The third of Napoleon Hill’s 10 Major Causes of Failure in Leadership, is the Expectation To Be Paid for What They "Know" instead of What They Do with What They Know.
“The world does not pay for what people “know”. It pays them for what they do, or what they induce others to do.”
This is a familiar trap that many of us, including myself, find ourselves in from time to time. The ego can kick in and inflate our sense of self-worth or monetary value in three workplace areas: 1) when first hired, 2) during performance evaluations, 3) when applying for promotion.
The first is when a leader is hired. When offered a role with a new company, we come to the table with a sense of our value. This initial sense of value is both objective, based upon our salary history and the market for similar roles, and subjective, based on our emotional sense of self. We seek to take on a new role because we think our track record, as shown on our resume, qualifies us. This, and a good interviewing technique bring us to the point of offer. The employer will, or at least should, have a pay range for each position in the company and will come to the table with an offer that’s a match for what you bring to the table and what they can afford to pay. This is where the dance begins.
Good employers, the ones that you want to work with, will not present a low-ball offer. But, of course, this does happen frequently. Having been on both sides of the table, this is not the way to start a new relationship. Seeking a win-lose arrangement right out of the gate is a recipe for failure. Steer clear and seek win-win instead. Don’t play all of your cards at once but hold some back so you are seen as flexible and seeking the best interests of your new employee. And, hey, depending upon the labour market and the particular situation, you do have to overpay sometimes. Getting the right person in place costs money upfront but will save you money in the long run. Don’t cheap out or lessen the candidate’s sense of value, and potentially lose them to a competitor.
This initial negotiation is like chess. The candidate overstates their sense of worth based upon what they know and have done so far in their career, and the employer tries to understate the candidate’s value because the candidate has not, quite rightly, proven anything as of yet. Here’s a novel idea, why don’t you agree on an initial compensation package that is fair to both and write in an escalator with clear, measurable objectives. If these objectives are achieved in the prescribed period of time, the candidate will receive the compensation that matches their sense of monetary value and satisfies your need to pay your leaders for what they actually get done!
The second area, where leaders in your company may inflate their sense of value to the company, can occur during the performance evaluation process. This too can be a dance between your leaders and you as an owner. Cocky leaders, with an unrealistic sense of their effectiveness, will come to the table having self-evaluated much higher than you have evaluated them. This should be a warning sign to you. The leaders that you want in your company will have a very reasonable sense of their performance level and will clearly identify areas of improvement. The ‘what I know not what I have done’ leaders will be the exact opposite. This should make it very clear to you that this leader has a core value misalignment. They think that they are better than they are. They take credit for the accomplishments of others and they want to see compensation increases far beyond what they deserve. Time to get this person off the bus!
In an attempt to mitigate the likelihood of this happening, try moving to quarterly or even bi-annual performance evaluations. Always end the evaluation by clearly identifying areas of improvement and S.M.A.R.T. goals on which you will follow up during your next coaching and development review. It's also wise to separate discussions around change in compensation from discussions of performance.
Finally, leaders in your organization can bring their overstated sense of value to the table when applying for, or feeling entitled to, promotions. Keen leaders and managers should always state their desire to grow, take on higher levels of responsibility and contribute to the greater good of the company at a higher level. This is healthy. What is not healthy is the leader who feels they are due a promotion based upon their ability to talk the talk.
Promotions and new opportunities must be provided to leaders who put in the extra work, who have a track record of getting shit done, and who are fully aligned with the values and core focus of the company, always acting in its best interests, not their own.
Earlier this week, I caught myself mid-mental gymnastics ascribing value to my services based on what I know and not on what I’ve done. A long-standing and highly valued client of mine and I were working on a contract renewal for this year. He is shrewd but fair— leaning a little more on the shrewd side at times. I am easy going and fair-minded, but not without a bit of ego at times.
The contract we were negotiating was based on a monthly fee. It covers a variety of responsibilities spread throughout five of his companies. It is a great gig and I am truly grateful for the ongoing opportunity. Given that it is steady work, I allow myself to be paid below contractor market value, and I am mostly good with that. Earlier in the week, I started ruminating on this. My client looks at my value to his businesses based upon the amount of my time that I commit to working with them, around 80% of my work time, so he bases pay on 80% of a full-time commit.
My ego kicked in, “Hey, wait. I have more than 32 years of industry experience and without me, you would not be where you are today.” Fortunately, because I have done the work and walk the walk, I caught myself and shook that off. It is not about what I know; it is about what I do for my client and the results that I bring. Without those results, my time and knowledge are worth nothing.
What is this ego thing anyway but a mask for our fears and insecurities? Leaders who rely upon what they know tend to suck the air out of the room, take credit, assign blame and do not create loyal followers committed to the greater good of the company. In short, these leaders create companies that are rarely smart, healthy or successful. Ultimately, they have to go before they destroy what good is left.
So, Mr. Hill, it seems as if you are shooting three for three so far. It matters not what I know or pretend to know, not what school that I went to, what degrees that I have, or what my resume looks like. At the end of the day, results talk and bullshit walks. It is all about what we get done, what results we bring and how our team buys into what we are selling. People can spot a phony a mile away.
Until next time!