December 13, 2024
One of the fastest ways to destroy the performance of your team isn’t to pay them poorly. It’s to keep changing the rules.
I see this constantly. Revenue dips. The owner gets anxious. He tweaks the commission percentage. He tightens the bonus threshold. He adds a new condition. He removes a spiff that people had gotten comfortable with. Six months later, he does it again.
Every time he makes a change, he tells himself he’s optimizing. What he’s actually doing is teaching his team that the rules are not real. And once your team believes the rules are not real — once they’ve learned that performing well doesn’t guarantee the payout they were promised — they stop running hard. They jog. They do enough to get by and wait to see what the plan looks like next month.
Pay plans take time to work. Your team has to first understand the plan, which takes a few weeks. Then they have to start building habits around it, which takes a few more. Then they have to see a check that validates the effort — that the plan actually paid what it said it would. Then they start optimizing their behavior. That full cycle can take three to six months. If you change the plan before that cycle completes, you start over. Every time.
The thing that really gets under my skin is when owners change a plan because someone started winning. I have heard this more times than I should have to: “Tom, if I keep this plan, they’re going to make more than me.”
My answer is always the same. I ask: is your plan based on performance? They say yes. I say: then go tell them to stop performing so well. Problem solved.
The smiles fall off their faces pretty fast after that.
Here’s what the owner who changes a plan because a top performer is making too much is really communicating to his entire company: don’t succeed here. If you figure out how to win under our rules, we will change the rules. You cannot trust this system to reward you.
That message doesn’t stay private. It circulates. Every single person in your company learns what happened to the tech who was having his best month ever when the plan suddenly changed. And every single one of them adjusts their effort accordingly.
Real leaders — the kind of people I want to work for and work with — love to see their people win. They don’t feel threatened by a technician making strong money. They feel like it’s working. The pay plan is doing exactly what it was designed to do: rewarding performance and driving results.
If you’ve built a plan that allows someone to earn exceptional money through exceptional performance, that’s not a problem. That’s a success. Your margins are healthy, your revenue is up, your customer gets great service, and your employee has a reason to stay. Everyone wins.
Commit to your plans. Give them time to work. Change them no more than once a year, and when you do change them, do it transparently, with plenty of notice, and replace them with something genuinely better — not just something that costs you less when people perform.