Price is Only an Issue in the Absence of Value
The title of this article is not something I invented. But, the smart person who first said it seems to be lost to history. But, that’s not the point.
As compensation professionals, we worry an awful lot about prices. Value is something we often put on a back burner while trying to build a better benchmark. The secret that the best businesses and salespeople know is that pricing loses its power when the value is properly understood.
It’s such a simple premise that it can be hard to believe fully. But, study after study confirm this simple fact. When something has value to a person, the price they put on it is higher.
Are your employees leaving for an additional $0.25 an hour? I recently spoke to someone who told me just that. While pay for these roles must be evaluated and possibly corrected, there is something deeper serving as the cause of this issue. The company knows it. The individual knows it. But neither have been able to put their finger on it. Identifying, defining, and building the perception of value is not always easy.
First, you must be able to create the feeling of value from the perspective of the individual. It doesn’t matter one bit whether you see value in the offer. You probably helped determine the details, so you probably see some value.
You need to understand what is valuable to the individual. Don’t guess. Don’t assume. Don’t tell them. Ask them. Listen and confirm. Then get to work building or communicating that value to the individual. Don’t do this as some defensive counter-offer to someone who has said they are considering leaving. Be proactive.
Work on learning what people in the problem area find valuable about their jobs and in life. Work on showing them how your solution builds on that value. Show them new ways to find value in what they do. If you can effectively do these things, you may find that minor pay differences are no longer an issue.
I can already hear some of the negative Nellie’s saying that this is too simple and it won’t work for everyone. You are right! It won’t work for everyone, but it will work for a bunch of someones. This is a purpose-built approach to dealing with people who are “leaving for better money.”
Think about it this way. Diamonds are made exclusively from one of the most abundant elements in the universe. They are incredibly expensive for something so abundant. But, they have great value to people purchasing and receiving them. They have come to represent something of significance between two people. They represent commitment. They represent the fact that you are doing well enough in life to own that shiny bauble. But, make no mistake, they are expensive!
The value they deliver exceeds the price required to obtain them. Spend the next two months figuring out what your people value and how your company can deliver it. If you do it well, you will find that prices are only an issue in the absence of value.
Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and considered a leading expert on equity compensation issues. Dan has written several industry resources including a recent Performance-Based Equity Compensation issue brief. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation.