I read a blog written by award-winning speaker, Eric Chester. He talks a lot about workplace culture and employee engagement – you know, all of the things that make us like or dislike our jobs. Recently, he posted a parable about compensation entitled “Why Equal Pay For All Your Employees Isn’t Fair To Any Of Them,” a story about twin brothers who work at a sawmill.
Both brothers have worked at the mill for the same length of time and both hold the same position. Yet, one of the brothers is paid significantly more. To illustrate why, Chester describes an instance when the mill’s manager gives them the same job in order to prove a point. He asks one brother at a time to check out a load of logs that is waiting to be evaluated.
The first brother returns a succinct, factual answer: “40-50 large logs, mostly pine, and all appear to be in pretty good shape.” His brother’s report looks like this: “38 pines; most are about 20 feet and are in really good condition. There are also 11 aspens, which are slightly shorter, and all but 3 are in pristine condition. He wants $1,000 for the whole load. Sam McHenry was down here twice last week looking for aspen for this large furniture project he’s working on, so I called him and asked if he’s still in the market for aspen. He told me he’d take the eight good aspen off our hands and offered $150 for each. If we accept his offer, we’ll make all our money back plus 20% and the 38 pine will be pure profit.”
The first brother did what was asked of him and reported the facts. The second brother took those same facts and regarded them as only the first part of the answer. He then utilized them to suggest a plan of action that would make the mill a profit while saving his boss the time it would have taken to come up with the plan himself.
That’s why the boss pays brother number two more money. If he paid them the same, it might be equal but it would not be fair. Why? Because brother number two brings more value to the mill. Think about your own team. Is everyone compensated simply by time spent on the job (hourly wage, etc.)? If so, you’re selling everyone short. It’s unfair to your better-than-average employees because they bring the company more value and thus should be worth more. It’s unfair to the company because it doesn’t encourage other employees to excel. And it’s unfair to the average employees, because there’s no reward for improvement.
Not all employees are created equal, and their compensation shouldn’t be either. They should be able to expect better pay for better performance. Try this and let me know the results. I’m fairly certain they will be easy to see.