Jake and Justin, twin brothers who were 23 years old, worked for a large sawmill not far from where they grew up.
Their father was aware that even though both sons had essentially the same job title and duties, Justin was paid significantly more than Jake. Curious as to why, the father sought out the owner and asked him about the variance. In response, the owner invited this father to drop by his mill and casually observe the activities.
A few days later, the father showed up at the mill. The owner picked up the phone and called Jake into his office. He said to him, “There’s a trucker from Portland at the gate with some logs he wants to sell us. Go find out what he’s got.” Within fifteen minutes, Jake returned and said, “I checked out the load and it looks like he’s carrying about 40 to 50 large logs, mostly pine, and all appear to be in pretty good shape.” The owner thanked Jake and dismissed him from his office.
He then summoned Justin and made the same request. “There’s a trucker from Portland at the gate with some logs he wants to sell us. Go find out what he’s got.” A half hour later, Justin came back and said, “I counted 38 pines; most are about 20 feet and are in really good condition. There are also 11 aspens which are slightly shorter, and all but 3 are in pristine condition. He wants $1,000 for the whole load. Sam McHenry was down here twice last week looking for aspen for this large furniture project he’s working on, so I called him and asked if he’s still in the market for aspen. He told me he’d take the eight good aspen off our hands and offered $150 for each. If we accept his offer, we’ll make all our money back plus 20% and the 38 pine will be pure profit.” The owner told Justin to sell the aspen to McHenry, then thanked him and sent him on his way.
He then looked at the father. “If this were your mill, would you pay those two employees the same amount?”
“Absolutely not,” the father said. “Though equal, it certainly wouldn’t be fair.”
(The Sawmill is a parable by Eric Chester.)
ON POINT – Compensating employees using time spent on-the-job as the sole metric (hourly wage, monthly salary, etc.) may be simple to calculate, but it does little to engage employees and incentivize top performance. The most effective compensation methods are those where employees are paid in direct proportion to the value they bring to their organization. This is not simple or easy, but it is a prerequisite to building a great workplace culture and being recognized as an employer of choice.