In the book, Bock--Google's Senior Vice President of People Operations who previously was an executive at General Electric as well as management consultant at McKinsey & Company, start-ups, non-profits, and acting--provides a most interesting answer to the question, "How did Google figure out how to keep its top talent?"
The answer: To "pay unfairly."
In Bock's words:
At Google, we...have situations where two people doing the same work
can have a hundred times difference in their impact, and in their rewards.
For example, there have been situations where one person received a
stock award of $10,000, and another working in the same area received
$1,000,000. This isn't the norm, but the range of rewards at almost any
level can easily vary by 300% to 500%, and even then there is plenty of
room for outliers.
In fact, we have many cases where people at more "junior" levels make
far more than average performers at more "senior" levels. It's a natural
result of having greater impact, and a compensation system that
recognizes that impact.
In business terminology, Bock's strategy is called "value added assesment." That is, the more an employee adds value to an organization, the more that employee will be paid regardless of that employee's position in the organization's vertical or horizontal hierarchy.
While some might believe that a novel, if not heterodox payroll strategy, it's really not. Consider how professional athletes, team managers, and other workers associated with sports franchises are paid. Across the board, top performers are paid, in some instances, significantly more than other franchise employees simply because they add less value.
As an idea, "paying unfairly" works and there's lots of precedent for it.
But, Bock believes that it is more fair to implement this strategy. It's that adjective more--as in more fair--that caught The Motley Monk's eye.
Think of what Bock's strategy would mean if it was implemented by leaders of public school districts, presidents of the nation's colleges/universities, CEO's of for-profit manufacturing facilities, and public administrators across the nation in public service agencies, non-profits, and local, state, and federal government.
One thing it would mean for sure: "Death to the unions." No more step-wise salary scales and career ladders based upon seniority, but salary ranges and merit pay as well. All an organization's leadership needs to do is to assess each employee's "value added" and present the terms of the contract. Reward the high performers richly and the sluggards--who are impeding the high performers from performing at even higher levels--will be quick to respond.
Contrary to Frederick Herzberg's research--which indicates that salary is, for the most part, a "hygiene factor" and not a "motivator"--Bock wants organizational leaders to reward their high performers, paying them a whole lot more than their lesser performers. It will change the organization's culture. He writes:
It's hard work to have pay ranges where someone can make two or
even 10 times more than someone else. But it's much harder to watch
your highest-potential and best people walk out the door. It makes you
wonder which companies are really paying unfairly: the ones where the
best people make far more than average, or the ones where everyone
is paid the same.
That's music to The Motley Monk's ears! Could it possibly be that the economic liberals of the Silicon Valley stripe are listening to the free market, rewarding their employees accordingly, and leading their organizations like true economic conservatives?
Read Bock's book and the answer will be pretty clear.
Let the discussion begin...
To learn more about Laszlo Bock's book, click on the following link: