Saturday, January 28, 2006

Pay For Performance And Poverty

I read a recent news article that described how a city was dealing with its rising poverty level. The city is asking volunteers to mimic the life of a poverty-stricken person. The city says that more than 200 people have volunteered and many of them have decided to help resolve the city's problem. Nice thought, but I don't think it helps anybody but the people that volunteer. It makes them feel good.

I think that the primary cause for long term poverty is simple. You've got to have a reason to want to get out of poverty. Some people that live in poverty don't feel like they live in poverty. Their way of life is all they know. Their parents lived it and their friends currently live it. They see no reason to leave the lifestyle. But, what if they had a goal? What if they had something to look forward to besides a government check? What if we instituted a pay for performance plan for poverty stricken individuals?

I used to hear this comment a lot during my early days of this business. "Why should I work for you when I can make more money by just sitting at home?" The government was actually giving them reasons not to work!

I got sick of hearing this, so I changed our pay structure. This comment alone was a big reason for our pay for performance plan. And you know what? It worked. The same people that wanted to sit home and collect free money decided to work for us and make more money by simply working a little bit harder. In our business, you get paid based on your performance level. You make good money if you work hard. You make lousy money if you're lazy.

The government could do the same thing. No, I don't have all the answers. But, the concept is simple. Make people believe that there is a reason to live. Provide incentives for reaching certain goals.

I've read that the national poverty level is $17,000 annually. What if the government assigned an advisor to each poverty stricken adult. What if the advisor required to see tax records, children's school records, and debt records from the previous year? What if the advisor outlined specific goals for the next year? What if the government paid that poverty stricken adult to reach those goals? It's simple. You get paid based on your performance.

The current system encourages people to keep themselves depressed. We all saw this after the Katrina disaster. People need a reason. My business is a mini-nation. It only has about forty employees, but it has the same economics as the rest of the nation. I've seen the pay for performance plan in action and it works.

I'm a little cleaning service owner in Florida, but I'm hoping that someone sees this and sends it to someone else. Make the idea viral. It can work.

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