Human Psychology, Rationality and What People Will Work For

     Right now I and a few partners are opening our own business for mortgages and we're trying to find a good processor-once we get that sorted out we can start. My friend, Jon, knew of someone who had a good reputation and now we've both spoken with her and she sounds very good-both skilled an professional.
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     I recently read Bill Walsh's book and he makes the important point with this formula of his: good talent and a bad attitude equals bad talent. I think this holds for employees as well or anyone you have to work with.

     I'm not a believer that say a highly skilled person with a bad drug habit would be a good hire-as this tends to make them unreliable. I used to sneer at dress codes as well but I've come to rethink that as well based on what economists call 'signaling'-which goes both ways.

     My friend and I went to have an interview at this office in Brooklyn-it was some sort of sale we would have been making to real estate agents themselves. We didn't end up taking the job-despite the fact that the guy who had recommended us to the company really wanted us to-as we weren't too impressed when we met the big boss.

     I don't mean to deal in stereotypes-though sometimes there's truth in them. The boss kind of looked like a Russian mafiaso type-I have had some bad experiences working with some crooked Russian outfits in NYC. I agree you shouldn't conclude that all Russians are mobsters.

    However, what really turned us off is the guy was in some stained white t-shirt and looked like he had just rolled out of bed-I half suspected that he stuffed his vodka bottle in the drawer when we walked in.

    In this case, as employees we saw his disheveled careless manner as a signal that this is not a guy who's too professional let alone reliable in how he treats prospective employees.

    So back to our search for a processor. Like I said, she seems excellent. One conversation we've gone back and forth on, however, is money. That's not too surprising to be sure.

    Jon and I are a bit different when it comes to money. He wants to find someone we can pay the least to but I try to encourage him to consider that 'you get what you pay for'-I worry that if you underpay someone why are they going to want to do great work for you? Putting it this way, the answer seems pretty clear-they won't. I wouldn't if I felt an employer was ripping me off.

    I do see that on a personal level his frugality pays off for him-I can't believe how far he can get on just a few dollars. On what to pay people we need, I think we've both kind of come to the middle.

    With the processor, I find it quite interesting. From the start she's said she's willing for either of these options:

    1. We pay her a flat salary of $500 a week

    2. Or at first $800 per deal, then it was $1000, now it''s $1500

     UPDATE: Initially I had mistakenly said $500 a month for 1! Thanks to Nanute for pointing it out.

    Still every time she gives us a new number she also reiterates first that she'll accept 1. The trouble with 2 is that it's risen so high that we worry we wont be able to make anything decent for ourselves at that rate.

     It seems that maybe she wants 1 as she always starts with that so we've decided to go with that. I didn't like it at first as $500 to me seems kind of piddly. But as 2 keeps going up I guess we'll go with 1.

   It's odd that someone would want so much ii commissions but accept a pretty pedestrian salary but that seems to be her preference. I was saying to Jon that maybe we should raise it to $600 a month and he was resistant to that.

   I'm thinking maybe he's right not so much because I mind about the $100 but because I've noticed an interesting dynamic that could play out with her as well. Often people agree to do a job for what seems to the person paying a pretty shabby amount so the employer feels like the should do better and announces that the employee has gotten a raise upon hearing the employee declares that this raise isn't nearly enough!

    I'm afraid that if I said to here that we're going to raise her salary from $500 a week to $600, she might suddenly demand $1200 a week or something. Seems to me that happens all the time.

   It's a strange kink of human psychology. I'll leave it to the economists to tell us whether this is rational. Maybe part of it is that these kinds of people like to be the chooser. They will declare they'll do some really unpleasant, arduous job job for just $200 a week and you know they're way underpaid but if you unilaterally declare their pay is going up to $300, they won't be pleased but instead will demand $900.

   This is what happened with Jake Gyllenhaal in Night Crawler-he was absurdly underpaying his assistant for how risky that crazy job of their's late at night trying to beat news teams to crime scenes to be first-but his assistant had named his price of just $40 a night.

    When Gyllenhaal finally offers him a raise he suddenly demands ownership in half the company-which 'forced' Geyllenhaal to 'have to' kill him as 'you took away my bargaining power.

    http://www.imdb.com/title/tt2872718/