Purpose Can Be Powerful, But It Won’t Replace Pay
I hope I’ve done a reasonable job of making a case for why it ain’t (just) about the pay and how important it is for all of us to be a part of something that matters. A strong purpose is absolutely critical; for our organizations, for us as leaders, and for each member of our teams! And when purpose is firmly in place, businesses achieve better results. But don’t take my word for it, consider the statistics Tracy Brower shared in her Forbes.com article called “The Power of Purpose and Why It Matters Now”:
Purpose is also powerful for companies. A study published by Harvard Business Review found when companies had a clearly articulated purpose which was widely understood in the organization they had better growth as compared with companies which hadn’t developed or leveraged their purpose. Specifically, 52% of purpose-driven companies experienced over 10% growth compared with 42% of non-purpose-driven companies. Purpose-driven companies benefitted from greater global expansion (66% compared with 48%), more product launches (56% compared with 33%) and success in major transformation efforts (52% compared with 16%).
While I’ve intuitively believed for a long time that a strong purpose can make a tremendous financial impact on an organization, these numbers provide me with a bit of confirmation for my gut-feeling. As great as this can be for any of our companies, I think it’s worth mentioning that the benefits of that purpose cannot stop in a corporate profit and loss statement. A purpose can indeed be powerful but it won’t replace pay - and it shouldn’t!
 Think back to the internet trolls that were chirping at one of the shorts I posted to our YouTube channel a while back… I can’t say that I’d be very excited about giving a company all I had in me, indefinitely, knowing how much profitability I was responsible for but never seeing any of that make a difference on my paycheck! If I were forced to place a bet, my money would be against those trolls having much do with anyone being profitable. I can’t point to anyone using their keyboard to whine about how the entire world has done them wrong being all that engaged in achieving any kind of purpose. That said, we would do well to make sure we’re providing the best we possibly can for our team members who are actively engaged in helping achieve a strong purpose. While they likely get a fair amount of fulfillment out of what they do, that fulfillment - or even the strongest purpose - won’t be what feeds their families.
 When an organization experiences the types of growth referenced in that Forbes article, doesn’t it just make sense to reward the folks who contributed to it? Taking care of our great team members is always less expensive than losing them to someone else who will, but I won’t hash out the cost of poor employee retention or the cost of constant recruiting here since I covered that in very specific detail through two chapters of What’s KILLING Your Profitability? (It ALL Boils Down to Leadership!) What I will do is emphasize that tying fair (or even best-in-class) wages to working toward a definite purpose leads to profitability, and that creates an even greater opportunity to take care of our team members…
Pay + Purpose = Profit, and Even Better Pay
I remember the first time an engineer showed up at the press I was operating to perform a time study. I was terrified! I hadn’t been with the organization very long and had to work as hard as I possibly could just to hit my daily efficiency numbers. I was convinced that this spelled the end for me… Looking back, I’m almost certain someone explained what that engineer would be doing and why, but my guess is that some negative-Ned in our department had also spouted off about how those time studies were going to be used to get rid of jobs and raise the expected hourly rates. It’s not hard to guess which voice a twenty year old kid would listen to, especially if he had more routine interaction with Ned than with his supervisor!
Three decades later, and having worked with companies in nearly every industry since, I have a far different understanding (and appreciation) for time studies and every other piece of the budgeting process; if we don’t know how much it costs to provide a product or service, there’s little chance the business we’re operating will be around long. And contrary to what the Ned’s of the world believe, looking for ways to continuously improve every process isn’t based on making them work harder or faster - even though most of the Ned’s I’ve worked beside weren’t delivering anything close to what they were capable of…
The reality of those time studies, and any other part of the cost analysis process, is that every organization needs to have a clear picture of what’s spent to yield their product or service - on equipment, materials, and labor - to have the slightest chance at remaining competitive in their market. Truth be told, the consumer has a lot to say about pricing in a free-market economy, and there had better be a very good and very clear reason for even a modest variance in price. Since most companies in a given industry deal with the same or similar suppliers and have comparable material expenses, the costs they’re forced to manage are those related to efficiencies and salaries.Â
Some organizations lead with best-in-class pay right out of the gate to attract folks to join them. In many cases, this results in the starting pay being relatively similar to what the same job pays someone with years of experience. Other times, the high wages equate to harsh working conditions, long hours, or poor treatment from the management team. Every now and then though, a company manages to offer ALL those things in one location - and I’ll let you guess how that impacts things like morale, turnover, and long term profitability…
On the opposite end of the spectrum, organizations may skimp on pay while attempting to design the simplest processes possible so the required skill level remains low. That can produce results but I’ve seen many companies that take this approach serve as a training ground for the others nearby that offer higher wages to folks with modest experience.
