6 ms·

"Pay For Performance" Doesn't Work For Generation Y

10 points by bond 15y ago

sp332 15y ago
If you are making what the average worker makes ($47,569.60 per year, a 1 percent difference in your pay is... about $12.81 net per pay period.... That's about $6.40 per week. And according to our research, that's what you'd pay for a six-pack of beer... You can't really believe that this nominal differentiation in pay is motivational and drives performance results. It doesn't. So, "Gen-Y" doesn't realize that $500/year is worth something, or that not buying a 6-pack of beer every week is worth $500/year. In other words, they don't have a good appreciation for how much money is worth.
- Hyena 15y ago
  Pay for performance only works if the marginal value of pay is greater than the marginal cost of performance. A performance bonus of $6.40 per week is less than a third of that pay at 40 hours, so why would someone work more than an additional 20-40 minutes (depending on time usually spent at work) to obtain it? Evidence is that the value of their time is around $20 an hour, after all.
  - deleted 15y ago
    [deleted]
wccrawford 15y ago
The problem is not 'pay for performance'. In fact, that's not what they're doing! The problem is that no matter how good you are, the most you can get is 6% more than what you're currently making. Some people improve far more than that in a year, and provide far more value to the company than that. In my dad's time, he quit jobs that refused to pay him what he was worth. If that meant a 10% raise, when the cutoff was 5%, he quit. He didn't argue with them. He just told them how it was and that he would leave unless they paid him what he was worth. Guess what I did this year? Yup, same thing. When I started with the company, they were really, really good about paying me what I was worth. But after a few years, management changed a lot and they started the 'it's a recession and we're capping raises at 5%' stuff. I knew I was worth a lot more, and complained. They refused to do anything, and gave a vague promise about looking at the situation in a year. I quit and went elsewhere to get what I'm worth. Instant 40% raise. I started there as a junior dev, and actually suffered with that situation for 2 years before I demanded compensation, and that's how I got 40% out of whack. So no, it's not about 1% being beer-money each week. It's about getting paid what you're worth. Oh, and btw, that's not $6.40 per week for a year. That's $6.40 per week for the rest of your life. Future jobs will be based on your current pay, and if you let them take it from you now, someone will be taking it from you later, too. Unless you demand it.
- pasbesoin 15y ago
  Your future is based on your status (pay being a part of that, but not all). Not only do you get behind, pay-wise, you can also end up being pigeon-holed as a... "grunt", for lack of a better word. Users/abusers prey on the weak, and once you demonstrate willingness to take such behavior, they'll keep returning for more. Look at it in the context of what is, these days, seen as a corporation's main mission: To maximize returns for owners. And in today's management environment, returns are measured across a quite short timespan (that often does not accomodate the timeframe required to foster employee growth and development). If they demonstrate the ability to get your services for less, they will continue to try to do so. I've had exactly one boss who was different. He brought me in, internally, from an underpaid, overburdend position (with a classic and widely acknowledged "user/abuser"), and he pushed for and gained 10% plus increases -- multiple, within a year -- for me in spite of a rather draconian pay freeze. He did this according to the original schedule he promised, and even surprised me with some additional increases I had not expected at those specific times. Concurrently, my "status" in the company went from... "line worker" to multi-divisional talent, directly consulting (outside of my original, direct responsibilities) with the senior management of two divisions responsible for about $1 billion in aggregate revenue. I worked my ass off in that position. And, senior management hijinks and HR BS aside, I enjoyed it. Working with this manager was a pleasure, because he would really challenge what you were doing, but once you demonstrated that it was correct, he'd simply trust you and let you get on with it -- also, despite being a manager, pitching in directly to confirm and cross-check results, supportively rather than suspiciously. My point is that, in the end -- and the sooner the better -- you can basically ignore everything that management is saying and simply look at their actions. If they treat you poorly, expect more of the same. It's up to you to treat yourself better, because they sure aren't going to do it. Secondly, good management does exist. Keep looking, or, as they say, "become the change you seek" (start your own business).
tomjen3 15y ago
It does. You just have to start your own company to prove (and get) what you are really worth.

