Friday, July 19, 2013

What's a Good Employee Worth?

I was talking with a serial CEO the other day about difference between the worker who’s a Hundred Percenter and the worker who’s the Plus Two Hundred and Forty Percenter and the CEO told me this story:

“A woman worked for me, I’ll call her Mary, who was one of the most dependable people I’ve ever had work for me.  She delivered almost everything ahead of deadline, she anticipated what I might need, she met every goal I ever set for her, and she had great expertise in our business.  Mary was a joy to work with.

At the same time I had a fellow working for me, I’ll call Steve, who was a pain in the you-know-what.  I’d ask him where he was on a project I’d assigned and he hadn’t started it yet, he’d been busy working on something else.  Or I’d tell him how I wanted something done and he’d argue with me that it was a dumb thing to be doing.  Or he’d come into my office with some idea he had and wanted me to interrupt my day to listen to his idea.  Often they were just things we weren’t going to do.  He didn’t miss deadlines but sometimes I’d wished he’d been more ahead of the game.  Plus his social skills left something to be desired.  Without intending to, in almost every meeting he managed to offend someone.   He eventually left.

We paid these two people about the same.  However, looking back on it now I see that the business got far more value out of one of these employees than the other.  

Mary was what you call a 'Hundred Percenter'.  She was completely reliable, an expert in her job, and did her assignments extremely well.  She was terrific.

Steve was what you would call a 'Plus Two Hundred and Forty Percenter'.  (Note: The 240% comes from a Gallup study that showed the most engaged worker is worth 240% more than the person who gives you the 100%.)  In Steve’s case he gave the business far more than an incremental 240%.  

Part of the reason he was a pain in the you-know-what is that he constantly wanted to change things.  One time the head of IT came into my office fuming over something Steve had done with his PC.  Steve had taught himself C and had written a small program that could do in seconds what took the technology group an overnight batch process to accomplish.  The head of IT wanted to know why Steve was writing computer code, where was that part of Steve’s responsibility he wanted to know.

Steve originated lots of little changes that boosted our margins.  But he also came up with some completely new ways to look at customer problems.  Often I found myself arguing with him, dismissing his idea, only to find myself embracing the idea a few weeks later.  His ideas changed how we service customers. He came up with a valuable new product we could offer customers. One year he came up with a change for customers that solved a big problem they had.  At the time I was not very supportive because I saw it as revenue neutral to us.  But, looking back on it I realize it built great customer loyalty.

I don’t remember all the changes he came up with but I sat down to put a value around what he delivered.  Based only on those things where it’s easy to calculate the value, in seven years Steve’s ideas delivered over $33 million to the company.  I suspect the real number is double that.  

Here is the frightening thing for the owner of the business.  If the owner of the business had come to me at the time and said I had to lay-off either Mary or Steve, I would have kept Mary.  She was predictable and never asked me to take a risk, and she was easy to manage.  I also realize now that the owner would never have noticed the difference although the value of his business would have been far less. It would have been a mistake on my part, but I could see myself doing it.

So, Bill, the work you’re doing around taking Mary and turning her into a Plus Two Hundred and Forty Percenter is the right thing to be doing and I think you’ve actually figured out how to do that.”
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