“… and gentlemen, these results are not just extraordinary because we - in this department - have experienced unprecedented growth in our corporation, but we have also achieved these results with a quite small team. The revenue per person for each of us here is unique in BestCompanyEver”
- said Lance while celebrating the results of an - indeed - successful backlog reduction program.
Generating more money != higher salary
He would have probably continued his speech if someone hadn’t interrupted him with that well-known question.
But do I see another dime?
That clearly stopped him. His boss - whose further and well-merited promotion was announced the very same day a few hours earlier - took on and he said that’s indeed a challenge to solve.
A real challenge, because in a grown-up corporation, even if some of the departments work in a start-up mode, it’s really difficult to value some teams’ contributions differently than others’, not just because of the internal HR processes, but also because then everyone would want to move to better-paid areas within the same enterprise.
The above-mentioned interruption didn’t even aim to point out the need for changing how people are rewarded. The big boss was right, it’s probably impossible.
No, there was another reason behind it. Emphasizing the importance of the revenue we - business analysts, designers, developers, line managers, testers, etc. - always feels bizarre in my opinion if it’s meant to motivate the teams.
Before sharing why let me tell you when it’s OK or even good. If it’s a small company where bringing in (more) revenue is still a matter of life or death of the company. If you are in a bigger enterprise with financial difficulties these are valid points to make. If after unprofitable quarters you finally nail it.
But within a corporation where there are thousands of people working and every quarter the financial statement is better than the previous one was, this will not motivate people. Reminding the plebs that their work keeps the company moving is okay, but don’t try to amaze and inspire with it.
We all know that in most publicly traded corporations the first people to satisfy are the shareholders. The more money the company makes, the higher the share prices and dividends go in the long run. I know, I’m not going to be nominated for the Nobel Memorial Prize in Economic Sciences…
But do the small ants who make the company thrive get another dime once the shareholders are happy? Barely, that’s the truth according to my experience. It is not at all represented in their base salaries, sometimes they might receive a slightly bigger bonus, but even that is unlikely.
The little ants are the last ones who get paid when things go well.
At the same time, they are the first ones when it comes to cost reductions. Lowering bonuses, cutting conference budgets, cancelling employee-family events, removing team events or even breakfasts will come as first just to reach some targeted quarterly numbers.
But as employees are ~mature~ adults, there will always be an explanation. Oh, sorry. No. Not even that. Most probably you will just realize that the event is removed from your calendar until further notice. Oops. There will be no further notice ever. If you bring it up, oh you know, what you have to listen to…
Usually, whatever is taken away is taken for good, even in case the team brings so huge revenues per capita.
Loss aversion vs risk aversion
Now you might argue that increasing revenue is in your interest because upper management might take away fewer benefits.
But is it motivating to work so that you don’t lose something?
If someone tells you to do something, otherwise you lose 10 quids, you will feel much more motivated compared to if you were promised 10 extra bucks for doing the same thing.
“Humans may be hardwired to be loss averse due to asymmetric evolutionary pressure on losses and gains: for an organism operating close to the edge of survival, the loss of a day’s food could cause death, whereas the gain of an extra day’s food would not cause an extra day of life (unless the food could be easily and effectively stored).”
But will this loss aversion really motivate a developer?
Maybe the answer is yes. But, as a manager, you have to explain what this extra revenue helps to keep or get.
Explain the contribution you bring
Humans, especially men are bad at reading minds. If I only hear the increased revenue I generated, I won’t feel motivated or even proud by the extra money our shareholders will get.
Please explain better. Tell me that I will still enjoy Fruity Fridays or I will get a 78.68 Euros bigger yearly bonus and I might cheer with you!
But let’s look at things from a different angle. “Our workers are not motivated by their salaries, but by the products they can work on, by their belonging to this family and by the new fancy technologies they can use here” - those, by the way, will be outdated 2 days before the day after tomorrow. Oh, we all heard this…
Fine, let’s assume that I accept that I’m not primarily motivated by my salary. But if I’m not supposed to be sparked up by my salary why am I supposed to applaud for what the shareholders make?
In reality, both the salary and the company’s revenues are important. For most, it’s essential to make a good living and the company revenues are critical in order to get paid. But honestly, the ability to pay the wages is probably not something you should motivate people with.
If you emphasize the quality of our products, the value we bring to our customers, the lives we help to save, the dreams we help to achieve, you’re a better communicator and motivator.
As an employee, I might care more about those things. Maybe I can directly relate my work to little Liza avoiding an accident due to our emergency brake system, or hiker Harry making it all the way down to Tierra Fuego. They might make me proud of my work. Mister Teller checking the increasing share prices and dividends will not motivate me at all, he will not make me happy or proud at all - and I’m really far from being a socialist.
On the contrary, hearing about the increasing incomes that never reach me, it makes me wonder what the hell I’m doing here. Should I go to a startup where I’m financially incentivized to make the product thrive? Should I convert to a type of consultant who is not paid by the hour but by the delivered results or just simply create my own business?
These are all the questions that are popping into my mind when I see managers speaking about ever-increasing revenues (per capita!) with their shining eyes. Even if I like to work for them, for the team, for the product.
I would heartily advise managers to follow some basic rules of public speaking and choose their words based on the audience. Motivate stakeholders with business numbers and individual contributors with the value we provide to the customers, with the quality of our work, with the decreasing pressure and increasing confidence of our business colleagues. With the things that actually have a direct impact on our life.