A common conundrum for employers is whether to hire talented employees from the outside, or develop them from the inside. If you want to build a performance-based culture -- a workplace that rewards people for what they actually achieve on the job -- you should consider the latter, according to Entrepreneur.com guest writer Robert Glazer, founder and managing director of Acceleration Partners.
"As our business grew, we faced this problem more than once. When we began hiring experienced candidates to fill senior roles, we found that they often came from larger companies with better compensation packages. Hesitant to offer them lower salaries, we ended up paying them more than some of our existing talent, hoping we would benefit in the long run from their experience," Glazer explains. "Of course, these high-paid employees still needed to learn the ropes at our company. And we found that it could take six months or even a year for their experience to pay off. In the meantime, we were paying them more than someone else doing essentially the same job at the same performance level or possibly at a higher level."
Because that didn't seem fair, Glazer's company adopted a two-pronged policy that it calls "Pay for Day One and Promote When Ready."
The idea is simple: You compensate employees for the job they can do on day one, not for their future potential. Then, when they accomplish more, you pay them more.
"In that context, we focus on candidates who are willing to take a small step back in exchange for higher long-term rewards and responsibilities. These are the people who have faith in their own abilities, and that their confidence will be rewarded," Glazer says. "Rather than pay up-front for capabilities that we are not yet leveraging, we promote and adjust compensation as soon as someone is ready for the next level -- even if that happens within a matter of months. This way, two people doing the same job are always paid the same, which is critical to maintaining a performance- and results-oriented culture like ours."
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