Wages and Expectations

Here's an interesting article about the relationship between pay and performance, in the mind and motivations of an employee. July 23, 2014

Question (WOODWEB Member) :
We are a two-three man shop doing both frame and euro cabinets. I have a main employee thatís been with me for years. He's paid $19/hour with six paid holidays, one week vacation, and $150 towards health insurance per month which equals a decent end of the year bonus. He machines, assembles, and does some installation. He can work on his own with follow up supervision and can set up most machines.

He works very steady at his eight hours but is ready to leave immediately even if something just needs a little tweak or if a mistake could be taken care of (only if I suggest and ask for it). I feel he hasn't bought into the company and when something is not really what he knows is ok he will leave it, of which then has to be redone anyway. Mistakes seem to come in waves for no reason, but he never offers to help out with them (itís just part of business he thinks). Is he being paid adequately for what he's doing or is he under paid? He is asking for a raise and I'd like to retain him since we all know that employees are hard to come by. How do I help him help me?

Forum Responses
(Business and Management Forum)
From contributor J:
Itís pretty easy to answer. Do you want to replace him, even at 25% more than he is asking for?

From contributor P:
You should discuss what changes in his behavior would be required to make him worth more money, and if he makes those changes, give him more money. You will have to figure out the exact amounts. Be specific about amounts and time table, and keep records to prove that the error rate is changing (or not changing.) It's time to pick up your own game as a boss - you need to set expectations and enforce them, and also be willing to reward good performance. If you think this guy is overpaid, fire him and hire someone else. If you balk from doing that, it's probably because you know you are getting what you pay for. Also: if we asked him for his side of the story, what would he tell us?

From contributor M:
I had a similar employee a few years back when we were bigger. Actually, probably more capable than what you describe and very hard working, but he would suddenly give up when something went wrong. Since then I've gone through a few more employees who haven't worked out due to lack of skill. So my advice is to work with what you've got, because he has the talent and experience. Try to keep him working in his comfort and productivity zone. Also, I like Contributor P's idea of setting expectations and handing out bonus money based on performance. Pricing is too varied based on location, your particular company, etc. to know if $19 is an appropriate wage. As a ballpark number, it sounds about right.

From contributor P:
Just to be clear, I'm not necessarily talking about bonuses. Workers plan their life around their regular wage, so an intermittent and opaque set of bonuses can be very frustrating for them. I can't comment on whether $19/hour is good or bad for your area, but I do think that you are being a little skimpy with the vacation time for someone who has been with you eight years but that's just my opinion. You really only need to do a little better than your workersí next best choice. Your levels of profitability factor into this too. You need to be able to afford whatever you plan to give out, and if you can't you should be able to demonstrate, with numbers, why. I have had great success with sharing my financial situation with my workers, right down to how much money I make. If you don't give them the true facts they will make something up, and chances are good that they will assume that you are making a whole lot more money than you really are. If you don't understand your numbers, that's the first place to start.

From Contributor W:
You say he's been with you for years. That could mean anything but if he's been with you five years he deserves a minimum three weeks of vacation. In my opinion he's seriously underpaid and you are definitely getting what you pay for. Ask yourself this: Do you want to keep him? Do you want some changes in his work ethic? Then ask yourself, when you first hired him did he go the extra mile and then tail off, or was he always reticent to deal with the extra crap? If he used to be more energetic then with a raise and more vacation you can probably drag that out of him again. If not then it is what it is. Do you pay overtime? Does he have a distinct job description? On the other hand, if he's been with you for years and hasn't left even under these conditions then he probably has no alternatives and you can continue treating him as you have been.

From contributor L:
Hard to say what's fair. There are big variations in shelter and transportation costs across the country, not so much in feed. If you want something more from him in terms of making sure the job is done right, including on time, you need to discuss those points along with whatever good points he has. I try to make it clear to employees that their pay is connected to our output. Some will never make the connection. I like Contributor P's system. It's rare that the average employee understands what it takes to run a business. I could fill several books with lack of understanding.

