Responsibility For Costs
October 5, 2007
Last Revised: May 23, 2012 4:50 PM
Mark recently remarked to me about his new understanding of the difference between an "owner" and an "ED" or "VP."
The difference is, perhaps, even larger than thought?
When an owner makes a mistake, he pays. It is the physical universe that assigns and enforces a condition on him generally without even telling him. He makes a mistake and customers go elsewhere. He makes a mistake and an expensive tool doesn't help production. He makes a mistake and .... he pays. Staff still get paid, until the final bankruptcy catches up, if it does.
When anyone lower than an owner makes a mistake, almost always it is the owner who pays also, even if the staff member takes some responsibility. The staff member often pays with only a fraction of the total cost ever experienced, particularly when you also include lost time and hidden mistakes.
Owners make the big bucks not because they are older, more clever or talented, but often simply because they cannot escape taking responsibility for mistakes of others. Owners, and their savings accounts, are the buffer between the bankruptcy a group or company might face and continued paychecks and survival. If staff members cannot or will not be totally responsible for their own mistakes then it is likely to be the owners' savings that prevents a bankruptcy.
LRH tried hard to push the owner's responsibility down the line because there was no "owner" in the case of the Church. He was certainly not an "owner." In truth, it would be "mankind" that would suffer the loss from mistakes made by any staff member in any org.
"Mankind" is hardly aware of the cost to "it" of an unhandled mistake by some staff member.
I recently "made a mistake" and paid some $12,000 as down payment for the RV I bought, plus some other thousands of dollars and hours of distraction, only to decide after a week's driving experience that it was a mistake. The only way I could see of reversing that mistake, getting out of the RV business, was to accept my personal loss of those thousands of dollars and hours of time. The seller of the RV had no sympathy. His business model allowed him to offer to take the RV back without further penalty than that I lost the down payment. It could have been worse for me.
I had no thought of asking each VP to take some share of that cost.
But, in truth, while I used my personal savings to pay for this mistake, that amount of money is no longer available for my support of Vibrant Life, or the mistakes that are made by my staff.
The staff incentive pay system is an LRH approach to letting every staff member recognize and take responsibility for both the good work done, but also the mistakes made by their fellows.
EVERY MISTAKE THAT COSTS THE COMPANY MONEY AFFECTS THE AMOUNT OF MONEY AVAILABLE TO PAY STAFF ON THE INCENTIVE PAY SYSTEM. THE INCENTIVE PAY SYSTEM GENERALLY WILL NOT WORK UNLESS, AT THE SAME TIME, THERE IS A SYSTEM OF "KNOWLEDGE REPORTS" WHEREBY ANY STAFF MEMBER NOT ONLY CAN SEE, BUT RECOGNIZES HIS RESPONSIBILITY TO, REPORT ON WHAT HE SEES.
My estimation has been that the Incentive Pay System can be implemented with no reduction in any staff pay from their present pay levels when we have achieved a stable amount of VSD at $20,000 or more for each of five consecutive weeks.
It may seem easier to reach that $20,000 level, five consecutive weeks, if I took more money out of my personal savings, hired more staff, spent more on promotion, but the $20,000 estimate was made on the basis of the present staff level with marketing costs being held to about 20% of CGI.
The Incentive Pay System that I have designed takes into account ALL Company expenses: payment for products, marketing, shipping, rent, overhead, owners' profit share, fixed salaries (for some) and the incentive pay plan. It is all taken into account. We cannot suddenly spend a much larger percentage on marketing than is planned in that system to achieve the $20,000 weekly VSD figure. But, we CAN spend those same planned percentages of current income -- although we have lately been spending more because the sales were down, but marketing expense did not rise and fall with the VSD, as it must when we are on the incentive pay plan.
This is a time when all staff, those who have recently made costly mistakes, and those who are innocently helping, nonetheless, all must produce without expenses increased over the percentages shown in the incentive pay plan.
Mark Warkentin has been appointed as Deputy ED and also is holding Ethics Officer from his position of DED. One of his major jobs in the soon future is to get every staff member to start reading and following published Company Policy and to assist staff members with understanding and applying Ethics Policy within the Hubbard Management System.
When/if/as Mark comes to handle any person with a condition below Non-Existence, he should handle it within LRH Policy, but approval of any such handlings can only be finally accepted by the ED.
He will run Executive Council meetings in my absence. The order I've given to have each VP give me certain reports is still to be followed, but when and as I see smooth compliance I will ask Mark to take over the daily receipt of those reports for handling, with me to receive secondary, "information" copies at whatever remote location I may be in.
There will be more on this.
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