“I do not know how much to pay people to make them work: pay less and they start working poorly, pay more and it’s even worse!” The craft of a manager is largely determined by how stable he can maintain high team performance at relatively low compensation costs over time.
Mechanics theory includes the concept of equilibrium. It can be stable and unstable. Stable equilibrium is explained to students with an example: the ball rolls into the cup by the wall and stops after several dampening bounces. Unstable equilibrium is demonstrated as follows: if you really try, the ball can be put on top of inverted cup (let’s consider the cup does not have a flat bottom), but the slightest nudge on it will make the ball roll down – i.e. it will lose equilibrium.
Human nature in its bulk makes the person (employee) strive for stable equilibrium all the time in an interdependence between his or her own safety, the application of his or her own self-limiting efforts and achieving stability in it.
Human nature in its bulk makes the person (employee) strive for stable equilibrium all the time in an interdependence between his or her own safety, the application of his or her own self-limiting efforts and achieving stability in it. Business, on the contrary, is a system that becomes sound and growing when it is in a position of unstable equilibrium. The task of a manager is to maintain, as a minimum, unstable equilibrium in a team through the actual work of the head (his efforts), i.e. to keep the employees’ motivation ball permanently at the top. The ideal situation would be the one where employees get used to the dynamics of changes in their responsibilities in course of the development of the company, see stability in these dynamics and finally find balance of their labour efforts and the “non-dismissal” safe zone in this system.
All of the above is about productivity. Increased productivity per person is one of the most important criteria for operational efficiency in any business.
...speaking about a manager, not his own fairness is important in relation to a particular person, but fairness of rules within the company established by him.
How can this be achieved? First of all, understand and accept that it takes time. During this time there should be fairness in rewards and punishments, both in words and money. Fairness is a subjective category, everyone has their own opinion. Therefore, speaking about a manager, not his own fairness is important in relation to a particular person (many tend to understand fairness in this vein), but fairness of rules within the company established by him.
Alongside the development of these rules, it is necessary to remember that the second most important aspect is enforcing compliance with these rules.
Thus, an unstable equilibrium position for business development is achieved by two major efforts of the manager (and no one else). The first effort is the constant development and improvement of procedures (quality control, rules for working with clients, rules for how bonuses are accrued, etc.). The second effort is the continuous monitoring of compliance with these rules.
The obstacle (more precisely: the responsibility of the manager) is that there are occasions when you want to exact personal justice against someone in breach of the rules, or (worse still) to break the rules personally. There can be a lot of excuses: “Well, he does not know about this!”, “I can not disobey wishes of a senior partner...”, “She deserves no praise either, in general ...” and so on. As soon as something happens, start from the scratch, everything will collapse (or will unavoidably begin collapsing) and people will quickly roll down into positions of stable equilibrium. The only way to soften the blow from this punishable offence is to not be afraid to find a way to recognize own mistake made.