Cost-value threshold
Cost-value threshold
/kɒst-ˈvæljuː ˈθrɛʃˌhəʊld/ (n.)
Human resources science: The point in an organisation where the value provided by a given member of staff, or item of capital, plant or machinery exactly equals its cost.
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The Human Resources military-industrial complex
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The line isn’t scientific. It is very, very hard to quantify the “value” of those staff not in revenue generating roles, which in this day in age is most of us I mean them. And nor is an employee’s value necessarily stable. Some get better, some get worse. It is hard to know why.
Pure ideology suggests one should keep all staff as close to the cost-value threshold as you can. To those who over-contribute, you should pay more; those who under-contribute you should pay less.
Practical reality (the difficulty with assessing what these people actually do, how valuable they are and what would happen if they left), human frailty and so on means this is never possible. You can’t just pay employees less, getting rid of them is expensive and coaching or managing them to better performance requires talent your human resources department is certain not to have. Paying good performers more just because they are, well, worth it, strikes against the heart of modern employee management. There is therefore a warm “safe zone” penumbra above the cost-value threshold where over-delivering employees can sit happily until bid away, and a cooler, and larger, “competence phase transition” below the line where net-negative staff can sit fairly safely plodding along without great risk of prejudice, even when a reduction in force comes along.