C Level Executives and Owners

Donald Sterling Article

This Donald Sterling stuff I find interesting.  Not that he’s a racist, I mean you’ve got a super old dude with a mistress and a billion dollars, it doesn’t surprise me he’s off the rails mentally.  You looked under a rock and found an idiot, congratulations.  No, what interests me is the implications for recruiting and HR.  Specifically, see this article and my comment.

That Sterling is an asshole is a statement for which there is abundant evidence.  From a recruiting HR perspective though, we have to consider what it must have been like to hire for this guy, and for people to work for him.  He is a prime example of a less than stellar personality getting to the top of an organization and dribbling his poison on the whole thing.  He is a case study of the fact that sometimes the boss/owner/CEO, or whatever, is the fucking problem.

We live in a society, and I’m talking about the US here, that is essentially fascist at heart.  It’s soft fascism, we’re not dealing with Mussolini here.  But our economy is highly managed and for the most part in favor of businesses, generally medium to larger ones, with some small scale businesses also benefiting.  Labor has been manged into a perpetual surplus, and various other aspects of the economy, such as anti take-over legislation like Williams and Sherman and various state statutes, that make it easier for mediocre to incompetent C level execs to stay in charge.  I recall a talk show once where I believe T. Boone Pickens was on a panel with some such execs, and I believe the host asked one of them what they would do if they knew Pickens was checking out their company.  Their answer was of course that they’d look at their company and make sure it was operating as efficiently and as well as possible.  To which the obvious retort is: why the fuck weren’t you already doing that?

By choking off opportunity at home the re employment of the unemployed is delayed, and a permanent labor surplus results, driving down the cost of labor from where it would be in a less managed market.  This lets people like Sterling stay at the top in regular corporations because the employees are not in as strong a bargaining position as they would otherwise be.  They can’t demand the pay, benefits, time off, etc., that they would otherwise command.

However, people adjust.  They will, if they feel they are under compensated, adjust their output downward as much as possible while still maintaining their job.  In the end the market rules, and you get what you pay for.  And there is a limit to the amount of shit the US worker will take before he collectively tells the entire economy to go fuck itself.  C level types beware, information gets out and people know what your company is like now, they don’t have to rely on your marketing hype.  Simply saying your company is A Great Place To Work! doesn’t cut it when your Glassdoor and Indeed scores are below 2 stars.  The era of bullshit is over, the era of information has begun.  Get your act together and treat your employees well, or you run the risk of being the next, somewhat less sensational Donald Sterling.  You may not make the evening news, but people will know you’re an asshole, they will know you run a shitty company, and they will not want to work with you.

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General Tips for Companies – Example of Poor Management

Poor management is one of the main reasons people report for leaving their position.  If you want to keep your employees you will manage them well.  Most don’t, which is why they lose them.  Most ‘managers’ have no training or even aptitude for management.  They were simply the best at what they did in the company, at least in someone’s estimation, and so one day someone came around and said, “Good job, kid, you’re running the department now.”  Often they will now be in charge of implementing policies they neither have the experience, brains, or courage to question, and they will often not be able to judge their own policies as per their effectiveness.  Here’s an example of such a policy that persists at a company I’m personally aware of.

At this recruiting agency the recruiters are expected to provide sales leads.  When they scour resumes they’re supposed to notice consulting opportunities, when speaking to candidates they’re supposed to ask who they’ve consulted with in the past.  Then, at the end of the day, they are supposed to deliver their results, along with the results of their recruiting efforts.  Are there standards for how many leads they’re supposed to deliver?  No, but they are criticized if their leads seem ‘low.’  Are they supposed to track these leads to make sure they don’t submit the same ones twice, which is a distinct possibility?  No, that would take too much time, but if they do submit the same one, they’re told not to do that and to pay better attention to what they send over.

So in others words these people are in a no-win scenario.  There’s no standard to measure them against, so they don’t ever know if they’re spending too much or too little time on the process, they just get critiqued when someone decides to on a whim.  Their primary function is recruiting which means they shouldn’t be devoting time to tracking leads, but if they don’t track the leads they will inevitably send the same leads over more than once, and this will be held against them.

It takes no more than ten seconds of thought to realize why this is a stupid situation, but it persists.  Why?  Well the company owner and one of the VPs thought it up and it sounds barely plausible so long as you don’t think about it too deeply, and no one has the guts to question it, so employees continue to be put into no-win situations where they are specifically told not to do what would be necessary to perform better.  It is impossible to succeed, it is guaranteed you will fail, and there is no standard to measure yourself against to see if any criticism is justified or not.

The Salary Barrier

The salary question is the first one I’d like to address here, or more specifically I want to address The Salary Barrier.  The Salary Barrier is that point in a conversation where you have ascertained that the person in question understands and accepts the concept of prices and pricing, but still can’t see how that applies to labor, or salaries.  We’re going to have to start with some basics on this one.

