August 2015 – Chuck Blakeman

3 Reasons Why One Company’s $70,000 Minimum Wage Hurt Everyone Who Got It

August 25, 2015/in Uncategorized/by chuckblakeman

At Payment Systems, Inc., everyone now gets $70,000 a year minimum. But people are quitting, and others are sharing complaints heard in factories a hundred years ago. Shouldn’t everyone be thrilled?

There are three big reasons why this is destructive, and such a bad idea for the people who work there.

Dan Price, the CEO, thought he was giving everybody a great gift great four months ago. Everybody loved it up front. But big cracks are appearing in the idea, because giving everyone a $70,000 minimum wage simply continues the archaic wage practices of the Industrial Age. And it has the same effect—destroying the human spirit. Here’s why.

Reason #1—People Want to Make Meaning, Not Money
In her research on Generational Differences in Work Values, Jean Twenge found that Millennials to Baby Boomers are all motivated by the same thing—Making Meaning. A recent Salary.com survey also found that people who are focused on the size of the paycheck are less motivated.

Semco is a billion dollar company with 3,000 Stakeholders. They require people to determine their own pay. Every six months you go to a computer and plug it in. You would think chaos would ensue. But the company regularly has to adjust pay UP as people fall behind the industry average. Why? Because Semco leadership is focused on ensuring everyone finds their work extremely meaningful. For the last 30 years, Semco’s retention has hovered around an unheard of 99% per year. And almost no one makes more than the industry average. Meaning trumps money every time.

Another study by Sylvia Ann Hewlett, on attracting and keeping the best people, shows that at least three things motivate people more than money; flexible work schedules, praise and recognition, and breaking up the work day with walks, bike rides, swims or other non-work activities. A simplistic $70,000 pay raise addresses none of these more important meaning-oriented motivations.

Reason #2—Meaningful Work is Results-Based, not Time-based
This $70k minimum wage is a throwback to an archaic system.

For thousands of years people got paid for how many shoes they made, and how well they were made. The better the shoe, and the faster they made it, the more money they made. They were solving problems and Making Meaning, and money came to them as proof.

Along came the Industrial Age Factory System and all that changed. For the last 175 years, and for the first time in human history, we have paid people simply for time spent working. How dumb is that? Gravity Payments fell victim to the Industrialist’s mindset—paying people without regard to production.

In an interview with the New York Times, Price said, “I want to fight for the idea that if someone is intelligent, hard-working and does a good job, then they are entitled to live a middle-class lifestyle.” Interesting quote, because his solution does not reward people for that hard work or for doing a good job.

Alan Wyngarden owns a mortgage company and went results-based. He reduced his loan processor’s base pay from $55,000 to $24,000, then incentivized her for how many high-quality mortgages she produced each month. Within a year she was producing three times as many mortgages at a higher quality, and making $135,000 or more per year. When pay is disconnected from results, people find it hard to be motivated to do great work. It’s basic capitalism.

You can see the angst creeping in. People know that getting paid without regard to performance is a bad idea. Stephanie Brooks, an administrative assistant, said, “Am I doing my job well enough to deserve this? I didn’t earn it.”

Reason #3—Raising Everyone’s Pay to $70,000 is LCD Management
Lowest Common Denominator Management levels everyone with broad, sweeping policies that ignore individual performance and team contributions. Everyone “gets an A” (or an F) no matter how they perform.

Marisa Mayer, CEO of Yahoo, found some people not working well from home. So she just herded everyone back into the office day care center to be supervised. In this case, she gave everyone an “F”, even those who deserved an “A”. Motivated people got the same “reward” as the lowest common denominator.

Dan Price at Payment Systems has given everyone a de facto “A”, which treats lazy people the same as top performers. Grant Moran, a web developer who got a $20,000 pay raise but quit after the $70k minimum wage was enacted said, “Now the people who are just clocking in and out are making the same as me, It shackles high performers to less motivated team members.” LCD Management—the great leveler.

Maisey McMaster quit because, as she put it, “He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump.” Everyone gets an “A”.

How to Fix This
People are motivated differently, and one size does not fit all. Great incentives include a variety of rewards and take into account individual motivations. Bad incentives are simplistic, focused solely on money, and imposed by a top-down hierarchy (Industrial Age LCD management) which assumes it knows better what you need, without including you in the solution.

Tying income directly to production helps people love their jobs. At our company, nobody will ever get a pay raise because they hung around another year. They get them because they add more value than they used to—a very capitalist idea. As a result, people are more motivated to work, create, solve, and innovate, and get pay raises that reflect those results. We’ve had zero voluntary turnover in nine years. Why would people leave a results-based system that focuses on making meaning, and doesn’t shackle them to people who aren’t as motivated?

Great companies focus first on:

a) building meaning into their work,

b) tying pay to results, and

c) creating a Highest Common Denominator workplace that celebrates great contributions and reaching for the stars.

