You might be the boss, but should you earn the most?
You might be the boss, but here’s why you shouldn’t be the company’s top earner.
All good bosses know the buck stops with them. But, contrary to popular wisdom, that doesn’t mean it’s the boss who should be earning most of the bucks.
Top talent is incredibly hard to find and even more difficult to retain. If you want to rise above the competition and reach your goals, you should consider rethinking how you structure your salaries. The payoff for some unorthodox thinking could be enormous.
Specialists, not generalists, deserve special pay
It’s probably fair to say that the boss is the highest paid person in almost all businesses. It makes sense, right? A hierarchal structure will tend to have a pay grade scale that reflects it.
At ValueMaker, we don’t believe in following conventions unless they are guaranteed to get the best results. When it comes to pay, there are plenty of reasons why the boss may not always be the number one earner.
A great example of this way of thinking can be found in sport. A football striker has one main duty. To score goals. A football manager? Here are just some of their duties: picking the team; analysing the opponents; speaking to the media; reporting to the board; signing players; drawing up tactics; following new trends and tactics; hiring and managing coaching staff; firing those that don’t perform, etc, etc.
Who usually gets paid the most in top teams? The striker. Hardly seems fair, does it? But the special traits and abilities the top players possess are so rare, that to win trophies it is essential to have them. And that means paying top buck.
Put ego aside, reward those that move the needle
Now think of a world class salesperson. They have one job. To get you sales. As the boss, you will have countless roles and responsibilities and a far more complex workload.
But the truth is, there is no other person in the business that can have as an immediate impact on your bottom line and company health as a salesperson who is bringing you the biggest and best clients. Doesn’t it make sense that you should do what needs doing to attract and retain that talent?
It doesn’t have to be a salesperson. Anyone who is taking your company forward and getting measurable results, needs to be kept on board. If that means they take home a bigger pay packet – or fatter bonuses – than top executives, then so be it.
Ego is your enemy. Leaders should make the tough decisions that take the company forward, not blindly follow the pay ladder because “that’s how things are”.
How do you find the right pay grade?
When hiring, to get the very best you need to at least offer financial incentives that match the market rate for that role.
Too many companies work backwards when setting pay - starting with the boss’s pay as the top line, then making sure to offer a certain percentage lower for a new hire, depending where they sit in the company pecking order.
A smarter approach is to start with a blank sheet of paper and forget about the pay of senior staff.
The focus should be on:
- What is the market rate for that role?
- What is the level of competition for candidates?
- What experience does that candidate have?
- Do they have a ‘black book’ of key contacts that could bring results?
Once you’ve considered the above, what is the difference you now believe your preferred candidate can make to your company? What will be the value exchange for the level of salary offered? It’s important that your new hire knows exactly what is expected of them and what they need to be delivering. That way there are no surprises and performance goals are clear for all from day one.
The only question that should remain isn’t whether the salary you need to offer is more than the boss, but if you can afford to NOT hire them.
Most senior roles will have a probationary period to pass when they first arrive. If things don’t work out and they don’t have the financial impact you hoped, you can exit them. But if you’ve made the right hire, they will be more than paying for themselves. Just because you may be a small business, doesn’t mean you should always think small.
Value, value, value
Your hiring decisions should be based on long-term strategic thinking. What hires can best boost the value of your business? Top talent will be expected to increase a company’s top line revenue at a level relative to their salary.
Understanding what you can afford is of course key. But you shouldn’t be afraid to pay at a level you haven’t before to get the right people.
Do what you’ve always done and you’ll get the results you’ve always got. Turn the world upside down, however, and you have a real shot of going places and striking gold.