Mark Butler

Mark and Jesse discuss the process of setting compensation, salaries, bonuses, and communicating those effectively to the team. Compensation is a touchy subject. Businesses want to incentivize employees to perform at a high level and reduce turnover by compensating them well. Employees need to feel like they have space to grow their skills and capabilities in the organization, and be compensated accordingly. And many business owners want their employees to be happy and feel fairly compensated, out of care for the people they have grown close to and relied upon to build their business. Therein lies a minefield, however!   Jesse argues that compensation, including salary, benefits, and bonus, carries a lot of information and expectations. Business owners should set compensation based on market rates for a given role, discounted to what the business can afford (both what the business can afford to pay and what amount of turnover the business is willing to accept if they pay significantly under market). Business owners should NEVER compensate out of a sense of charity, generosity or to "share the wealth," epsecially with unplanned bonuses. While these things can seem great in the moment, they can cause serious confusion for employees. Why did I get this? How do I get it again? Should I expect this every year? If I don't get it next year, does that mean I'm performing poorly, or the business is doing poorly? There are many pitfalls to basing compensation on something other than the cold hard facts of market rates and clear job descriptions.   Mark Butler, Virtual CFO The Money School: https://moneyschool.works https://markbutler.com https://letsdothebooks.com   YNAB https://www.youneedabudget.com

Mark and Jesse ponder the question: what makes (and keeps) employees happy? While Jesse doesn't like the term "happy," there are definitely some strategies to keeping employee morale high and making jobs more fulfilling. Jesse references Dan Pink's book "Drive" and his concept of AMP -- autonomy, mastery, and purpose. If a job can offer these things to an employee, chances are they are going to find fulfillment and satisfaction in their work.   Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com   YNAB https://www.youneedabudget.com

What if all your spending... was actually borrowing? Ok, well not ALL your spending, but those situations in which you pull money from one category of your budget and apply it to another. Jesse gives the example of going to a special dinner at an exclusive restaurant. Reservations are very difficult to get, and you finally get one when someone else cancels -- but it's tonight. And you don't have the cash available in your restaurant category! So you move money from another budget category to cover the expense, because this is your only chance to go to dinner. We all run into these situations from time to time. Maybe it's not a fancy restaurant, but situations arise where you have to spend money now or forego an opportunity forever.   YNAB does a good job of making you aware of the tradeoffs. When you move money from, say, car repairs, to cover the restaurant expense, you must acknowledge that your car repair category is now underfunded, and that you'll have to replace that money later. Essentially, you're saying that "future you" will figure it out and generate the cash needed to replenish that fund. Jesse takes this a step further. Really, even though you "had the money" because it was in your budget, you still borrowed from future you -- because you created a liability which future you must take care of.   You didn't actually take on debt per se -- you didn't charge a credit card or take out a loan -- but you did borrow the money, from yourself. In that sense, everything is borrowing. Mark and Jesse explore the implications of this line of thinking, and how YNAB could better illustrate this concept.   Mark Butler, Virtual CFO The Money School: https://moneyschool.works https://markbutler.com https://letsdothebooks.com   YNAB https://www.youneedabudget.com