Okay, I think you need like a human resource consultant or lawyer before implementing any of the tips in this chapter. It is titled “Pay For Performance” and it revolved around how you should set everyone in the business with a compensation structure where their paycheck can increase or decrease based on performance. Very much like a commissioned sales person. If you must pay someone a base as a result of stipulations such as people being in a Union then you should pay them the lowest base salary and make them earn the rest through a bonus structure.

As well, Cloutier was expressing how it’s not good enough if your pay for performance structure is a one lump some setup such as how companies have a year end Christmas bonus if the company does well. Basically, with this no one has the urgency in between to do well.

He used examples too of companies that he convinced to implement this type of compensation structure. Not surprisingly, the majority of the employees disliked this and quit. Just as fast as they quit he mentioned that they were able to find new replacements. The profits and productivity have soared since then.

Now here was the biggest shocker. He mentioned that even for his own company when someone does something bad he would deduct their pay. Example, he said that he began to deduct $50 when people failed to return calls within thirty minutes. Not surprisingly, people smartened up afterwards.

I have no idea how you can do that with an employee. Example, to my knowledge you can’t just deduct an employee’s wage if they did something bad. If these were like contractors or business partners then that would be completely different. So that’s why I say that you should really research this and the laws in your area.

There was also an interesting point on how employees like the job security though and so this type of plan wouldn’t fly in most cases. Cloutier then tries to counter that view by saying there is no such thing as job security and that it is actually more secure this way since people are in control of their pay in many ways and can make more.

Overall, I personally agree with the underlying message here where it makes most sense to have a structure where people are rewarded and compensated from producing results. In many ways I think many people have too much of an entitlement mentality when it comes to earning money.

In some ways you can say that it is just better to be an entrepreneur if you have to work under this type of pressure. Another way I see it is that you basically are an entrepreneur except you don’t have to pay for all the expenses in running a business.

I’m reading this story about that Wal-Mart store that closed down in Quebec way back. It was the first store apparently in North America to obtain union certification and shortly after the company announced that it would be closing down the location.

As a result, hundreds of people were laid off and recently there is a lawsuit in the supreme court against the company initiated by former employees because of it. From what I read, they are going on the basis that they lost their jobs due to their union activities while the company claims it’s more about the business in general and how profitability was the reason they closed.

While in my honest opinion that union deal probably was a big reason for the closure, if a company decides to close its doors for this type of business I can’t see how anyone can contend that. For all I know, someone could close it down because they simply don’t like it anymore and so how can anyone force them to keep it opened?

Of course it’s sad that hundreds of people lost their jobs, but it’s a little different if say only a selected few were fired as oppose to the whole business closing its operations.