When Keeping Up With The Jones’s Is Bad For Business
April 3, 2008
I don’t know if you’re familiar with the term keeping up with the Jones’s. I guess that depends which country you’re from. But many of you will be all too familiar with the concept - too many people want what they’re neighbours have got, and more often than not, they want to outdo them too.
Now, I’ve always found these types a bit sad - but to be fair, I love them at the same time. If you have a business, these people are your best friends, because more often than not, what you sell to them, you can also sell to their neighbours.
But, if you’re in business with the Jones’s types, or worse still, you’re one of them yourself, you need to change your wicked ways because this attitude is bad for business.
A friend of mine was telling me a story about a company who’s trying to headhunt him. Their business is not doing so great and my friend has a brilliant track record in their industry. Now I don’t usually gamble - in fact, I hate gambling. But, I’d be willing to bet that he could turn their problem round dramatically and net them a huge profit in his first year of working for them. There’s just one problem - the company think like the keeping up with the Jones’s types, in a backward sort of way.
My friend isn’t desperate for the job, but he agreed to go to work for them, so long as they paid him the same salary he is getting now. I personally would have wanted more - but he’s happy with the same amount. Anyway - they want to pay him less. In fact they don’t want him at all, unless he’ll take less.
And the ridiculous thing is, the difference is a paltry amount but their reasoning is even sillier. The Directors don’t want to match his salary because he’d be getting the same pay they’re getting themselves. Now - isn’t that poor thinking at it’s worst? They’re not going to be getting less themselves. And they’ll be benefitting from a massive increase in profits and business growth. But they don’t want it, because they don’t want to pay someone the same salary they’re getting.
And it’s not just them. This illogical way of thinking is pretty common. In, I Can Make You Rich, Paul McKenna refers to a study where several people were offered a salary raise. They were given two choices - they could have $80k a year and their colleagues would get less. Or they could have $100k a year, but their colleagues would get more. The majority chose to take $80k a year because they didn’t want their colleagues to earn more than them. So, their backward thinking meant they got a lot less money.
Do you know people who think like this? Can you see what a huge advantage you have if you don’t think like this? Or do you already think like this and do you want to change your ways?
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Hi Catherine,
In a way, this is rather funny. Being self employed, if I calculated the amount of time we invest in the business (often it feels like 24/7), and divide it into our yearly income, we make a lot less, per hour than our employees.
Paul McKenna’s story is an interesting one. He’s saying that some believe our “value” (in life) is based on what we earn?
Although I understand that corporate way of thinking, and their chain of command, often one person can do the work of two or three, and rightfully should be paid more.
Maybe your friend should take the job with a condition that he gets a bonus of X% of the profits the business will realize based on his expertise to turn it around,
Barbara Swafford’s last blog post..Blogs To Be Subjected To Parental Ratings
Hi Barbara - He’s sort of saying that - but he means more often than not people would rather earn more than others, even if it means getting less - which is madness really. Sort of like cutting off your nose to spite your face.
I forgot to mention - they did offer him a commission, but because of the type of business it is (sales) he said it would be unethical to take it. He doesn’t want to be accused of selling to people who wouldn’t be right for the product and vice versa, because he is on commission you see.
That Paul McKenna question is absolutely amazing. Is that really true?
If it is, it must have been a sample of a certain type of person perhaps. But I suppose it’s worrying if it’s really true.
I don’t think people actually desire money as such. And I think people desire “stuff” and money is the route to that stuff.
But this kind of suggests that people want more stuff than their neighbours, and that’s more important, than simply being able to have more stuff.
The attitude of the directors who couldn’t stand a member of staff on more money than me is also unbelievable.
Why are they in business?
I’ve often been paid less or nothing at all compared to employees.
Their problem is that they are possibly missing the point about their business. They may perceive it as some sort of job, where because they lead it, it helps them maintain their status at the top of the tree.
I’m delighted if people are paid more. Highly paid people are usually paid well because they deliver more. And any business owner who desires more than a job, may be in it to one day sell it.
That means, adding value to the business. Which also means that in the short-term, it doesn’t matter what you are paid and whether that is more or less than anyone who works for you.
