I was just having coffee with a friend of mine. I’ve known Bill for years and I’ve never seen him this upset.
“You wouldn’t believe what my boss just did!” Bill said to me.
“What did your boss do?” I asked.
“They just promoted someone who has no work experience to my level of Director. I was so pissed that I went to my boss and threatened to quit.”
“What did your boss do?”
“He said he would talk to the CEO about promoting me to a level between VP and Director.”
I started laughing.
“Why are you laughing Brett?” Bill asked.
“It’s a classic maneuver,” I said. “You have a bunch of disgruntled employees and you’re worried about losing them.
“So what do you do? You promote them so they’ll stay. Sometimes it works and sometimes it doesn’t work.”
“I’m still pissed,” Bill said. “I’ll take the promotion if I get it, but I don’t trust these people (management) any more.”
You lose the trust of your people when you overpay someone.
Make no mistake about it. You can overpay someone by non-monetary means as well. And an inflated title certainly fits.
I used to believe the saying “titles are free.”
There’s no cost to an inflated title, right? And, you’re making someone feel good.
I worked at a company years ago where an employee was promoted. Word got around that the employee had quit, and management promoted the employee to keep him from leaving.
Soon it became commonplace. A surefire way to getting promoted was quitting.
The problem is what about the people that play by the rules?
You can’t promote a fair work environment when you’re not treating everyone in a similar manner.
I had a young employee at the same company. John had tons of potential, and he was really good.
John wasn’t ready to be promoted yet, but I intended to promote him in a year. I wanted him to earn the promotion rather then being given the promotion.
I told John during his review what a great job he was doing. I also told John he was a year away from being promoted.
John was crushed.
John couldn’t understand why others (through the “I quit” methodology) were being promoted, and he wasn’t. In John’s eyes, it wasn’t fair.
John was right. It wasn’t fair that he was playing by the rules and not being rewarded.
Your culture takes a beating when you are not consistent.
Every time. Every single time I have overpaid for someone I have regretted it. Interestingly enough, the same problem happens every time:
The superstar you just hired is never worth it. Ever.
I was looking for a co-founder/VP Engineering when I started my company. I talked to a lot of people, and there was one that I really liked.
However, I got the feeling that he wasn’t going to be a good partner. He just seemed in it for himself, so I passed.
You’re looking for people that are team oriented.
Yes, the person may have a great resume, and yes, it is oh so tempting. But don’t do it. This person is not a good fit for your startup.
Why? Mercenaries that don’t care about your team rarely work out.
An experienced candidate that is a great fit for your company will adjust their salary requirements to what you can pay.
Let me give you an example.
I had worked with Greg on and off for 20 years. Greg is considered one of the gurus of Analog IC design. He’s probably one of the 10 best Analog IC designers in the world.
Greg had been working at another company (part time) when we started our company. The company was a large public company in the space (kind of a Google equivalent in the Analog IC world). Greg, for various reasons, was unhappy.
We had an open house and Greg came by. We started talking about how we could work together again.
I asked Greg, “What are you currently being paid?”
“$400,000,” was the answer from Greg.
“You know we can’t pay you that. Here’s what we can do,” I told Greg.
It was over 50% less than he was currently making, but it was in line with the salaries we were paying other senior engineers.
Greg agreed to join us.
And Greg was great! Not only did Greg develop unbelievably great products, he helped mentor younger engineers, and he helped everyone raise their game.
But, it never would have worked if Greg wanted to be paid more than the other senior engineers.
There would have been multiple problems:
- The other engineers would have resented Greg being paid more, and…
- The engineering team plus the rest of the company would feel we were not being fair, and…
- Your team will not be loyal (nor should they be loyal) if you’re not being fair
You need to develop the guts to pass.
Your company culture is the most important part of your startup. Your culture is a living and breathing entity that changes each time someone new is hired.
All it takes when you are small is one bad employee for your culture to be destroyed.
Let’s say you have nine people, including yourself, on your team. Now you have the chance to hire a true superstar, but the superstar wants too much money.
You try negotiating with the superstar, but the superstar will not budge. You can sense already that the superstar will be a challenge. But you really need him.
Should you take the risk?
I’d vote against taking the risk because now 10% percent of your workforce is problematic. I know you really need the superstar, but there will be other superstars that believe in your company AND fit the culture.
Just remember that it’s much harder rebuilding a culture.
Yes, you can fire the superstar if the superstar doesn’t work out, but your culture has been changed because you’ve changed what’s acceptable. It’s not okay to hire someone that doesn’t fit the culture you’ve struggled to build.
Instead hire smart, passionate people with integrity that fit the company culture you are building. Yes, finding superstars that want to be part of a great team are tough to find.
But, you’re building a great company, right? And it takes the courage to say, “No Thanks” to the supremely talented superstar that doesn’t fit your vision.