Dear Robin, How Can I Get Millennials To WORK?

I received a question in our membership portal from a client who asked a question that every business owner has or likely will come across while building their team and scaling their organization.

Here is the question and then I'll hand you my thoughts.

"Robin,

I have a few millennial employees and I try to understand how managing this age group has changed the workplace. Those of you who are baby boomers did our work to reach our goals and I never thought that my employer "owed" me that time back like the next day or the next week especially if we were on salary. There is never an issue when emergencies happen or for any various reasons have to leave early. We don't ever say "Well you can work those 4 hours tomorrow over and above your work day as I understand the salary designation, helps my wife is a 35-year HR professional.

As you know there are times when we get caught up on a situation we cant just be like Fred Flinstone down the dinosaur when the whistle blows. Yes I am that old ;-).

Do you run into this situation? How do you handle it? I understand if you are hourly there is overtime, but salaried people are time-exempt. What are your thoughts?

Thanks, Ron"

Well, Ron...

For the first 6-7 years of running my business, I struggled HARD with hiring the right people and, more importantly, managing them so they were productive players on the team. I’ll save you the horror stories, but I finally got to a point where I had enough and hired a coach to work with me on this so I could get it right.?

As I read your question, I see a lot of the same ideas and problems I had and have since resolved, so this answer is going to be long, winding and (hopefully) very, very useful to you. I have several thoughts…??

First, there’s the legal matter. You must abide by the law, period, and each state has different laws for overtime and pay. For example, in Tennessee, employees who are paid by the hour MUST be paid overtime pay at a rate of no less than time and half their regular rate if they work more than 40 hours. However, if the employee is being paid on a salary and earns more than $684 per week and/or is performing professional, executive or administrative duties, they are NOT required to be paid time and a half. But make sure you abide by the law. The world is full of legal sharks who delight in nailing business owners for anything that even hints of “wage theft.”?

That said, if you don’t want clock watchers, and you want employees who will stay and get the job done, you have to do three things: 1. Hire the kind of person with that work attitude, 2. Make it clear that staying a little after 5:00 is occasionally part of the job, and 3. Stop paying them by the hour AND put together a compensation plan that incentivizes the behaviors you want.??

Step one is that you need to get clear in YOUR mind that you’re hiring people to produce an outcome or result, not just put in hours. Do you have a job scorecard that details the mission of the position, the top key results they need to produce WITH clear KPIs for performance measurement, and a list of job responsibilities? If not, that’s where you start.??

Part of the bonuses we give to our leadership team is based on hitting P&L targets, as well as retention and customer satisfaction scores. In most cases, for NON salespeople with a quota, they are getting about 80% of their compensation on base salary and 20% variable, or performance-based. You can pick any ratio you want, but 80/20 is a good starting point. The bonus is typically divided by 5 so that they get part of their bonus each quarter for hitting that quarter’s goals, and then an annual bonus if the overall year performance is met.??

Example:?

Base Salary: $80,000 per year?

Performance Bonus: $20,000 per year, or $4,000 per quarter plus an annual $4,000 bonus?

Therefore, in the above scenario, the OTE, or “On Target Earnings” is $100,000.?

If they hit their PERFORMANCE goals every quarter, they get 100% of their bonuses and hit their OTE.?

If they hit their goals in 3 quarters, they get $4,000 for 3 quarters, or $12,000 (not $16,000).?

If they end up bringing up the goal in the year, they get another $4,000 bonus.?

For example, let’s say the first two quarters of the year they miss their 4 score on CSAT, but then in the last two quarters nail a solid 5 and bring up the annual average to 4. They would get $4,000 in two quarters where CSAT was met AND the $4,000 for the year. That year, their earnings would be $92,000 (3 x $4,000 + $80,000 base).??

In some cases, you might decide to give them their entire bonus ($20,000) if they did an exceptional job overall or due to circumstances outside of their control that prevented them from hitting their KPI goals, but that’s at your discretion.??

The performance-based compensation is EXPECTED to be met because we EXPECT them to meet or exceed the performance goals we’ve given them. So, if our GMs (general managers) must maintain at least a 4 out of 5 score on CSAT (customer satisfaction), and they get a 3.5, they do not get that portion of their bonus that quarter. If they miss that in one quarter, we are having a serious conversation about how to make that improve by the next quarter, and they must own getting it done.?

Let’s say your techs need to hit certain KPIs of tickets resolved, client uptime and CSAT on the tickets they handle. Bonus them on THAT.?If you design the compensation correctly AND hire the right people, you don’t have to monitor their hours. They will either work overtime at their discretion to hit their goals, or they’ll figure out a way to hit their goals without working overtime. Either way, everyone wins.??

This is why I don’t like hourly pay for critical, strategic employees. If you hire them hourly, OF COURSE they are going to be clock watchers. You would too. If you had a client that was paying you hourly, you wouldn’t give hours for free and would probably charge a premium if you had to work nights and weekends, so don’t pay your people that way or that’s what you’ll get.??

Further, GREAT employees want to be compensated on performance provided they can earn more than the average salary and hitting the goal is reasonable and fair. It’s the lazy and stupid ones that just want to be paid for putting in hours because they don’t want to be accountable to results, or lack the skills and confidence to take ownership of the result.??

In fact, I would figure out how to bonus them for performance that allows them to make slightly more than the average going rate for their position.?

Second, “clock watchers” come in all ages. I’ve had older to middle-aged people working for me who only wanted to work the 9 to 5. Guess what: that’s perfectly okay. I tell my employees, “You name the price and I name the terms.” Sometimes they want more than the position can pay. In those cases, they either need to find another job (with my blessing) or they have to take on a different position that can afford a higher pay rate. If they aren’t qualified for that position, they’ll need to go elsewhere to find a higher pay rate for the job they’re doing.??

Remember, not everyone is gunning for a bigger check or a higher status. I would estimate that 70% aren’t. They want to go to work, make good pay, and leave by 5:00 p.m. every day. In some cases, they have to leave by then due to responsibilities they have outside of work – and that’s okay. All businesses need these people and need to have expectations that they aren’t going to be working overtime to earn a promotion or gain extra skills. By the way – have YOU shown them that IF they work harder and put in the extra time they will get to another level of compensation and responsibility? Have you shown them a path for advancement? If not, that’s on you.??

Only about 20% of the people in the workforce are at the top of their game and have the passion, drive, desire, and work ethic to EARN a promotion.

Question: Are you providing the kind of environment and company that would attract THOSE people? Are you giving them a compensation plan that fuels this behavior, aligning them with your goals???

Then there’s the bottom 10%. Those people are lazy, confused, disgruntled, and unethical. The goal is to not hire them in the first place; but if you do, fire FAST. Again, these people come in ALL ages.??

Right now, I have over 30 employees who are in their 20’s who are hardworking, polite, and ambitious, and who work late without me telling them to do so. I also have some employees who are wrapping up their work by 4:59 and out the door like “Fred Flintstone” as you described. I have no beef with that provided they are getting their job done well and projects on time.??

I’ll leave you with a final thought:

YOU are responsible for who you hire and their performance, so if you are attracting the wrong people, it’s not because an entire generation has morphed into aliens who have an entirely different set of standards and work ethic, it’s because your attitude, compensation plan, hiring methods and leadership approach needs to be fixed, just like mine needed to be fixed years ago.?