10 points by bond 15y ago

sp332 15y ago

If you are making what the average worker makes ($47,569.60 per year, a 1 percent difference in your pay is... about $12.81 net per pay period.... That's about $6.40 per week. And according to our research, that's what you'd pay for a six-pack of beer... You can't really believe that this nominal differentiation in pay is motivational and drives performance results. It doesn't. So, "Gen-Y" doesn't realize that $500/year is worth something, or that not buying a 6-pack of beer every week is worth $500/year. In other words, they don't have a good appreciation for how much money is worth.

Hyena 15y ago
Pay for performance only works if the marginal value of pay is greater than the marginal cost of performance. A performance bonus of $6.40 per week is less than a third of that pay at 40 hours, so why would someone work more than an additional 20-40 minutes (depending on time usually spent at work) to obtain it? Evidence is that the value of their time is around $20 an hour, after all.
- deleted 15y ago
  [deleted]

wccrawford 15y ago

The problem is not 'pay for performance'. In fact, that's not what they're doing! The problem is that no matter how good you are, the most you can get is 6% more than what you're currently making. Some people improve far more than that in a year, and provide far more value to the company than that. In my dad's time, he quit jobs that refused to pay him what he was worth. If that meant a 10% raise, when the cutoff was 5%, he quit. He didn't argue with them. He just told them how it was and that he would leave unless they paid him what he was worth. Guess what I did this year? Yup, same thing. When I started with the company, they were really, really good about paying me what I was worth. But after a few years, management changed a lot and they started the 'it's a recession and we're capping raises at 5%' stuff. I knew I was worth a lot more, and complained. They refused to do anything, and gave a vague promise about looking at the situation in a year. I quit and went elsewhere to get what I'm worth. Instant 40% raise. I started there as a junior dev, and actually suffered with that situation for 2 years before I demanded compensation, and that's how I got 40% out of whack. So no, it's not about 1% being beer-money each week. It's about getting paid what you're worth. Oh, and btw, that's not $6.40 per week for a year. That's $6.40 per week for the rest of your life. Future jobs will be based on your current pay, and if you let them take it from you now, someone will be taking it from you later, too. Unless you demand it.

pasbesoin 15y ago
Your future is based on your status (pay being a part of that, but not all). Not only do you get behind, pay-wise, you can also end up being pigeon-holed as a... "grunt", for lack of a better word. Users/abusers prey on the weak, and once you demonstrate willingness to take such behavior, they'll keep returning for more. Look at it in the context of what is, these days, seen as a corporation's main mission: To maximize returns for owners. And in today's management environment, returns are measured across a quite short timespan (that often does not accomodate the timeframe required to foster employee growth and development). If they demonstrate the ability to get your services for less, they will continue to try to do so. I've had exactly one boss who was different. He brought me in, internally, from an underpaid, overburdend position (with a classic and widely acknowledged "user/abuser"), and he pushed for and gained 10% plus increases -- multiple, within a year -- for me in spite of a rather draconian pay freeze. He did this according to the original schedule he promised, and even surprised me with some additional increases I had not expected at those specific times. Concurrently, my "status" in the company went from... "line worker" to multi-divisional talent, directly consulting (outside of my original, direct responsibilities) with the senior management of two divisions responsible for about $1 billion in aggregate revenue. I worked my ass off in that position. And, senior management hijinks and HR BS aside, I enjoyed it. Working with this manager was a pleasure, because he would really challenge what you were doing, but once you demonstrated that it was correct, he'd simply trust you and let you get on with it -- also, despite being a manager, pitching in directly to confirm and cross-check results, supportively rather than suspiciously. My point is that, in the end -- and the sooner the better -- you can basically ignore everything that management is saying and simply look at their actions. If they treat you poorly, expect more of the same. It's up to you to treat yourself better, because they sure aren't going to do it. Secondly, good management does exist. Keep looking, or, as they say, "become the change you seek" (start your own business).

tomjen3 15y ago

It does. You just have to start your own company to prove (and get) what you are really worth.