Anita* was a model employee. As CEO of my previous tech company, I had hired her to take charge of our bookkeeping and administrative affairs. When Anita came aboard, I asked what she wanted in order to feel fulfilled at work. “Harish, I want to do such a great job that you’ll want to pay me a six-figure salary and feel great about it.” This was a bit of a stretch – it was hard for me to conceive of bookkeeping as a six-figure position. After doing the math, I saw how with the right mix of hard work from Anita and better systems, she could indeed earn a justifiable six-figure salary. I wrote a work-incentive plan that had Anita making her target salary after 18 months, if she hit the right benchmarks. “You’ll be worth every penny if you make these goals,” I told her. I gave her a lot of autonomy and leverage to get her work done well. Anita exceeded expectations, and hit every one of her targets within 14 months instead of 18, earning the six-figure salary she richly deserved. A success story, right?
Sadly, no. Two years after her initial success, Anita was fired. Despite clear subsequent targets and pay incentives, along with new assistants to support her, Anita’s ability to deliver declined. The once-star employee had deteriorated into an employee who filled only the basic job description and fought with me over minute details of her work plan, just so she could claim the monetary incentives. What happened to Anita? It took me several years of making the same mistake with others to figure this out. And it happens in all sorts of places, not just in entrepreneurial startups.
Archan* is a a guy that I’ve worked with in the past and think highly of. Archan just quit his $150,000+ per year job as a full-time search-engine expert for a well-known and growing web company. He had been working in his spare time for more than a year on a brilliant mobile app, something that could be a boon to business travelers.
Archan had finally raised enough money to pursue this more fully. What did he have to lose? “If my product’s not a success,” he said, “I can always go back to the corporate world and get a job pretty easily.”
Archan’s quitting represents the same category of mistake I made with Anita a few years ago, and both are insidious because they represent a failure of understanding on the part of both parties – the employee and the employer. It represents a failure in relationship-driven leadership.
At the core of these failures is how leaders and entrepreneurs, and employees in turn, typically ask for accountability and are then rewarded. Money is the carrot (or some proxy for money, like vacation time, or a trip, or a bonus, that sort of thing). That works in an industrial operation where there are fairly time specific goals to be achieved. But the reality is, money isn’t as important as the relationship. This charming and insightful video from RSA talks of the research underscoring why this true. The long and short of it is, “pay enough so that money isn’t an issue, then give your employees high recognition, autonomy, and the opportunity to learn and grow,” and watch them excel. Reflecting on this, I immediately understood my mistake with Anita, and I’ve started to see more of these mistakes in others today.
The six-figure salary threshold Anita wanted was the level at which she stopped worrying about money. Sadly, though, both Anita and I were conditioned to think of money as the main motivator, so we wrote her subsequent work plans with money as a continued focus.