Prices.  Everything that is scarce and valued has a price.  Prices are developed on markets, they are bid up and down based on supply and demand conditions, all based on the subjective perceptions of the people doing the bidding.  I prefer the most and least competent buyers and sellers model, but I forget who first proposed it.  However, it’s enough to know it’s a process of discovery that occurs continuously.

Now, if you were to run into a Rolls Royce dealership and demand a Grey Ghost, but only offer the price of a Honda Accord, almost everyone understands you will be asked to leave, or laughed out of the place.  This concept, using various goods and services, is understood by most every human being on the Earth.  Except with regard to wages.

What’s more, HR and recruiting professionals, at least some of them, seem to make a living not doing much HR or recruiting, but writing about those things.  They tend to hive off into high minded theoretical horseshit.  One such avenue their thoughts travel is the role of compensation in motivating people.  They will often talk about allowing employees to be creative, to stimulate them, to do any number of things.  Other than pay them.

Now, CEOs and business owners read these articles, and you must understand, most of them are incompetent.  Most companies in the US are small to medium sized businesses.  They are run by amateurs who were in the right place at the right time, with the right service or product.  they are not necessarily run by people who have a clue how to manage a business, much less other people.  So, they read these articles and always come away with the idea that you offer alternative forms of compensation in lieu of actual salary, not in addition to salary.

No, it’s also important to remember that salaries fall on a normal distribution like anything else.  There’s a mean, a median, and a mode.  These are instructive as to what the going rate for a given type of labor would be, and these numbers are easily accessible these days at websites like salary.com.  This means both employers and potential employees know what they should be getting in a general sense.

Now, the kicker is that in recruiting, whether you’re corporate or agency, you’re still likely inundated with requests to fill positions at salaries that are 30-50% below where the market says they should be.  Here’s why…

No one thinks to check first.  Or, very few people do.  It’s really that simple.

So, we have a perfect storm of recruiting and HR professionals basically earning money by telling CEOs and business owners that they don’t actually have to pay their employees.  You get incompetent managers and HR departments that decide on budgets before looking at actual job requirements.  And you have agencies working mostly on spec who take the orders, with no DSLA in place and so no consequences for the originating company beyond the cost of their vacancy, and those agencies will sit on the order and work it and eventually what happens is the job doesn’t get filled, they get really lucky and find someone who is undervalued and willing to take the position at the salary proposed, or, and this is the least likely, the company caves in and pays market rate for what they actually need.

Here’s the reality…

You get what you pay for in the labor market as in every other market.  Labor has a price, you either pay it or put up with a more junior person who you can afford.

If you want to fill a position, you will figure out what the job description is and then look up the salary ranges for that type of role in your area, and aim there.  If you’re below the mean salary you will have problems filling the position.  If you’re significantly below the mean salary, you will not fill the position.  If you have alternative forms of compensation you can offer, these need to be offered to your high performers as a means of retaining them.  You can not make up for any significant shortfall in salary with other benefits except in rare instances where what you’re offering is exactly what the employee wants.

It is way past the time HR and recruiting professionals pulled their thumbs out of their asses and told companies they have to pay their employees and pay a market wage.  If they are not willing to do that, you can still find them people, however they will be more junior than where they were aiming, or of lower quality, like lacking leadership potential, etc.  You can’t simply “get people” at any price for any job.  Recruiters and HR professionals need to set better expectations and push back more on these companies run by idiots who think they can go to an electrical engineer who would be earning 90K at any random company in area and offer that person 50K and that they’ll jump at the offer for some reason.

To all business owners: you are not the only game in town.  There are other companies out there, and they’re offering jobs pretty much like the ones you offer, with pretty much the same benefits and working conditions, etc.  You need to look at your company in a totally honest fashion with no marketing or PR bullshit in the way and find out why someone would want to work there.  If you can’t answer that, or if there really is no reason, you need to look at your compensation rates because that will become the only way to differentiate your company from the competition.

And to finish up, you need to stop listening to morons who try and tell you salary is not a motivator for people.  It is the primary motivator.  People need food, shelter, and clothing.  They do not get that by having more creativity at work, or working for a company with a prestigious name.  Try and pay your rent or mortgage with either of those things, it won’t work.  You first need to compensate your employees fairly for what they are doing for you, and then target the ones you want to retain and hit them with non monetary compensation to try and keep them around longer.  Money is without fail the first question candidates ask about in any inquiry about a position.  People need to stop tip toeing around this issue and address up front and in the open: pay matters.  Deal with it and pay your employees with money, not freedom or opportunity or any other non monetary piece of bullshit.