Structuring Pay for a Team LO15407

Dennis Keibler (djkeib01@homer.louisville.edu)
Fri, 17 Oct 1997 14:59:39 -0500

Replying to LO15383 --

I would like to touch two threads: "Team Building" with "GRADING SYSTEMS
in LEARNING ORGS" if possible.
or more specifically,
How to structure the pay scale of a team?

In LO15353 Karl V. Koenig writes:
>The solution here is a relative ranking (subjective) of individuals
>within an engineering specialty. That provides at least a starting point...

and

In LO15378 Eric Budd writes:
> A difficulty with ranking individuals in any system is attributing
> observable differences to a particular individual. We already know there
> will be differences between people. Whether or not those differences mean
> something is an important question. ...

I too have never been comfortable with ranking individuals of a team.
Maybe it's just too much ego, but I feel resentful about being placed in
that win-lose situation. Is there a conflicting choice between rewards
based on team outcomes and rewards tied to the individual's performance?
(The compensation package of executive management vs. the pay structure of
those in the typing pool.) If so, then seeking a win-win situation seems
appropriate. Assumptions need to be uncovered.

When basing rewards on team achievements, one must (according to previous
threads) view the structure of the team as a manifestation of interrelated
processes. Those processes are implemented by individuals. Changing one
aspect, such as compensation or grading of an individual, can/will affect
everything else - hopefully for the better. Also, a lot depends on how we
define the team and which members are included.

Simon wrote in LO15328:
>According to my view, teams are several people working together
>collectively within a defined and structured unit.

Jon C. Jenkins replied in LO15342:
> A team, in my definition, is a relatively
> small group of people say 2 to 25 with a shared meaningful purpose,
> concrete goals, shared methods of working, interdependent corporate work,
> opportunities for personal growth, shared responsibility for the whole
> task and whose members are accountable to each other for their work.

Could not a team also include the whole company? The local community? Or
even a global population? For surely we are all interrelated if we expand
our focus widely enough. Isn't the owner of an engineering company part of
the structure/process/pattern called "team?"

Taking this approach, it is easy to see how changing the benefits plan of
the custodial staff can affect the resources available to the engineers.
Elevating an individual member of a team elevates the whole, and I benefit
when my co-workers benefit. Also, vise versa.

If I, as the owner of an engineering company, decided to put myself on the
payroll, what should I pay myself? Naturally, I would want to act in the
best interest of the company - duty to its stockholders, to other
employees, and to customers - which would systematically be in my best
interest as well. So maybe I should take a smaller salary and consider
other non-monetary gains as sufficient rewards?

but ...

As a business owner I take a great(er?) risk. Failure of the company means
more than just losing a job. A great deal depends on my ability to trust
the employees I serve. I must be confident in my intuition. My aspirations
must soar very high in order to overcome complex opposition. So it has
long been assumed that the owner's compensation should be rightfully
higher than others like, the receptionist or custodian. Higher than any
other team members.

but ...

Now, I'm not sure whether this assumption is right or wrong for they too
affect the organization. They are part of my team also. They too certainly
have some aspirations, or courage, or commitment to something. How can I
compare someone else's personal traits to mine without making a value
judgement. (My commitment has more value and my aspirations are more
worthy, so I deserve more money.)

As I look at the team payroll system structures and draw out
inter-relationships, I notice there is no good measurement of what we call
'intuition'. Also there is no objective indicator for level of courage, or
aspiration, or any of the other traits we look for when first hiring
individuals on board. I know of no sure way to base pay on the elements
one may bring to a team.

The only conclusion that I have reached, is that the current ways of
rewarding individual team members are not the best ways.

Rick,
you wrote in LO15383:

> Most of my career has been as a high-tech entrepreneur (I arrived in the
> org learning world in 1991). In my most successful venture, we had seven
> founders; in the launch and over a fifteen year period, every one of us
> had very critical contributions to make. We noted on several occasions
> that we didn't think we could have done it with a very much smaller core
> team. As to visions, in our case it was not one person's vision and the
> rest of the team gathered in support.

I think there are many other practitioners and consultants contributing
here who consider themselves "team members."

So, if it's not too forward of me to ask,

How have you, in the above and other ventures, distributed compensation
among the team members? Do consultants view their own internal pay scales
as fair processes? What methods have you found that Are working well?

Thank you for the opportunity to ask.

-- 

| | | Dennis Keibler | HSC Biostatistics Center | | University of Louisville | Louisville, KY | | djkeib01@homer.louisville.edu | | http://www.louisville.edu/~djkeib01 | |

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