People will raise themselves to our lowest expectation of them. The most motivated achievers with brains are leaving Price’s company, and over time, only the least motivated will stay. Play a game that motivated adults want to play, and great achievers will rise to your greatest expectations of them.

Making meaning, and results-based incentives always attract great people. LCD Management makes them leave. Your choice.

Article as seen on Inc.com

The Post Office Can (and Will) Sell Your Stuff, Even Before the Delivery Date

August 18, 2015/in Uncategorized/by chuckblakeman

Caveat emptor.

The U.S. Postal Service makes a profit from selling your lost stuff. It auctioned off $3,100 worth of my books before they were even supposed to be delivered, and continued to sell them long after it was made aware of the issue. “Fascinating!”

I regularly tell business owners that regardless of the circumstance, whether you perceive it to be good or perceive it to be bad, it all deserves only one response—“Fascinating!” My recent experience with the U.S. Postal Service was about as fascinating as it gets.

Considering what happened, there might have been a few other F-words early on, but we got to “Fascinating!” as fast as we could. It’s really a much healthier place to work from. You have to have a sense of humor about this stuff because life is really too short to be little. But this is so bizarre that I think as a public service, others should know about this obscure, but extremely common practice by the USPS.

Where’s Waldo?
In May we shipped 20-plus cases of books to a conference where I was supposed to be in front of thousands of people for a keynote. Four cases of them, 88 books, never arrived. They were the very first books out in public from our new, second edition of Making Money Is Killing Your Business. We filed a claim with the USPS, but knew the chance of ever seeing them was negligible. We went ahead and reshipped them via FedEx (they all got there). The P.O. losing stuff isn’t new, but what follows gets goofy.

A week later one of our staff was finalizing our new Amazon.com account for the second edition and found “used” copies for sale by multiple companies on Amazon. This made no sense since the only books that were public from this new edition were on their way to that conference. The online resellers told us they had bought the books at a U.S. Postal Service “Mail Recovery Center” auction days earlier, before our books were even supposed to arrive at their destination. “Fascinating!”

Hello? Is anybody home?
For over a week we contacted everyone at the U.S. Postal Service we could think of, from the local station manager, to Consumer Affairs, to the Postal Service Inspector’s Office. The responses ranged from versions of “tough nuggies” to “it’s not my job.” After a Denver TV station ran a lengthy news segment on it, USPS people started coming out of the walls, not apparently to solve the problem, but to contain the PR damage. But at least we learned what was going on. And you should know as well; it really is fascinating.

Sold to the man in the lime-green leisure suit!
Ever wonder where your lost packages end up? According to the Colorado Consumer Affairs Office for the Postal Service, they sell stuff all the time when they can’t find the owner, or in our case, before they attempt to find the owner. This is true whether it’s insured or not. For decades it used to be a live auction at a few locations around the U.S. Then the whole auction thing was moved to Atlanta to something loosely named the Mail Recovery Center, or MRC (“recovery” may not have been the best choice for the title).

Now the whole thing is online and you can buy my stuff every day. And the profits all go to keeping the Post Office solvent, so you can feel good about that. Consumer affairs said the MRC sold my stuff because anything valued (by them) at under $25.00, and books that arrive in lots of 10 or less, can be sold immediately.

How cool is that? Great profit center for the P.O. Except my books are clearly marked $28.95 each and arrived at the MRC in one lot of 88 books. They were auctioned off that way—again, before they were even supposed to arrive at their destination (I keep saying that because the whole story is more “Fascinating!” that way.) They’re supposed to hold everything for 30 to 180 days, but apparently that is only in theory. Consumer affairs had no explanation for why the books weren’t held for any length of time, or why they didn’t try to find the guy whose name was splashed across all 88 covers.

After weeks of waiting, we finally got the Post Office to buy back some of the books from the online resellers and send them to us. But as of yesterday, almost three months later, those same resellers were still selling some of my new books as “used,” on our own Amazon.com account, and one claims they bought more of my books from the P.O. just last week. Bizarre. The Post Office made a tidy profit selling our $3,100 worth of books, and the third-party dudes were making a killing as well. At least someone was having a good time.

Can I have some of that?
I asked the P.O. if they were going to give me the profits they made from my books. Consumer affairs gave me a flat “no.” I’ll check with my accountant to see if I can take their profit as a deduction on my taxes, but I’m guessing I’ll get another flat “no.”

It ain’t over till it’s over
I tried for another month to get the P.O. to pay enough attention to buy back the rest of the books still being sold online, but they had already sent me a letter in June that my situation was resolved. Many emails and phone calls since have come and gone without a response. I guess sending the letter makes it resolved.

Going, going, gone!
They’re probably all in the Bahamas living off the profit from my book. Who could blame them? I guess maybe me, but again, life is too short to be little. But I thought you all needed to know the Post Office has found alternative profit centers auctioning off your stuff, in case you wanted to ship with more reliable and responsive services that make their profit off getting your stuff where it’s supposed to go.

“Fascinating!” (But not surprising, right?)