Those highly paid people may be making your company more valuable. They may be getting commissions for gaining new clients, and each client has a lifetime-value which under-pins the valuation of your company.
Or they may be brilliant at delivering a service which ensures clients never want to leave. Again, adding value to your business because people want to buy companies that has a loyal, happy client base, delivering profits which would give them a return on investment - especially currently - worth far more than sticking it in the bank.
BUT saying all of that, if you want a saleable business, I think it’s probably better to invest more in systems.
Companies that have too much value invested in key personnel are more risky. Because if those amazing people leave, the clients may well leave too.
If building a business of value is your goal, then you have to win clients who are in love with the service you can consistently deliver.
I am not saying people aren’t important - they are. And good people can work even better within an established system.
Ian Denny’s last blog post..You Are The Best - So Why Don’t New Clients Beat Down Your Door?
Hi Cath - I liked your post today, and I feel for your friend. It shouldn’t work that way.
My company pays consultants very well for what they do, in many cases, more than what the management would make. That’s a good thing.
All is not perfect where I work though - the employees who actually do development work often have 5-6 year old computers with smaller monitors. The upper level managers - of course - have the latest toys, but what do they do? Count beans. And most of the time you see them they are not at their desks anyway, but instead sitting in meetings sending each other messages via BlackBerry.
*sigh*
That’s life I guess!
Brett Legree’s last blog post..the power of one.
It’s that irrational reasoning that makes people happier to get $25 when others get $20 than to get $50 when others get $50. *sigh* Obviously, the future of their company doesn’t matter to them. No chance they could reframe him as a large piece of expensive specialty equipment?
Great example of how psychology is often the biggest obstacle to success.
Sterling Okura | bizlift’s last blog post..Update - New Champ, Paris-Nice and Full Feed
I’ve never understood the disconnect between performance and salary. If he can give them a massive increase in profits, then he’s worth more money. Someone who gets little done will typically make only somewhat less money than a superstar. For some reason, athletes are paid based on performance, but most employees aren’t.
Hunter Nuttall’s last blog post..The Best And Worst April Fools’ Joke Of 2008
Hi Ian - sorry for not replying earlier, but some bloody electrician down the road made a hash of things and managed to break several things in my house, including the Internet connection.
Yes - those Directors are quite mad aren’t they? In my earlier days at Rainbow, I always paid people more than I paid myself. Some months, I wondered if we were actually going to be able to get enough money in to eat, but you expect that in the earlier days of a business don’t you?
Hi Brett - Thanks. That’s complete madness and it probably happens in a lot of businesses. Mind you, I personally think my friend is best not going to work for them. He’s worked for one of the Directors in a previous business and there were some problems.
LOL Mrs M - It’s scary though. Many of these companies probably would feel better about spending more on a bit of worthless equipment.
Sterling - that is true. I guess we do create most obstacles with our own minds.
Hunter - it’s ridiculous isn’t it? I would much prefer to pay people on performance. I’ve paid some people far greater salaries than others and it’s because they earned the business more and never said “I can’t” when there was an emergency. Unfortunately - those types are few and far between where I live.
Clare - thanks - glad it made you feel better. My only regret was not doing it years earlier. And i would advise anyone in a relationship
with an ass..le to get out asap. It doesn’t get better and they don’t change - so you wind up wasting a lot of years of your life.
It also beats me how managers or directors can shoot themselves in the foot like that. The irony here is that they actually headhunted your friend and yet they are not prepared to pay him what he is worth.
To me that just sums it all up. They want the profits and fame that comes with increased performance, but they are not prepared to pay their dues and remunerate the people who can get them there.
This very much reminds me off my career as a chef. Despite working for some top restaurants with many accolades us the chefs got paid a pittance while the big dude cashed in big.
Funny thing is, without a chef there is no food on the table, therefore no patrons and no money. This happens everywhere unfortunately and might be a result of giving micro managers too much power.
Monika Mundell’s last blog post..Creating BANS Clone Sites The Easy Way
Hi Monika - that is terrible. Chefs deserve decent pay as it is the food they cook that attracts the customers to a restaurant to begin with. Many chefs I know packed it in to do something else. There was just too much stress, unsociable hours and low pay.
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