If the money is earned by the boss, then employees are sharing the boss's money. If the money is earned by employees, then the boss is sharing the employees' money. So, who actually earns the company's money?

Let me start with a case. I won't name the company, to avoid accusations of paid promotion, as I've been unfairly labeled before.

This is a retail company known for its corporate culture, with all sorts of extreme customer service and illogical rules, such as mandatory closure one day a week. The company isn't large, but its influence is significant.

Many bosses around me admire it, but they can't replicate it.

Why can't they replicate it? Because the company pays its employees high salaries.

How high? About double the industry average. And the boss forces familiar retail bosses to raise salaries, not just a little, but to levels that make them nervous.

No matter the culture, there's an unchanging truth: you get what you pay for.

Of course, many bosses have a different logic: you pay according to what work is done.

Strict management is hard without adequate pay. Of course, even with adequate pay, management may not be up to par. It's a necessary condition, not a sufficient one.

That's the first logic. But it's not complete.

Because pay is sufficient, service improves. Because service improves, sales go up. Because sales go up, profits increase.

The above logic seems complete! Actually, it's not. It's the kind of completeness that ordinary people can think of.

What's the other logic? It's the product mix. To put it more bluntly, it's the proportion of "self-purchasing" in retail.

The high gross margin from self-purchasing, combined with increased sales, generates enough gross profit to support high employee salaries.

This is logical self-consistency, or self-justification, a logical loop. Missing any link won't work.

Giving high salaries is wise, but the logic behind the wisdom is not known to most.

I know a company where the boss thought low salaries were why employees lacked motivation. But after raising salaries by over 50%, employees still lacked motivation. That's a lack of wisdom.

Everyone knows that KA (Key Accounts) in China are in trouble, with store closures. But the drawbacks of KA were formed during the "KA Sinicization."

In foreign countries, KA doesn't charge much in back-end fees; they mainly make money from front-end. But in China, KA mainly relies on back-end fees, neglecting front-end. Even Walmart had to compromise with KA Sinicization. The result of that compromise is now bearing bitter fruit.

It's said that Huawei and Alibaba have extreme cultures, with overtime and extreme service.

All of this is related to salaries. Not only are salaries high, but benefits are also superb, envied by all.

That's not the whole story. Huawei and Alibaba are not only expanding in scale but also moving their businesses toward higher gross margins. This isn't decided by employees; it's the result of bosses' decisions.

Salaries can motivate employees, but only when the boss's wisdom solves the company's operational problems can the logic be self-consistent.

Twenty years ago, I worked at a company. We had three meals a day provided, and during meals, the boss often told us stories from the early days.

Once, the boss asked me: "For a bad company, there are both management and operational problems. Which do you tackle first?"

I had an MBA, so this question wasn't hard. If management is poor, how can you solve operational problems? I answered decisively: "Tackle management first."

The boss said, "To tackle management, you need to hold onto both the hat (position) and the money (salary). Without money, employees won't value their jobs, and management won't work. Where does money come from? It comes from operations."

The boss added, "Operational problems can be solved by a few people, but management problems involve everyone. Use a few to solve the money problem, then use money to solve the management problem."

The boss was a high school graduate, and I had a master's degree. The boss taught me a lesson that was very useful.

Speaking of high salaries, it involves the issue of "sharing money."

Not long ago, I met a boss from traditional media. Despite the difficult situation in traditional media, this company is thriving and transforming quickly.

I told the boss, "You're really good at sharing money." I even joked, "Your subordinates are all capable, but you don't seem that capable yourself?"

A deputy general manager of this media company said, "We deputies look more and more alike, like a married couple."

It's precisely because of sharing money that employees' passion is ignited.

Speaking of sharing money, we always think it's employees sharing the boss's money. The boss earns the money and then distributes it to employees.

That's wrong. There's another kind of sharing: the boss sharing the employees' money.

Here's the question of where the money comes from: Is it earned by employees or by the boss?

If it's earned by the boss, then employees are sharing the boss's money. If it's earned by employees, then the boss is sharing the employees' money.

This is a very important question, and I suddenly realized it.

If the business unit is a large organization with management levels and strict division of labor, then it's mostly employees sharing the boss's money.

How do employees share the boss's money? Mostly through KPIs. A large business unit without KPIs is difficult. Of course, relying solely on KPIs won't work either. Huawei is a typical large business unit, but Ren Zhengfei's spirit of self-criticism solves problems that KPIs can't.

When sharing money by KPIs, employees always want to cash in quickly, leading to short-term behavior. That's normal.

If the boss lets employees' short-term behavior go unchecked, with no solution, that's abnormal.

High salaries don't necessarily mean employees get a larger share, but the absolute amount is higher. It's like cutting a cake: the slice may not be big in proportion, but it's substantial.

If the boss is sharing the employees' money, it's generally in small business units.

Modern management has always emphasized incentives, which is contradictory. Under KPIs, there's little room for incentives. I've been emphasizing activation, and the best way to activate is individual liberation.

So-called individual liberation means giving individuals capital attributes. Bosses don't need management because they have capital attributes. Employees need incentives because they have management attributes.

Once individuals are liberated, they acquire capital attributes and become "second bosses," no longer needing incentives because capital attributes naturally lead to self-motivation.

Self-motivation leads to finding ways to maximize profits. When profits are maximized, of course, the "big boss" shares the "second boss's" money.

The boss who is good at sharing money told me: "Now, underperforming employees avoid the boss, feeling embarrassed, as if they owe the boss. Not only haven't they earned money, but they haven't shared money with the boss either."

In the internet age, modern management is becoming traditional, and management attributes are giving way to capital attributes.

If modern management in the industrial age was employees sharing the boss's money, then in the internet age, it's mostly the boss sharing the employees' money.

So, sharing money is a strategy.

Source: Teacher Liu's New Marketing

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