Business By Hormozi #226: Don’t Use Compensation to Fix a Problem Better Training Solves
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The Real Problem Isn’t Money—It’s Skill
Many business owners think that if employees aren’t performing well, they just need higher pay. But while fair compensation matters, it doesn’t fix everything. Lack of skills, unclear direction, and poor training can’t be solved with a paycheck.
If your team is struggling, don’t assume they need more money—assume they need better training. A salary increase won’t make someone more competent, but the right training will.
Why Compensation Alone Doesn’t Work
Throwing money at problems might seem like a quick fix, but here’s why it often fails:
Skills don’t improve. Higher pay doesn’t teach someone how to do their job better.
No motivation for growth. If employees get paid more without improving, they stay stagnant.
Higher costs, no results. Raising pay without increasing productivity strains business finances.
Money should reward performance, not replace development.
How Training Creates Long-Term Success
A well-trained employee is more valuable than an overpaid, underdeveloped one. Training leads to:
More confidence. Skilled employees take initiative and solve problems.
Fewer mistakes. Training reduces costly errors and inefficiencies.
Higher job satisfaction. People enjoy work more when they’re good at it.
Scalability. A trained team grows with the company, reducing the need for constant hiring.
Instead of paying people more to stay, invest in making them better. When employees see progress, they’re more likely to stick around—without relying on constant raises.
When to Increase Pay
Higher pay should follow performance, not cover up problems. Give raises when:
The employee has mastered their role and is adding more value.
They exceed expectations consistently.
Their skills are in demand in the market.
In short, compensation should reflect progress, not replace training.
Conclusion
If your business has performance issues, don’t start with salary adjustments. Start with better training, stronger leadership, and clearer processes. Because in the long run, a skilled employee is worth more than an overpaid, undertrained one.
