How to Staff Your Company - Part 2 (Beware the Minimum Wage Manager)

author: Lee Buttolph

“I pay you good money to figure this out!” shouted the small business owner to his general manager.

Yup, heard that before. But is this a true statement? Let’s break it down and take a look at it.

Here is what I hear in that statement:

1. The owner believes he pays his general manager a lot of money and

2. The owner has given the general manager a lot of authority over how to run his department.

Understanding the second statement is important to understanding the first. If the owner has given the general manager lots of control that means the general manager should be competent enough to run the parts of the company he has control over without a lot of input from the owner. How do we know the general manager is competent enough? Does he/she have any relevant experience? How long have they been in the business? Any advanced degrees or certifications? For every one of those qualifications, salary paid increases.

A salary range for a general manager in this company’s industry could be from $50,000 to $150,000. Obviously this is a large range and the implications to the bottom line profit could be significant depending on the salary price point the owner hires at.

So, what do most owners do, they find a “good guy,” pay them $60,000/year and give them all the authority the job description calls for (and nothing but On the Job Training (OJT)). The reason given is that they just don’t have the money to pay any more.

I call this the Minimum Wage Manager Problem. You hire someone at the bottom of the pay scale (essentially minimum wage for this job description) yet you are always surprised and angry when they can’t figure it out on their own how to run their department. You end up spending a lot of time telling them what to do, putting out fires and generally doing their job for them.

Stop being surprised by this. If you hire someone on the cheap, expect to have to coach, mentor and lead them through their job ON A DAILY BASIS. This doesn’t mean they can’t be effective at reducing your workload but rarely will they be able to take that duty 100% off your plate. It will probably be more like a 10-20% workload reduction.

If you can only afford to hire a minimum wage manager, you should probably be doing the job yourself until you can afford someone of a hire caliber. (see Part 1 on How to Staff Your Company)

Remember, the reduction in workload for the pay is not linear. The pay will need to increase substantially before you see most of the your work offloaded.