the company.

I was assigned to help fix the late problem.

Unbeknownst to me over 15 people had unsuccessfully worked on the problem for several months with out a breakthrough.

I was asked to go fix the problem in the Philadelphia office. At first I thought we need to hire more people. But I remembered a job I had a few years earlier being a rock artist, basically I got paid to glue rocks together. I got paid 1 cent for every two rocks I glued together, that’s right $.01, one penny. The people working there were averaging 400 to 500 per hour. $4.00 to $5.00 an hour. I was a bit hungrier. Within a couple of weeks I was gluing 800 an hour, and by 3 months I was averaging closer to 2000 an hour, $20 an hour in 1988 as a recently graduated high school student. I was living large.

I theorized if I tied pay to performance some people would catch fire. I hoped this would fix the problem.

I spent a couple of weeks coming up with a plan and working out details.

Unfortunately was naive and unexperienced. I did not know how to explain the benefits properly to the people in my department. I announced to the 25 people working with me we were going to start paying everyone differently. Most people were upset, I had three people quit the first night. My boss even told me if this fails you are taking the fall. Now failure was not an option for me. I pushed forward.
Within a month we were making our deadlines, within two months we were beating the deadline by two hours.

Amazingly, while half of the staff had quit, we were able to beat the deadline with the 12 remaining people. The average wage had gone from $8 an hour to $12. So the people were happier

The month before I implemented my plan the company had paid $32,000 in labor costs, my salary included. When I got the financials for the second month, with my new pay for performance process in place, the labor costs were $16,000, and we had done 10% more work than in the month before the new plan.

There were 14 other office doing the same work. Of course my plan was implemented in all of those offices. The net effect for the company was over $1,000,000 more profit every year for the company.

Yea I got a raise.

At first I thought it was a fluke, I was wrong. That happened in 1997, I’ve been involved with several pay for performance implementations, and studied many, many other implementations of pay for performance from as far back as 1870. Most with very similar results. Companies like Toyota, Walmart and Necor steele use pay for performance strategies to beat the competition, pay better, treat their employees respectably and deliver extraordinary value to the customer.

At first I thought these things were pretty obvious, they are to me. However, I started realizing there were lots managers, over 15 in the story above, in the company with the same opportunity to see the solution, but they didn’t. I have also spoken with hundreds of managers in other companies about these concepts. Most understand what I am saying, some have tried unsuccessfully to implement their own pay for performance system, some have partially implemented systems, and many say they can but still haven’t.

check out what it costs to put one of these in place in your situation. Pricing

One time one of my friends came to visit and saw how I was hooked up and made fun of me saying “You can get by just fine with one” and proceeded to give me advice and show me how he could use one really effectively.

It was funny a year later I went to visit him and he had two. He too realized how much better his life was with two.

Several years ago I started using three. Now I am up to 4.

Heres a picture of my hookup.

Doing most of my work on the web I have found it to be essential to have at least two. However anytime I can get a setup with more it just makes it easier to keep a bunch of things going a once. I also have learned to hook up multiple computers and use only one keyboard and mouse. Something I am also starting to find more and more essential.

Go out a get you a second monitor. I often tell people it’s a drug I can’t kick.

Good luck and enjoy your new found productivity and freedom.

Check out these resources.
Synergy the way to share a keyboard and mouse between computers
Screen recycler
And of course wikipedia if you want the history

What is that one simple thing?

It’s really just one question. “What do you want?”

Then the manager, owner, fool in charge ask themselves what do I want? To stop being the idiot and the fool you realize; I can trade what I want for what they want. Reward program, compensation plan or pay scale it’s all the same. I was making $9 an hour, cleaning a butchers shop, as a sophomore in high school,1985 . I made $20 an hour gluing rocks together my first year in college, 1988. The second year after earning my associates degree I was working 5 hours a day getting paid over $75,000 a year teaching people how to count paper, 1996. Amazingly a few were making $40 an hour counting that paper, the average was $18.

I’ve heard it some where “ask and you shall receive.”

This is a comment in reference to the Tech Republic Article “Do Formalized Reward Programs Really Work?”

I am the happy, fat and lazy beggar, that sits and wait for the next handout.

I read an article today that reminded me about this point. Open Forum from American Express

It talked about how the industrial revolution in may ways killed creativity. The creativity that men possessed before. However it seems that creativity is returning as a must to survival.

I realize I need to get up off my butt and start hunting again. I am starting to sound like the “who moved my cheese” book I read a couple of years ago.

What are you doing to be more creative? What are you doing to get up off your chair?

Sadly it’s the companies that fear putting a variable pay system, also know as pay for performance in place. Variable pay is where companies pay you more if you work hard and produce more. Many sales professionals are paid this way. All doctors and dentists are paid this way. They get paid by what they do and if they get good they are paid more.

I have converted many processes to pay for performance system. Every time I have done this the average pay increased by 50%. Some individual workers, who figured out how to be better and faster increased they pay by up to 500%.

In one office raised the wages in a three month period from $8 an hour to $12 an hour. The highest paid person was making over $20 an hour.

In another office I took the average wage from $12 an hour to $18 an hour with the highest paid making over $40 an hour.

Every day I am saddened by the fear that keeps America’s working class continually poor and unproductive.

It truly is tragic.

Well more specifically Management Ego. You know where the manager says “Do it my way!” and thinks, “Because they made me the Manager, and pay me more than you, I am right.”

A that point I have to get out the shovel because I have to dig my way out of a load of crap.

Management Ego Gets in the way of innovation.

Increasing Innovation requires destroying management ego;

Get rid of the ego, listen to the people doing the work, give them the tools they need to succeed, then get out of the way! and watch the money pile up.

If your looking to help build A pile of money I can help.

If your looking for something else. Please don’t waste my time.

Everyone works to survive first. The problem is people can’t really get started on other motivations until necessities are met.

Once the basic necessities are met, then motivation will change. Do a bit of research into Maslows hierachy of needs. Another interesting conversation about motivation can be found in Daniel Pink’s book “Drive”

How effectively and directly pay affects performance will depend on the persons own needs/wants.

There are many situations where pay is a great motivator towards performance.

I worked a piece rate job just after graduating from Highschool in 1988. I was able to make up to $20.00 an hour where my peers doing the same work were making $4 to $5 dollars an hour.

Pay was a great motivator for me. I was definitely hungrier than the $4 and $5 dollar an hour folks.

I have been studying the effects of pay on performance for 15 years.

Do I care? A bunch of wealthy guys, the players, and a small group of really really rich guys, the owners. Bickering about money. Who cares, really.

If I was doing the negotiations for either side I would setup a “Pay for Performance” plan. The owners know how much each seat in each Arena cost. They know how much they can make if a seat is filled. They know how much revenue each viewer will bring.

tying those things as an incentive to compensation should work as an incentive to get them to perform.

The problem that Pay per Performance eliminates the ego. People like their egos, because their egos are what make them feel important. If you take their ego’s out of the equations they don’t have anything to feel important about.

Former First Lady Nancy Reagan recounts a story about genius.  “Once, at the University of California, a student got up to say that it was impossible for people of Ronald Reagan’s generation to understand the next generation of young people.  ‘You grew up in a different world,’ the student said.  ‘Today we have television, jet planes, space travel, nuclear energy, computers…’

“When the student paused for breath, Ronnie said:  ‘You’re right.  We didn’t have those things when we were young.  We invented them.

How will you be remembered