How to Give Your Employees a Raise…For Free

What do your employees want? A pleasant working environment? Yes. Meaningful work to do? Of course. Work/life balance? That would be great. Decent coffee? Duh.

All of these things are vitally important, but the thing that really brings them in the door each day is a paycheck. Your employees work for money, and they would really like more of it. What follows is a wild suggestion for giving your employees a raise that doesn’t cost you anything.

Photo of a cup of coffee
Drinking coffee is not a revenue-producing activity. Photo by David Leggett.

I recently wrote that the easiest way to increase your hourly pay is to work fewer hours. What is true for individuals and rates of pay is also true for most companies and productivity. You can increase your company’s productivity by putting in fewer man-hours. (This post applies primarily to salaried knowledge workers; if you are a manufacturer, run a call center, or are a retailer, you can probably skip this post as well as the one next week.)

A simple measure of productivity

At its most basic, productivity can be measured as revenue received divided by hours worked to produce that revenue. You can increase productivity be either creating more revenue with the same number of hours or creating the same amount of revenue in fewer hours.

Increasing revenue with the same or fewer hours is really nice, but hard for a number of reasons. (I’ll cover the one that I think is the most significant next week.) The other side of the equation—working less—is obviously much easier.

Productivity and pay

Why would your employees want to decrease the number of hours they work? Because we all want a little more time, and because (stick with me for a moment) you are not going to reduce their pay.

I’m suggesting that you pass on to your employees part of the value of their productivity by allowing flex time, closing the office early on Friday if all the work is done, or some such scheme. The devil is in the details, of course, but working fewer for the same amount of pay means that your employees are getting an hourly raise. This raise doesn’t cost you, the employer, anything (and saves you coffee).

A per hour raise and additional time off makes employees happy. It also motivates them to even greater productivity because they are now enjoying the fruits of those productivity increases.

It is obviously a good deal for the employees, but why is it a good deal for you, the employer? I’ll cover that in more detail next week, but for now let me just point out that—

You are already paying for non revenue-producing activity.

Wander through your office and look honestly at what you see. If your business is like most offices, in addition to doing work that generates revenue, your employees are visiting, checking the highlights of last night’s game, holding ineffective meetings, and drinking loads of that excellent coffee you have so kindly provided.

It’s enough to make some employers ill and want to fire every last employee…but it isn’t their fault. They aren’t doing this because they are bad employees, or because they are lazy, or aren’t committed to their jobs. They are doing this because they are expected to be in the office for eight hours each day. They are doing this because in the modern knowledge economy it rarely takes eight hours to do a day’s work. They are doing this because they have no real incentive to improve.

Take a walk through the office…then take a walk outside and cool off before you fire someone. Give some serious thought to the unproductive behavior you have observed and what’s causing it.

In my next post, I’ll describe how to really improve productivity and why it makes sense to give those improvements away.

Tell me why this doesn’t make sense in the comments below. I’d like to address objections in a future post.