Here’s where the rubber meets the road on this: companies operating in a free market society must remain competitive - with their pricing, and with the atmosphere and compensation they provide their team members - or they’ll soon find themselves holding an empty sack. Earlier, I suggested that when all things are equal, purpose matters. I went on to say that even if all things aren’t equal, purpose often matters the most to some of the best folks we’ll ever have on our teams. But even then, it’s our responsibility as leaders to take care of our teams; even the most powerful purpose won’t feed their families!
However, the organizations I’ve seen provide fair compensation and combine it with a definite purpose that each team member can connect with have also been the ones to achieve significant top and bottom line growth. When that happens, providing even better compensation to the great team members who helped make it possible is a no-brainer! But not all of those team members view compensation the same way so let’s take a quick look at that before diving into how to recognize the purpose that drives each individual we lead.
We Can’t Treat Them All the Same
One of the things that Cindy and I have enjoyed most about customizing our Emerging Leader Development course for many of the bigger clients we work with has been providing them with the tools to communicate more effectively with each individual on their team. As we teach them how to quickly recognize and understand the primary communication style of anyone they interact with, we explain the importance of delivering a message the other person can receive. In doing that, we build on the idea of The Golden Rule that’s served society as a whole so well for centuries by suggesting a slight tweak; communicating with others as they need us to communicate with them rather than how we would want them to communicate with us. To make sure the idea sticks, we refer to it as The Platinum Rule…
Make no mistake though, this idea applies to a lot more than just how we communicate with others. It’s every bit as applicable to how we show appreciation and how we reward the great people on our teams for helping achieve our organizational purpose and driving overall profitability!Â
Not long after enduring that first time study I mentioned before, things started to click for me as a press operator and I was able to churn out well more than the number of parts I needed to make my daily efficiency. In those days, the company I worked for gave employees an occasional T-shirt to celebrate stellar performance. I can’t remember if that was monthly or quarterly, or even how much I needed to exceed my target. What I do remember is never giving a shit about those shirts… Had a supervisor ever acknowledged how hard I was working to make that happen, it would have gone so much farther. I think the idea of giving a shirt to individuals who go above and beyond has been replaced in most organizations today by the proverbial pizza party when an entire department beats the goal, but I still haven’t heard many stories of direct recognition or appreciation - and we’ll circle back to why that’s such an issue soon…
In smaller businesses, I’ve seen quite a bit more creativity in passing down the fruits of hard labor. I’ve seen substantial bonuses, trips, and even shares of the company as ways to reward team members for extraordinary work. At one point, about a year or so into a new role, I received a glowing review and was given a twenty percent pay increase. While I truly appreciated that the effort I was putting into my work had been recognized and the owners of that company were so willing to compensate me for that, I was at a spot in life where I was much more interested in extra flexibility than additional pay. In a different role, I had the most flexibility I had ever been offered in a full time position and a fair salary, so each merit increase got funneled to my 401(k) since that was pre-tax. I’ve also seen a few cases where key team members were given an ownership stake in their company for their hard work.
Don’t miss my point here, I’m not suggesting any one of these as being right or wrong. I’d be willing to bet that each of the things I’ve detailed here could be received well by many folks on any given day, but I believe any reward we provide a great team member will be best received when it’s one that fills a pressing need they have at that time. And it’s very unlikely that one great team member will have needs that are identical to any other. If we truly want to reward our teams for helping increase profitability while being a part of something that matters, we’ll do well to pay close attention to the things they need and value most. The best part is that doing this will give us a chance to help them identify and pursue their own definite purpose in the process, because we’ll be watching for some of the same indicators to identify both - and that’s where we’ll pick up soon!