Secret Denominator

I recently came across a list of Top 25 companies by “happiness of employees.” There are lots and lots of flaws with most methodologies that measure abstract things like “happiness,” but I’m only going to focus on one today. It practically leapt off the page at me when I saw it.

I’m not going to put any particular company on blast here, but one company jumped out at me because I knew this company well. I’d never worked for them directly, but I worked in an industry that interacted with a lot of their employees. And they were miserable.

So miserable, in fact, that there was excessively high turnover. And then – ah ha.

How do you raise the average wage of your employees while also saving money? Simple: you fire the lowest-paid 10%. Boom, now your average wage is higher even though your total payroll cost is lower and no employee is making a penny more.

How do you get really high employee happiness? Fire all the unhappy employees. Or just make them so unhappy that they quit.

That’s the “secret denominator.” What isn’t being measured or observed – or at least isn’t being reported. I remember first learning about this nasty trick in sales recruiting. A company could honestly say as part of it’s recruitment efforts that “over 95% of our sales reps make over $100k/year,” because they’d set the quota at $25k/quarter and fired anyone who didn’t make quota in the first three quarters. So it was technically true that virtually all sales reps made that much, but the part that never got filled in was “out of how many that tried?”

Always look for the secret denominator. Look for what isn’t being counted.

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