Pay Unfairly is
chapter 10 of Laszlo Bock’s Work Rules! Ever provocative this book shares the
thinking behind Google’s people strategy. What is remarkable is that it is 24
times harder to get a job at Google than to get a place at Harvard University.
And three million people a year apply for jobs there.
Bock is Google’s
senior vice president of people operations. The most important rule is to hire
great people and people who are better at your job than you are. He devotes two
chapters to this subject.
Later on we get to
the Pay Unfairly chapter where Bock offers four pieces of advice:
-
Swallow hard and pay unfairly. Have wide
variations in pay the reflect the power law distribution of performance
-
Celebrate accomplishment not
compensation
-
Make it easy to spread the love
-
Reward thoughtful failure.
Bock is a very
smart man and knows that many of his readers will simply not believe that rules
that work for hoodie wearing millionaire software engineers can work in their
businesses. But he is adamant that they will work for you too.
Part of the reason
to believe him is his personal backstory where his family fled persecution in
Romania to find success in America.
“I realise that
Google is in a privileged position. I remember working for $3.35 an hour and
how liberating it felt when I found a job paying $4.25 an hour. And when I got
a salaried job that paid $34,000 a year I felt like I’d never have a financial
worry again. After my first paycheck I went out to dinner and for the first
time felt flush enough to order an appetizer and a drink with my meal.”
And part is the
evidence. For a retail example, Costco pays 55% higher wages than Sam’s Club
but each employee generates 88% more profit per hour.
At Google, Bock
found that the best people are better than you think and worth more than you
pay them. He advocates that people should be paid unequally because top
performers deliver much, much more than average performers. The top 1% of
workers generate 10% of productivity, he believes. The top 5% deliver 26% of
output.
This does not
apply everywhere. In organisations that rely on manual labour, have limited
technology and place strict standards for both minimum and maximum production
there is little opportunity for exceptional achievement.
Which type of
workplace do you want to have? Getting the compensation right is hard work. But
it is better to do that than to lose your best people, Bock argues.
The second rule is
to offer experiences as the reward for incentive schemes rather than cash. Even
though Google people said that cash would make them happier, the results were
that team trips and blowout team dinners were far more rewarding. “The joy of
money is fleeting but memories last forever.”
The third rule is
to make it easy for employees to praise other employees. Bock has a “Wall of
Happy” outside his office where praise is displayed. Something easy to do in
your staff room.
Finally, he says
you should sometimes reward people when they fail. It is important that they
respond to failure rather than just giving up.
Work Rules! is a remarkable book. Read it to be
inspired. There is plenty that you can do even if you don’t employ a band of
millionaires.
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