Show me the Money - Compensation Strategy for Managers

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SHOW COMPENSATION ME THE MONEY STRATEGIES FOR PEOPLE MANAGERS

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a ll managers must decide how much to invest in each individual on their team

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y ou can invest a fixed amount of money and/or time MONEY TIME Compensation, promotion, benefits, etc… Coaching, mentorship, training, etc…

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s o, as a practical example, if you have 10 members on your team, $100,000 in comp, and 30 hours per week to support them, how will you invest?

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h ow much of your time & money do you invest in your top talent?

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w hat about your weaker members?

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w hat about everyone else?

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w hat is fair? w hat is right?

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w hat gets you and the firm the highest return on those investments?

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remember

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it is a fixed pie that you have to work with, so you need to make hard choices

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s tart by dividing your workforce into 4 categories

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CATEGORY OF WORKER STARS POTENTIALS WORK HORSES UNDER ACHIEVERS

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a nd, since people fall roughly into standard deviations

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i t’s a good bet that your team will distribute roughly as follows

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CATEGORY OF WORKER % OF YOUR TEAM IN THIS CATEGORY OUTPUT AS A GROUP STARS 10% 40% POTENTIALS 30% 30% WORK HORSES 50% 20% UNDER ACHIEVERS 10% 10% in your team of 10, you’ll have 1 star, 3 potentials, 5 work horses and 1 under achiever the star and potentials will add a vastly disproportionate value to your goals

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h ere is my recommended investment strategy

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CATEGORY OF WORKER % OF YOUR TEAM IN THIS CATEGORY YOUR BUDGET YOUR TIME STARS 10% 50% 10% POTENTIALS 30% 30% 50% WORK HORSES 50% 20% 20% UNDER ACHIEVERS 10% 0% 20%

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w hy this distribution?

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RULE ONE comp your stars extremely well so that they stay, and then get out of the way so that they can achieve t hese guys don’t need much time. they are well trained already. all they need are goals and air cover

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RULE TWO Potentials have the highest return on time comp them above market, but invest a much greater relative percentage of your time so that they become stars

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RULE THREE Comp your Work Horses fairly and spend some time helping them understand & achieve their goals But signal that while it is OK to, "just get the job done," if they stretch themselves towards the Potential category, you'll respond with greater investments

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RULE FOUR Do not comp your under achievers Instead , spend a disproportionate amount of time to help them retrain and/or move out of the function where they are under performing and into another function where they can become a star

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