From contributor R:
One of the more difficult things to learn as a small employer is that the employee will never have the same passion as you do for the business. Staying over 30 minutes makes perfect sense to you, but to the employee it may never. You don't mention if he has kids. Maybe he has to pick them up on time from the daycare, or pay more for the day. If he has mistakes in batches, I'd bet home life is the answer. Wife, kids, mother in law, you name it. In my area, he would also be having financial trouble types of fights with his wife. I never expected any of my employees to buy into the company, and especially at that pay scale. He's not on a career path with your company at that rate, it's a job that he has. If he makes money for you, keep him, and give him a raise. You expect him to pay for his mistakes? That has come up before and I think mentioned that is illegal in some states. Does he still get a big bonus if you make a mistake on the bid? It's not easy having employees, but trusting them to do the best for you also comes from his respect for you.

From contributor B:
I think the wage seems about right, though it is hard to factor the cost of living in different parts of the country. I have a six man shop and I try to base my wages on productivity and commitment to the success of my business. I have found that even green employees can develop very quickly if they have a good work ethic and good hands. At times, these workers can be underpaid as their development outpaces wage increases and as an employer I need to make sure they are happy in their environment and that they feel they are being rewarded and their work appreciated.

Conversely, there are occasionally workers who, though reliable, lack the good hands. These employees can be difficult because of the inevitable competition between workers. If you keep the mediocre workers and increase their compensation, simply for time with the company and possibly because they are asking for a raise, it affects everyone. The good employees will be mad because they have to deal with weak members of the team who are not pulling their weight. Not a good situation. Over time, this has tended to balance out over time for me. If work slows down, it's usually the least productive employee that will be let go. When work is booming it gives you a chance to add new employees who can occasionally turn out to be stars. Take the long-term view, if you need him because you have the work, keep him and hire someone else when work increases. If the new guy works out and is more productive, you have your answer. Of course, if his output doesn't cover his salary, you also have your answer.

From contributor D:
You have an attitude issue that may or may not be related to pay. A conversation to find out what the real issue is and more importantly what your expectations are is in order. An increase in pay alone will not usually solve the problem for any period of time.

From contributor V:
I agree. Pay is only 1% of the issues that could be bothering someone at any one time.

From contributor K:
I think this is a leadership issue. Someone being paid by the hour is focused on the hour (when they arrive and when they leave). If he wants to leave when he expects to leave, I don't see how you can hold that against him. Expecting him to stay without being asked is expecting the wrong thing from him. What you can expect from him (and this is where the leadership comes in), is for him to perform as expected. The simple fact of the matter for the mistakes coming in runs is that is what you accept. Mistakes absolutely happen, but if you are not going to change the process, or educate your staff on how mistakes hurt the company, or get to the root cause (could be time for an employee change), don't expect an hourly employee to place any priority on it.

You are there to build and run a business and they are there to collect a paycheck. The ones who step up and go beyond that paradigm are the ones you target for leadership within your company. But is your responsibility to set the pace and expectations in your company. If he is looking for a raise, now is the time to raise and set the expectations and address the issue. Tell him the straight facts. It's hard to afford or consider raises when there is so much money lost through mistakes. I would suggest a 60-day time-frame to identify the root cause of the mistakes, implement the changes and set the new expectations for a no mistakes. During this time, tell this employee his work will be evaluated and at the end of the 60-day period you will make a decision regarding the raise.

Now to make an advocate in your company, if you decide to give him the raise, I would take him and his wife out to dinner, and talk up how much he has improved to his wife and announce that you are giving him a raise, then pull out a check for the difference over the past 60-days between his old pay and new pay and hand it to him in front of his wife and explain that you hope that his growth was not a one-time thing and that his consistency will remain at the level that earned him the raise so that raises can continue in the future.

What you have done at that point is set aside a special time for him and publicly recognize him to the people in his life that are important to him and create an advocate at home as well and backed up your word that fewer mistakes equal the ability to give raises. Wives/girlfriends love to see their husband/boyfriend do well and have a habit of holding their feet to the fire. If he is not worthy of the raise, be ready with why and give him a probation period to get up to pay or replace him (don't wait until that probation period ends to get someone in the wings, think ahead).