What Are You Paying For?

March 20, 2018

Here’s a fairly common scenario in the hourly-wage world:

Employee X replaces Employee Y. Employee X does the work faster, but just as accurately. But you’re paying by the hour, so Employee X has some down-time. How are you going to make sure that you’re getting what you pay for? Do you:

1. Cut Employee X’s hours, since you don’t need him to work as long to get the job done?
2. Cross-train Employee X to work on something else during his remaining work hours so that he can be more of an asset to the company?
3. Say, “We’re paying him for what he accomplishes, not how long it takes him to do it,” and give him flexibility in when he works and let him keep the original pay you agreed on, thereby demonstrating your faith in and appreciation for Employee X, and building company loyalty and grooming a potentially great employee?

One employer went with Option A. Would you like to know why that’s a bad idea?

Employee X will probably leave. Then you have to pay to train somebody else, and, in this particular company’s case, also pay an employment agency a whopping fee to find the replacement in the first place.

You may decide that, in the long run, it pays to use Option A. But do the math first. And remember that an employee that catches on that quickly and is honest enough not to milk the job will probably be an asset to the company overall.

Option C is nice. It shows the employee that he is valued. But is it really the most effective use of your dollars? Unless you’re thinking really long-term, it might be wise to give X something to do to fill in the remaining hours you’re paying him for.

If you are thinking long-term, though, don’t discount Option C entirely; especially if you have positions that will be opening up, or even created, in the near future. An employee who feels valued will be a huge asset to your company, and will trust you to do right by him. And he will return the favor. If that’s your strategy, think about Option C.

Otherwise, go with Option B.