Why Minimum Wage Isn’t Great for Exceptional Employees

New Zealand’s minimum wage of $23.50 per hour (or $25 with holiday loading) guarantees fair pay for workers. But is this system truly fair for above average employees? For those who excel at their job, the minimum wage structure may actually work against them. It also works against the economy as a whole as I would argue through this post. 

The Problem with High, Flat Wages

Under the current system, businesses are required to pay all employees a minimum of $25 per hour, regardless of skill or productivity. This creates a frustrating scenario: 

• Flat, rigid structure: A highly efficient and skilled worker earns only slightly more than an average or underperforming employee. For example, a star employee might earn $27 or $28 per hour, while someone barely meeting expectations still gets $25. The narrow gap between wages leaves little incentive to work harder or stand out, limiting opportunities for growth or reward. Granted employers can go hire someone else and replace it with an average employee but there is a cost to hiring, training etc. So often employers would just pay a small differential to a great vs an average employee as opposed to going through the pain to keep hunting for a better one.
• Businesses Can’t Afford to Reward Excellence: The high minimum wage already strains small businesses. Employers face significant costs for even average workers, making it nearly impossible to pay top performers what they’re truly worth. For instance, a café owner paying $25 to an average worker can’t afford to offer $35 to a skilled worker, even if they deserve a, say $10 differential. The system therefore forces businesses to treat “racehorses” and “donkeys” similar, if not the same, stifling motivation and productivity. 
• Missed Opportunities for Star Employees: A rigid wage structure means good workers have limited options to increase their earnings. It’s a viscous cycle, as exceptional performance rarely translates into significantly higher pay which means overtime you tend to be come the average (lower it actually) as opposed to raising the average. Revenue-sharing models or performance-based bonuses—potential solutions—are restricted as they are on top of the minimum wage. Also such models are not applicable in most industries. 

When hard work and talent don’t lead to meaningful financial rewards, employees may lose motivation. The system effectively discourages innovation and effort, as even the best workers find themselves stuck in a limited wage bracket. 

Lets talk about productivity

When compared to OECD (Organisation for Economic Co-operation and Development, a group of 38 rich countries), New Zealand ranks 3rd in terms of minimum wage as of 2019, ahead of UK, US, France, Germany etc. Meanwhile, our minimum wage has increased by 30% since 2019 so not sure where we rank now. And productivity data of OECD shows that our productivity has dropped over the years. As per an OECD report “Most countries with a labour productivity level below the OECD average in 2000 have seen a substantial catch-up since then, pointing to a convergence of labour productivity levels across OECD countries. However, the gap with the OECD average deepened for Greece, Israel, Japan, Mexico and New Zealand in the last 20 years”. 

Granted productivity is a function of innovation, technology adoption etc. and not just wages but we can see that increasing wages has at least not helped improve productivity compared to most other OECD nations. 

High cost of living in NZ

One argument is that minimum wage is a function of cost of living and since NZ cost of living is high, minimum wage should support that to have a decent living standards. But is the cost of living not high, partly because of minimum wage? One has to at least pay $10 for a decent lunch primarily because of rent and wages cause ingredients are not even a third of the cost you and I pay for any product sold in cafes and restaurants. Talking about food, most restaurants close after 8 or 8:30 PM as it is not viable to pay minimum wage as traffic slows at night. Auckland, our largest city, does not have a night life to speak off. Even on weekends you would struggle to get a good dinner post 9PM. 

Imagine a small town, say Gisborne, where the GDP per capita was 51K in 2023 vs Auckland and Wellington’s $87K. But businesses in both places are expected to pay the same minimum wage. Is cost of living same for Auckland and Gisborne? 

And are our living standards not commensurate with our abilities? Be commensurate to the skills brought to work? So an above average employee will be able to have a better life compared to the below average. That is how capitalism works. Why is it unfair? 

What is required? 

A more flexible approach could create room for above average employees to thrive and encourage entrepreneurs to take risks creating a great recipe for economic growth. After a basic minimum pay, which should be much lower than the current $25, allowing performance-based pay or revenue sharing could give top workers the rewards they deserve. Services such as cafes will open late and new businesses will be launched leading to increase in overall employment. Business that are usually closed on weekends may keep them open for a few hours on Saturdays. All this will lead to economic growth and higher employment. 

Seeing the large differential payment may also encourage average or below average workers to be motivated and challenged to work harder. This would only foster a culture of productivity and growth. 

