Management Consultant Asks: Why Aren’t You Earning Residual Income?
Tip! As managers we know that good decisions must be based on optimum quality and quantity of objective information. If information is withheld or distorted by those we are dependent upon to provide it, the decision cannot be the best one possible.
I want to say something quite clearly and emphatically, and ask you to repeat it to yourself a few times: MY COMPENSATION IS ENTIRELY ARBITRARY! For example, let’s say you write computer programs for a software company that packages your “code” into products that it sells to customers. You will probably be paid a salary, perhaps earn an annual bonus, and accrue some vacation time. You may also get some benefits, including a partially paid health plan. All of this seems so normal, so typical that you never question this menu of dollars and perks. Sure, you may want a greater helping of salary, but still, as long as there is a salary and a few other goodies, you’re set. Tip! Delegation is often considered a necessary trait of management. It is the ability to assign responsibilities and tasks to a direct report.
But what if one of your software programs really takes off in the marketplace? Will you be entitled to receive royalties from it, have any ongoing equity interest in it, or ever be able to claim a bigger desk, a reserved parking space, or any material advantage from its performance? The short answer is “no.” If you ask your company about it, they may smirk or laugh or just look at you as if you’re nuts and say, in a conclusive, parental monotone: “We don’t do that.” They won’t say WHY they don’t do it, because they probably haven’t thought it through. In fact, paying you royalties or a residual income may be in their interest, it may spawn innovation, create that extra spark of incentive to attract and retain the very best designers. Tip! Respect the input of the experts you hire. Let your employees see taking them seriously. If they think you’re just going through the motions, they will too. Lead by example.
How, then do companies decide what they’re going to pay? MONKEY-SEE, MONKEY-DO! They imitate each other. Some call it benchmarking, others conduct salary surveys, but the net of it is the same. They mirror each other. Breaking the paradigm is difficult, once it has been established. Let me give you an example. One of my clients is a consultant who shows his clients how to save money on their printed advertising. Specifically, he knows how to tweak ads so they can be smaller, cost less, but yield better results than large ads. He charges a percentage of the savings he’s able to generate, which seems very reasonable, right? Tip! An essential requirement for effective management, communication is a two way street. It includes passing along communications from executive objectives, share holders, or company directives.
If he doesn’t save them money or improve the ads, they don’t pay. Only if they get results do they have to pay. What can be sweeter? But he has found that is not the way his clients want to pay. They prefer paying him for his TIME, which is the way the great majority of consultants bill their clients. They believe, of course, that if they pay only for time, they’ll reap the benefit of his expertise, for less. But even if they traded dollars, or if they saved money his way, they’d prefer to do it theirs, which is the traditional way. When it comes to compensation, tradition dies hard. But there is hope, if you’re creative, diligent, talented, and they need you. Check out the movie, “Ray,” about the life of the great singer, Ray Charles. You’ll probably like the music, but listen for the part when he insists in his contract negotiations that he “own” the rights to the masters of his recordings. They’ll tell him it’s unprecedented, but finally, they’ll yield. Tip! Conflict distracts employees from otherwise productive use of their time. Studies reveal that up to 30% of a typical managers time is spent dealing with conflict. And that 42 percent of their time is spent reaching agreements with others when conflicts occur.
To borrow a phrase, when it comes to compensation, you don’t get what you deserve. You get what you negotiate, and they won’t break with tradition, unless and until you do! Dr. Gary S. Goodman is the best-selling author of 12 books, over 600 articles, and the creator of numerous audio and video training programs, including “The Law of Large Numbers: How To Make Success Inevitable,” published by Nightingale-Conant-a favorite among salespeople and entrepreneurs. For information about booking Gary to speak at your next sales, customer service or management meeting, conference or convention, please address your inquiry to: gary@customersatisfaction.com Realize Your Personal, Professional, and Business Potential With A Little Help From Your Friends. Leave a ReplyYou must be logged in to post a comment. |
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