5 Tips On How To Pay Better To Increase Results For Your Business

When you're coming out with a pay plan, what things should you consider to make sure you're paying your people right? James shares the answers in this video.

Podcast: Download (Duration: 3:09 — 3.1MB)

Video highlights:

00:14 – When there’s ambiguity…
00:29 – Don’t obsess on THIS
01:01 – Where to tie the impact of the pay
01:38 – How to remove conflict
01:54 – To have stability

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Download the PDF transcription and 5 Rules for Formulating a Pay Plan

Transcription:

James Schramko here, and today’s tip is around how you pay people in your business. Now, I’ve got five rules that will make things easier for you when you’re coming out with a pay plan.

James Schramko

Simplicity is key
The first rule is it must be simple. It’s got to be simple to understand because if there is any ambiguity, this can cause you, or your employee or contractor a massive heartache and loss of energy.

“Ambiguity causes massive heartache.”

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Reward what you want
Two, you’ve got to reward the results you want. There’s no point paying for something that you don’t want. A lot of people obsess about paying an hourly rate, but what you’re buying is one hour. It doesn’t necessarily stipulate a particular result that you’d like to get for that hour.

“Why pay for something you don’t want?”

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So have a look at other ways you might be able to pay people. Maybe you can pay per project. That way, they can complete the project in whatever time they like. But you get a specific result. Always reward what you want, and this is especially important if you have sales people.

Pay for ability
The third rule is that the result you want has to be able to be impacted by the person who is impacted by the pay plan. There’s no point having a team budget percentage payment that the team members can’t actually impact. It’s not their fault if something happens to the business outside of their control. So when you actually pay them on that, that can be very disenchanting and they can lose motivation. Again, the more directly you can tie the impact of the pay to the ability to the employee to impact that pay, then that is better.

Have a fair pay plan
Fourth, it really should be fair. Anything that is out of alignment for too long won’t continue. If you don’t pay the right amount, or if you pay too much, one party is going to be upset and it’s going to lead to conflict. So to remove conflict, have a fair pay plan.

Sustain rewards
And number five is ideally, you can sustain this reward mechanism for some time. That way, you have stability, you build up loyalty, you have consistency, and a lot of people who are contracting to you or they’re basically employed to you are going to look for that stability. It’s going to provide a nice bedrock to have that employee-contractor relationship.

So hopefully, you’ve enjoyed these five tips on how to pay better and get a better result in your business. If you do this, you will find it’s a pleasure working with the people around you. That people know exactly what they will get paid, and they know how it works. And the system, if it’s set up properly, is going to increase the profit of your business, and you’re going to have a great time.

I hope you’ve enjoyed these tips. I’m James Schramko.

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