To conclude

While the minimum wage ensures fair pay for all, it inadvertently penalizes star performers. The incentive to excel is low. By failing to reward excellence commensurate with effort, the system limits opportunities for top performers and holds back overall productivity. It’s time to rethink how we value and incentivize talent in New Zealand’s workforce.

7 things I do to run a successful Agile Squad

This is the second part of the Agile way of working. You can read my first post here.

Having run the prescribed Agile way for a few months, I got really frustrated with how we were running Agile. There was no agility. I changed a few things over time. So here are seven things I do as  PO. Ah and by the way, my squad is considered one of the most successful in my organisation, even though we don't do things the typical agile way. 

1. Fewer Ceremonies: Something about me. I don’t enjoy too many meetings. I have a short attention span and I find most meetings are a waste of time. With that backdrop, one of the first things I noticed was that Agile had many ceremonies (meetings), many of which I found a waste of the squad’s time. So here is what I changed. 
   
   As I mentioned in my previous post, I love the 15-minute daily stand-up. I wish I knew this in my earlier workplaces. Such an efficient way to quickly align on tasks and discuss blockers. And yes of course we have a 30min to one-hour planning meeting once per sprint. BUT we do far fewer retros. Traditional retrospectives can sometimes become sessions that focus on venting frustrations, unintentionally fostering negativity. While regularly gauging the team’s overall morale is essential, I’m not convinced that retrospectives are always the best format. Frequent retrospectives often lead to an overemphasis on issues, prompting people to recall concerns that might not otherwise come to mind. It’s a bit like being asked, "What’s wrong with your life?"—while you might have a couple of things, the more often you’re asked, the longer that list can seem. Informal get-togethers are better. I wish I did more of them but everytime we have had them, I have learnt more from them as opposed to the retros.
   
   And no Backlog Refinement: We skip formal backlog refinement sessions. Instead, we address prioritization and clarification needs during stand-ups and planning meetings, streamlining the process on a regular basis. 
   
   
2. Feedback. While there are fewer retros, there is regular feedback. This helps me and team members improve continuously without waiting for a formal session. 
   
   
3. Fewer Sprint Reviews: Unlike most POs, I avoid presenting in most sprint reviews. This keeps the focus on the team’s work rather than on me, and it fosters a sense of ownership among team members. They feel proud and happy presenting which is a great incentive. We also skip presenting in reviews where we have little to showcase. Sometimes its just a concise update in a slide and talk more about blockers. 
   
   
4. Keep Stakeholders Engaged: Stakeholder engagement is key to my mind. I make sure stakeholders are continuously informed and involved through regular updates and informal check-ins rather than relying solely on formal review meetings. Having said that, I avoid too much of feedback cause that slows us down. We are aware that nothing is perfect but we have chosen speed over perfection. We launch and course correct.
   
   
5. I Go After Money: I try to pick projects that can bring in revenue that can be attributed to my squad. Clear success metrics, and in this case revenue, means everyone is happy. Part of the reason we are seen as successful is the fact that we pick projects that can be measured and then we keep key stakeholders engaged. 
   
   
6. We pivot constantly: True Agile is about adaptability. We stay flexible often picking projects mid-way in a sprint and delivering it quickly. I don’t follow the agile dictate that a PBI should be Sprint ready. We will not even achieve half of what we do if we followed that, ha ha. Our Sprint goal list is usually longer than we can deliver in a sprint but that means we don’t stop if we are blocked. We move to something else while the blocker is being cleared. 
   
   
7. We focus on outcomes, not Processes: We prioritize delivering value over following processes. The goal is to produce tangible results that meet our objectives and satisfy our stakeholders. This also means we take risks. The decision is based on whether what we are doing is an improvement over the current state. And if it is, we go ahead even if we know there is a flaw, which we of course correct it over time. Point is we don’t wait for a perfect solution, Sprint readiness, endless discussions. We believe in phase wise, quick turnaround changes.

   By making these adjustments, we’ve managed to create a more streamlined and efficient Agile environment. It's not about following the Agile playbook to the letter, but about adapting it to fit the squad’s purpose.

    

Why am I not a big fan of Agile?

I was introduced to Agile few years ago. Having navigated some of the toughest markets and sectors, the Agile rhythm took me by surprise. I thought, "Alright, give it six months before passing judgment." After seeing agile close and from a distance, here’s the verdict. 

Now, if I’m generalizing and this doesn’t apply to how you run Agile, please share your tips so I can learn. If you’re reading further, I’m assuming you get Agile terminologies. If not, ask an AI tool. 

