A couple of weeks ago my column was weighted on customer service.  Because of the number of responses I received, I know it struck a nerve.  Some of those responses spoke about how the folks who deliver customer service are paid which got me thinking. It got me thinking about the slow job recovery we're having and how much the low rate of job creation has been affected by the efficiencies many companies, large and small put in place to survive the recession.  It got me thinking about where compensation levels are and it even got me thinking about how we pay; salary, hourly and the many programs of commission.

 I have a friend who talks about "stretch compensation."  She says, "If my employees stretch, I'll pay."  What she means is if they stretch themselves to be better or go the extra mile, she'll pay for that performance.  So what about those who don't stretch?  What and how should they be paid?  Is it time to move everything to "pay for performance?"  In commercial real estate there are many positions based solely on the premise of pay for performance...it's called commission. 

Management gurus tell us pay for performance is supposed to not only work, but be the Holy Grail, but is it?  I read that a recent Hewitt poll of 200 U.S. corporations found that 72 percent now make variable-pay options available to some groups of employees, compared with 47 percent in 1990.  But not all companies are finding that this type of contingent pay brings the results they want.  It seems that monthly revenue targets are generally set from the top down, as in, "What does the corporation need?" not from the bottom up, as in, "What's reasonable for this market?"  What happens when a company compensates based on what employees produce, how they contribute to teams and in larger organizations, how the company's stock is doing?  Is a fairly complicated compensation plan the answer or does monetary compensation really not matter that much and we're working on the wrong end of the problem?

As companies strive to work "leaner and meaner", employees tend to get "tireder" and "tireder". Can any pay for performance program solve that problem or is there a point at which no feasible incentive system can boost productivity any further?  We know that technology and productivity go hand in hand and go a long way to creating a market advantage, so when the playing field becomes more even on the technology side, the human productivity side has to grow to stay competitive.  Have we been doing more with less long enough and that's what's creating a lack of customer service?  Have we reached the point where there are no more creative ways to use smaller staffs?  Do we have employees who can't stretch any more no matter what the compensation and as a result, they just aren't capable of giving good service?

I venture to say that in most areas of commercial real estate that's not the case, though everyone has certainly worked harder since the recession began.  I believe we have a long, long way to go before we've exhausted the strides we can make with technology and process.  I believe we place too much emphasis on what the overall market is doing or not doing because we somehow think we can't influence it.  I believe it's a comfortable excuse to say "It's the market."  Is the market bad?  Yep.  And so in the scheme of things, does that really mean we're all underpaid and overly tired?  Is there nothing we can do but wait for "the market" to make everything all better?  I hope not.  I don't believe so.  Every day I talk to people in our industry who are doing well and yes, they like to be paid for their performance.  They don't dwell on what the market is doing.  They don't ignore the market, but they do have a focus on how they are doing.  They're willing to examine new ways of doing things and they even implement some of what they examine.  That's how they get "paid for performance".  I say the answer to, "Does and should pay = performance?" is absolutely!  And the best judge of the performance is the one performing.

Click here to join our blog discussion or simply shoot me an email when you get a chance.