One of the biggest reasons for success in spite of people going wholly unnoticed is that there’s never any accountability in most businesses; at least not for those in power.
While people who provide a service like design, legal or engineering are often paid directly based on output, managers sidestep the output equation entirely.
Managers often get paid based on the output of the team as a whole, effectively incentivising managers to ensure the output of the team is linked to them; regardless of the truth.
Yet when the output of the team drops managers don’t feel the pinch. In fact, if the output of the team drops long term managers simply move to another team in order to preserve their pay grade.
We always talk about politicians lining their own pockets, but the same is true for the managers of most companies.
Whether it’s company expenses or taking extra holidays, minor infringements are often the signs of bigger problems.
The management classes often concentrate more on what they can take out of a company than what they can put in. Without accountability to link managers to not only their output but their effect on output, managers run rife.
Of course there will always need to be a bad manager; but this is less down to accountability as the collective creation of managerial scapegoats.
In a situation where a group of managers is performing poorly, rather than accept group responsibility, they will seek to blame one individual in order to protect their own earning potential.
You never see a good manager leave, simply because no matter how good a manager is, once they are out of the door they become the reason for recent poor performance regardless of the truth.
The only way to stop these minor issues becoming bigger ones is to come down hard on the small things so that the big ones never have time to develop.
You need to make your team and their management accountable from the start.
This doesn’t mean take a ways people’s liberties and right to a private life, everyone loves an employer that bends the rules, but there’s a difference between people with a genuine need for the rules to be broken and those that take advantage of the system for their own benefit.
After all, sometimes rules need to be broken in order to let new ideas flourish. For some reason management often take their position of authority for granted.
There seems to be an assumption amongst career managers that as you rise through the ranks your contribution to accountable output should drop; but the opposite is true.
Confusing the accountable output of a team you manage and the contribution to that accountable output is common. Put simply, just because you sit over a well performing team, doesn’t mean you’re the reason they are performing well.
Yet accountability doesn’t just come into play with mistakes. It comes with success too. The fact is that most people think they are owed a wage just to turn up to work.
This feeling of being owed a living is seen in both rich and poor alike.
In the media we demonise those receiving benefits, yet look up to the children of successful people who spend their parent’s money.
Make no mistake, whether you’re receiving money from the state or your parents, you are still receiving handouts. Until society stops celebrating the excess of inherited wealth it will never extinguish the desire for some at the other end of the wealth spectrum to live off the state.
Somewhere along the line in businesses where you don’t charge for labour by the hour we stopped valuing employees by their influence and output and started paying them based on what “other people get paid”.
The lack of a link to the money people make their employers (or alternatively save) is a chronic problem in business today and one that won’t be solved unless you link the company’s bottom line to the pay of each employee.
Without that link we cultivate the attitude that as an employee, if you cost the company money, then so what? After all, if the company loses money, they still get paid.
But as an owner your income is your business and the success of that business is linked to your income; simply giving employees a similar link is very beneficial.
The simplest way to do this is through a bonus, but in order to really hit home the fact that you can gain or lose a business money you need to make that bonus rise or fall based upon measures such as margin, profitability or costs.
Of course with minimum wages and the opportunity to go elsewhere for employment, there will always be a minimum you can pay an employee, but finding a happy medium to link their pay to your business success is a must.
Sometimes business owners get this equation wrong and make targets achievable, but with time and the right mix you can instill a constant religious drive in your employees to do the right thing for the business.
But be warned, managers will line their own pockets if given the chance. As such it’s best to leave remuneration programs to business owners, once you’ve figured out how to measure the effectiveness of your managers that is.
• Link your employees pay to the success they bring your business
• Manage your pay and bonuses yourself
• Ensure you keep abreast of how effective your managers are
• Managers will always find a common scapegoat
Read our next blog post “Good sales people are hard to find”.