Opponents of fair pay as I describe — as an activity with both market and structural blind spots that need to be adjusted — often worry that changing pay practices will stifle business innovation. or that business leaders will no longer be able to reward them with truly outstanding performers. I see this all too often in start-ups and in all companies with ambitious managers and before we learn to analyze the difference in the way most companies evaluate their performance. job prices for most people, I wanted to cover this topic to show how to exempt certain types of companies or superstars. employees from fair pay practices create more problems than they solve.
On business innovation, I find Paul Graham’s 2016 essay titled “Economic Inequality” instructive, though maybe not for the reasons he intended. Graham is a guru among founders and in his essay said that “eliminating large variations in wealth means weeding out startups.” Exaggeration aside, his argument is that startups can in fact cause inequality directly, but overall this is a favorable trade-off for a better system. The broader economy can create new wealth from scratch. Creating new wealth is a good thing, but I wish he would also create daylight in the midst of helpful and harmful startups. Not all startups (or traditional businesses, for that matter) are built to maintain fair pay results. Some are designed exclusively around the idea.
How can founders ensure that they build the kinds of companies that value fair pay? Simply put, they shouldn’t be writing a business plan that creates new conditions for low wages and thriving inequality. The founders, realize that you can choose your business model and you can decide if you operate with sincerity from the start. To apply sincerity to the mission statements of famous startups (some of which have grown into huge fortunes), you don’t “connect people to possibility” when subtracting tips from the base salary of the delivery drivers. You are not a “starter opportunity” when you are leading the legal battle against independent contractor classifications that will give people a basic sense of security. And you’re not “raising the world’s awareness” by giving the CEO a multi-billion dollar package of credit for nearly bankrupting the company.
The same mentality – that innovation trumps fairness – also permeates large companies. Laszlo Bock, the legendary former head of human resources at Google (known as Human Operations), helped the company score on the Best Companies to Work for around the world list. Not to mention many imitators who have tried to replicate Google’s culture and work environment, and I can think of few companies that have done more to influence and enhance their salary and benefit offerings. standard benefits for the entire market (at least for office workers). But what Bock is best known for in the compensation world is an idea he admits is provocative, described in his book Work rules, that companies should knowingly “pay unfairly.”
Unfair pay, as Bock describes it, is the recognition that “two people doing the same job can be hundreds of times different…
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