Agile has its perks. Regular rhythm, bi-weekly presentations, steady stream of deliverables, ceremonies, yada yada. Personally, I love the daily 15-minute stand-ups. They keep everyone on the same page. Plus, something that most people don’t realise, given its tightness, the stand-ups force us to be concise—no one has time for ramblers. My team sneers at marathon talkers. But those crisp updates? Love them! 

However, for me, the advantages seem to end there. Sure, Agile is a lifesaver for companies drowning in chaos and delays and those tech companies. But does it work for others? And is it a forever fix? Even in a chaotic setup, after a few quarters, you gotta ask: Should we pivot and transition away from conventional Agile to be more effective? As projects, teams, and organizations evolve, sticking to the same Agile playbook can backfire. Here’s why I am not a big fan of Agile:   

Everything is counted in sprints: Agile loves its sprints. Typically a two-week cycle to plan and execute tasks. Sounds good, right? Wrong. It’s maddening when colleagues talk in “next sprint” instead of “this Friday” or “coming Tuesday.” It leads to overestimation. Tasks that take 5-6 days get bloated into a sprint’s work. Agile thinks in two weeks. Miss this sprint? The next deadline isn’t two days later; it’s two weeks later. In high-stakes markets, we think in days, sometimes hours. Miss Tuesday? Sure, shit happens… how about Thursday?  

Too many ceremonies: Agile is bloated with ceremonies. Daily stand-ups? Great. Planning sessions? Necessary. But backlog refinement? Really? Why not combine it with stand-ups? And retros after each sprint? Humans need time to process what's going wrong or right (be it their project, organization, or their life...). A fortnight or two don’t always provide enough context. Conversely, if something’s off, fix it now, why wait for a retro? 

Performance and return are not always correlated: In Agile, there exists a role known as the Chapter Lead, a leader within a specific craft such as Design or DESL. This individual oversees members within their chapter, responsible for maintaining the excellence of their craft through continuous training, innovation, and governance. Additionally, they oversee the growth and compensation of their chapter members. On the other side, there's the Product Owner, tasked with achieving organizational objectives like revenue, ROI, or other metrics or creating products. Their team, or squad, consists of members from various chapters, pooled together to accomplish these goals. While squad members utilize their respective crafts to meet squad objectives and spend the majority of their time with the Product Owner, the latter doesn't play a role in or influence their professional development. For instance, a member of the Design team could excel in their craft but struggle with teamwork, meeting deadlines, or showing initiative. And yet take home a good raise at the end of the year as opposed to someone who contributed substantially to achieving organisational goals. 

Sprint reviews are a snooze fest: Preparing presentations every two weeks to a room full of glazed eyes? Kill me now. Why should anyone care about incremental shifts from Point A to B? I get why the audience claps robotically. Why spend hours making up a showcase of monumental progress when they’re mostly tiny steps from A to B from an organisational stand-point?  

So, what’s the solution? Stay tuned for the next post. Oh, and by the way, my squad consistently ranks top in deliveries and Agile maturity. I’m no expert, but I’ll share some secrets of how I run Agile.

NZ's trust economy maybe at risk

 

New Zealand is undergoing some serious demographic shifts. Last year, we saw about 170,000 net migrations: 50,000 people left, and 220,000 people arrived. For a country with around 5 million people, that's a significant bump of about 3-4%. Most of these new arrivals are heading straight for Auckland, perceived to be having more opportunities. This means Auckland is experiencing an even higher influx percentage-wise.

When I landed in New Zealand four years ago, I experienced a bit of a culture shock. I coined it the "trust economy" – a culture where honesty and transparency are the norm. People here are straightforward and reliable, whether they’re buying and selling on Trade Me or just keeping their word. Its common, for instance, for people to click a close-up photo of a chair that may have its paint chipped in a corner in a trade-me ad. At a recent company event, a director said he trusts everyone until they give him a reason not to. That pretty much nails the Kiwi ethos.

But here’s the thing: with more people coming in from outside, this trust dynamic is bound to shift. Different cultures have different takes on trust. It’s no secret that not all cultures might put transparency and honesty on the same pedestal as New Zealand does. I think it is a given here. As more Kiwis leave – we're talking 40,000 to 50,000 a year – and more migrants arrive, the country’s social fabric is likely to change. This rapid demographic transformation could challenge the existing levels of trust and transparency.

