The Black Box theory of labour
by Gustavo Sosa,CEOSosa Ingenieria,Chief of Engineering RONTIL, Uruguay
Websites like Salary.com make a living helping people know how much their colleagues are charging. In the countries where such luxurious information isn't available (e.g. Spain, Brazil) you always ask a friend how muchhe makes before attending an interview. Similarly, employers use historical data or union standards to establish beforehand how much to offer.
This attitude leads to a double bargaining between employers and employees. There is a joke where a friend asks another how much is he making, and the other replies 'pretty good, considering what I actually do'. But this person still has a job, this means his employers thinks he is paying 'with leftovers and a bed'.
As an example, at the company where I currently work, we ran into legal problems with a client. The legal fees were killing us, so I decided to get a lawyer on the payroll, instead of paying by the hour. The difference was dramatic. The monthly salary was the same as the fee for 10 hours. And that doesn't even take into account the value I got in having a full-time legal adviser.
Let's say you have a technician who makes USD 20,000 a year. One day he finds a problem with the electrical system that was causing loss of earnings, because of stoppages and break downs. The yearly loss of earnings was about USD 80,000.
Well, that means that one worker could very well work just one day every four years and you still get even. Now imagine he is actually clever, and not just lucky. If he gets to work everyday, he will help you make a small fortune. The higher the skills of this person, the more dramatic the effect. What about a Marketing VP who is able to look at the proposal for a new product and predict it won't work? How much would have Warner Bros paid to an executive able to stop all the mistakes they did with the movie Justice League? How much would you pay Warren Buffett or Charles Koch to come work with you for one day every five years?
I got these ideas from Elliyahu Goldratt (read his book, The Goal), but he focuses on machines. He points that having a facility operating at 100 percent capacity, is a mistake. You really need idle capacity, so you have resources available when problems arise. If you are already working at 100 percent and suddenly you need to rush a batch, how do intend to do it?
Well, the same happens with people. For psychological reasons you have to keep them busy-ish, giving them some tasks so they don't get bored or develop discipline problems. The tragic result would be your average public worker. I try to generate meaningful work even for an apprentice painterand ask for his opinion when preparing the list of tasks.
So, give them stuff to do, just don't breathe over them, and allow for creativity. That is what is going to make you a millionaire, and not the reduction of average bathroom breaks from eight to fiveminutes or reusing all the bolts from the junk yard.
Remember that nobody can think at gunpoint. If you expect them to become creative when your company is facing bankruptcy, I have bad news for you: they will use that time going to job interviews.
From now on, instead of focusing on how much money you are paying to your workers, compared to the standard, focus on how much you get out of them, in real value. And workers, focus on how to help the company MAKE money, and how to CREATE wealth. And make yourself get noticed for it.
Don't expect your boss to give you a pat on the back. You will have to educate him about what you did and what that represents for the company in financial terms.