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Great points about the costs of short-sighted thinking, Chuck!

An initial hiring rate blunder creates an extremely awkward issue. A positive motivational opportunity is missed when the victim is shortchanged; instead, resentment is created.

Attempts to make up for underpayment later can backfire and may be corrosive. Anyone hired improperly low will see a subsequent corrective adjustment as a belated admission of grievous past under-compensation. Ultimately, more money will be spent repairing the destructive effects of a bad entry rate than if the right amount had been paid at the beginning.

A story goes that Walt Disney did not 'spend more than he needed to for talent' but that he got the best talent in the world. However another story goes that he needed a top cartoon person for 'Cinderella' and the person he wanted demanded more money than Walt wanted to pay. He met with some 'trusted advisors' and decided not only to meet the artist's pay demands but to exceed them by 25%. The story continues that this person 'won' one of the Academy Awards Disney earned for that movie.

I wonder if Mr. Disney revised his opinion about what people are worth based on that story? (If it is true, that is)

Humans have infinite value, even though their commercial worth may be constrained by economic principles. Even if your story was an apocryphal fable, Jay, I suspect that Disney always recognized talent and paid what it was worth to his organization. Seems like a sensible approach, showing confidence and creating clear mutual expectations.

How can you establish a good working relationship when you initially tell a new worker they are "worth less"?

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