For instance, in India, it’s not uncommon to lie in business dealings or at school if you haven't finished your homework. Recently my architect was late for a meeting, which is very uncommon here as people are punctual. But he did not offer any excuse and just said that he was enjoying his lunch and suddenly realised that he was going to be late. Here in New Zealand, kids don’t lie about unfinished homework because it’s acceptable not to finish it – no reprimands. In India, though, the consequences can be harsh, creating an incentive to lie. I'm not judging which method is better, just pointing out that the stakes for honesty are different in different cultures. Perhaps if you are too honest, you may not survive in many of them. 

Anyways the question is, will this influx of diverse cultures disrupt New Zealand’s ‘trust economy’? It’s a delicate balance, and I’m keen to see how NZ will adapt to these changes over time.

AI is so Hyped…especially by CEOs

AI has become the shiny new toy in the business world. CEOs are throwing around the term and hoping it'll magically solve all the company’s (and their) problems. Those especially where the businesses are not doing well are using it even more to assuage the shareholders in investor calls… and market is indeed responding with share prices going up (Adobe, Meta, and Nvidia especially according to a report by WallStreetZen)

 

I remember when I was starting my career – back then MS Office was the buzz word. Everyone thought that it would reduce jobs (improve profits) and revolutionize the game. In just a few years every company had MS office and then Google products. MS Office did not become the MOAT. Cause everyone had it. I see AI going the same way.

 

I mean, sure, AI is cool. It can automate tasks, crunch numbers faster and make things a bit easier (and prettier). But will it single-handedly transform a struggling company into a powerhouse? Probably not. Will it be a differentiator? Probably not.

 

I think AI to be more of a leveler than a differentiator. Soon everyone will have access to it, whether it's through their own fancy AI system (bad idea for most) or just renting out some third-party software and adapting it for your business (From Open AI, Influencer, Anthropic to domain based such as Writer.com). So, in the end, it's not really a game-changer because everyone's playing with the same toys – yes some toys will be better – but not a differentiator as such to improve bottom-lines substantially.

 

Unless I am getting this wrong…

 

P.S. Ah and this was not written by AI – I tried it but it wrote "CEOs are throwing AI term like confetti at a parade" … Sorry, I don't write that pretty.😋

Global pitches may not be such a good idea - an article by me published in the BrandEquity on 7-7-2019

https://brandequity.economictimes.indiatimes.com/news/marketing/why-global-pitches-are-not-a-good-idea/70112581

Many are the MNCs who work on the global pitch model. The selected agency, typically a global player, wins the mandate across multiple countries where the client has a presence. Now there are several reasons this isn’t the best of practices around:

The Client’s POV: The local agency in each country did not win the account. Rather the account was gifted to them by their global headquarters. The local agency therefore had limited or no contribution towards winning the business. Similarly, the local client SPOC had a limited role in the decision-making process since the same was implemented not at the regional, but at the global stakeholder level.

In such cases, ownership is low at both ends because representatives of neither agency nor clientele had skin in the game from the outset.

Another factor that becomes a challenge from the client’s perspective is that beyond a point, complacency seeps in since the agency knows that the mandate will not shift. The client thus ends up losing out not only by dint of their own actions, but oft by dint of their inaction.

The Agency’s POV: There are enough, and more instances of global clientele being serviced by agencies locally and successfully so. Suddenly, the global mandate changes and an agency that was doing some truly exceptional work loses out in favour of an agency that might not even understand the category. In such cases what really rankles is the amount of additional effort agencies put in, in order to make sure that the client is happy over and above the requirements of the mandate.

As importantly, what is the long-term incentive to service a MNC client religiously if one may lose the account all of a sudden owing to global calls?

Market POV – Local clientele understand their requirements, call for a local pitch and know which agency within the geography can handle it. Besides many other things evaluated at the pitch, as important is the inter-team connect. Global pitches don’t offer that chance. What they do bring to the table is transparency and uniformity of sorts. To achieve this, global can work with the local office to set criteria, standardise brief templates and perhaps introduce an evaluation process to make sure the choice is objective and process unbiased. Secondly, each country has its own good and not-so-good agencies. Bundling an account with just one player across continents does not allow one to optimise the best talent for the brand by geography. 

The decision should therefore be left as far as possible with the local client. After all, the world is moving to a hyperlocal approach and to, at this point of time, employ a cookie cutter approach would be hara kiri. Way better then, is the horses-for-courses approach, one that allows clientele to tap into the best servicing talent globally with the best local understanding to achieve the best results.

Agencies Fee or working Media - an article written by me published in IMPACT 31st March 2019 Issue

https://www.readwhere.com/read/2083116/Impact/volume15issue42#page/20/1