It's so true what he says, in a nutshell if you do mechanical work like moving boxes from one side of the room to another, you can financially reward your workers based on how fast they get it done because the solution of how to do it is clear.

However, if you if you have more boxes then what that room can hold and you try to financially reward your team based on how fast they can figure out how to get all those boxes in there, all you do is stress them out because the solution needs time to flourish in their minds so financial rewards in this case don't matter.

I'm in software and for over 15 years I've been telling my managers that my job can be done anywhere but it's that old 1900's mentality that if I'm not in my chair banging away at the keyboard, then I must not be doing anything. Such a downer for moral.

It's time to move ahead and compete in new ways in this new global economy. It's time to stop spending company profits on new cherry wood desks and company cars. Let your team out of the locks of the "butt in chair" syndrome and let them truly be part of your company by giving the reigns to lead and try new things.

Now, salaries are intended to correlate with the value employees bring to a company. Management is serious business. It plays an extremely important role, which no individual employee can play on his own while sticking to their own role in the company. In web development (as in many other fields), you can have a couple of developers and a good project manager outperform a team with a thousand developers and no manager. To say that managers don't provide value (and only coordinate value-creation) is false. Their coordination is an irreplaceable value. It takes a certain mindset and a number of qualities to be able to manage a team. These qualities are valuable to companies, and those who possess these qualities should be paid handsomely.

It's not the business of government to decide who is most valuable to a company and how much employees should get paid. If I'm worth a million to a company then I'm entitled to earn a million. Whether any of that money will make me happy or not is none of anybody's business. It's my decision how I spend that money.

As for how you drew the line between who's at the bottom and who's at the top, do you honestly believe that the people who bring more value to a company are simply the ones who are being paid LESS? So a janitor brings more value to an architecture firm than an architect?

Apologies that my comment is long, but I found the topic of this post (and your business views) interesting!

The points you raised about why it's "irrational" to pay employees more money has nothing to do with psychology research. At least, that's not the stand point I'm arguing from. I'm speaking from a business point of view.

Private companies are created by individuals who would like to make money, and who sometimes have a vision for the value they wish to share with the world. I can have a spa to make money, but also because I care about well-being and love to give people the opportunity to relax.

I would usually require the support of other people in my endeavor to offer such services, and so I hire others (my employees) to help me out with my vision. I would like to make money, and they would like to make money. They can share my vision, or couldn't care less about my vision. All they might want is to afford a place to sleep and some food to eat. They could enjoy their job or hate their job.

What matters to me isn't how much they love or hate their job, but how much of a contribution they are making to the company, which in turn translates to better services and more sales (and inching closer to the vision I have). However, if I would like to make others happy (like you do, and I share this value with you), then I'd be concerned about my employees, their well-being and the happiness they are experiencing. Usually, a passionate employee is able to contribute more to a company than an employee who is simply enduring the agony of a job in order to get paid at the end of the month. The contribution these two employee types can make is different. I would like to help my employees enjoy the experience of working with me so that they don't look for work elsewhere, so they can contribute the most they can and so they can experience happiness on an individual level.

But the value of an employee for my business depends on the value he is able to bring to the business. If my business model is sound, then it would mean that I'm making more money as I progress towards my vision (i.e. the two are in alignment). Therefore, the value of my employees would be tied to the amount of money they help me make.

(cont.)

2. At the bottom is people who are paid less, often much less.

1- Why would a company want to make its employees happy?

2- How do you classify who is "at the top" and who's at the bottom? For example, is an architect considered a worker or a coordinator?

Why are employees paid for the value they bring to the company? Either this is to motivate employees to bring more value (through rewards), or to make them happy. But psychology research shows that rewards do not increase value produced, nor does more money make people happy. The research shows that people are happier working on things they love than getting paid enormous sums of money. Therefore it is irrational to pay people excessively large amounts of money.

Do you have a rational reason why employees should be paid more for creating more value that is based in psychological science, or is this simply your irrational bias?

The second line of argument is more Marxist: who is creating the value, really? Workers all create the value–the people at the top simply coordinate value-creation by employees. Therefore value is created by all employees and should be shared equitably.

It's not either be happy or make money, according to psych research, but making more than about $50k does not in any way whatsoever increase happiness. This has been shown again and again. It is one of many irrational biases we tend to hold, but does not fit the science.

Why are employees paid for the value they bring to the company? Either this is to motivate employees to bring more value (through rewards), or to make them happy. But psychology research shows that rewards do not increase value produced, nor does more money make people happy. The research shows that people are happier working on things they love than getting paid enormous sums of money. Therefore it is irrational to pay people excessively large amounts of money.

Do you have a rational reason why employees should be paid more for creating more value that is based in psychological science, or is this simply your irrational bias?

The second line of argument is more Marxist: who is creating the value, really? Workers all create the value–the people at the top simply coordinate value-creation by employees. Therefore value is created by all employees and should be shared equitably.

It's not either be happy or make money, according to psych research, but making more than abotu $50k does not in any way whatsoever increase happiness. This has been shown again and again. It is one of many irrational biases we tend to hold, but does not fit the science.

Salaries aren't simply paid as a motivational tool. Employees are paid for the value (a.k.a. results) they bring to the company. Whether external motivations are used or intrinsic ones is besides the point (i.e. it shouldn't influence salaries and is certainly not a reason to introduce salary caps).

We should also try to turn our cynicism down a notch: when companies expect their employees to simply do their work, we complain; and when they try to offer more facilities, we complain.

What I find especially unsettling about the article is that it presents happiness and money as a dichotomy: either be happy or make money. If you're not enjoying your job, then you deserve more money. If you do enjoy your job, then you deserve less money. Now that's a spiritual crisis and a moral crime capitalism would never dare commit.

However, it does have profound implications for those of us like myself who wound up in self-improvement type careers. (I am an MSW from Columbia who shortly after social work school discovered astrology and ultimately left social work for self-employment these past 40 years.) If extrinsic rewards are largely ineffective in motivating people to change, and yet our methods are in some part influenced by an extrinsic-reward culture, we must think through how we approach clients and keep them motivated for doing the often painful self-examination that growth requires. Thank you–you’ve given me much to think about. Donna