This is one of those dilemmas that keep business owners awake at night—particularly in the early phase of a business when the amount owners are drawing out for themselves might be relatively low. The paradox they have to juggle is that they need the best staff in order to differentiate and grow their business, but the best staff cost more than owners can currently afford or are comfortable paying.
The reason this paradox seems difficult to resolve is usually down to the fact that we use a too limited definition of the word reward; i.e., we see ‘reward’ as equalling ‘pay’, and so it becomes a monetary-based paradox that is then based solely around how much money we have available.
Approaching a wider view of reward, Scholarpedia (for example) defines it as:
“any objects, stimuli, or events that (1) increase the probability and intensity of behavioural actions leading to such objects (learning, also called positive reinforcement), (2) generate approach and consummatory behaviour and constitute outcomes of economic decision-making, and (3) induce subjective feelings of pleasure and hedonia”
So, if we take this definition and apply it to a small business scenario, we’re talking about praise, pay, and pleasure. Note that only one of those three elements is focussed specifically on the concept’s monetary aspect.
Under this definition of reward, then, the paradox becomes slightly easier to solve or at least balance. What we as business owners need to ensure is that our overall ‘reward bundle’ is sufficient to inspire the loyalty, creativity, and commitment we require from those we employ. The mistake we often make is to forget there’s value in the opportunity we give our employees to be a significant part of a growing business. If we empower them as decision makers, if we recognise and praise their effort on a regular basis and give them the freedom to learn and develop their skills, we’re creating an environment most employees otherwise locked into large process-laden and results-driven organisations would happily jump ship to join, irrespective of any pay discrepancies.
So the questions we ought to ask ourselves on a daily basis are relatively simple:
- Have I given out enough praise today?
- Am I paying my staff what the business can afford?
- How can I create a more pleasurable working environment for my staff?
As is often the case in business—as in life—if you can’t answer the question, you can either find the solution or answer a different question. So, if you can’t solve the “How do I pay my staff more?” question, try answering instead: “How can I reward my staff more?”
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