What Our Employees May Be Saying About Their Pay

Steve Wyrostek MBA, BA
March 25, 2008 — 2,972 views  
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When I meet with employees to discuss their concerns the subject of pay sometimes comes up. I say sometimes because it appears if people perceive they are paid fairly, it's never an issue. However, if some inequities are present, it will come up, sometimes with a vengeance. While I've read scholarly works on how pay isn’t why people leave companies and that other factors are more important, my experience strongly suggests that pay may be in fact, the most keenly felt factor if it's neglected. People will and do leave because of pay. Cancerous dissatisfaction spreads because of pay. Following are the top four issues I've heard in feedback sessions around pay.

The linkage between pay and results. If, as a leading executive or owner, you are transparent to your employees on how the company is doing, I believe that's a sound strategy. However, if your company is doing well and that's being touted, you may want to make sure you're giving some money back to your employees in the form of bonuses or raises. In one company, the Regional Manager made a big show about how much profit the company was making. The reaction of the employees to this was resentment. They felt that none of the bounty had trickled down to them- the reason for the good results. You may also want to make sure that when you do share the wealth employees make the connection between good results and pay.

Compression. This is probably the issue I hear the most. It comes in the form of comments like; "I can’t see where the 30 year person should be making as much as the new hire," or "New hires that come in make as much as we do." To prevent this and the resentment it causes, you may want to do periodic reviews (at least every other year) to analyze salary bands and make wage adjustments as appropriate.

Raises. Feelings around this generally address the fact that the raises are small and/or not linked in a meaningful way to performance. "We don’t get enough pay raises to get along with the economy", "Evaluations are meaningless", "We go through all the goal setting but everyone still gets 3%", "It doesn’t matter if we work our butt off, everyone gets the same increases."

While I believe it's difficult to implement a performance management system that connects appropriately to raises, it has to be done. I've also been in situations where I've seen managers deliberately not use up their increase allotment so they could come under budget. I believe this is a flawed strategy. It's best to pay competent performers as much as possible each year and use every cent at your disposal doing it.

Pay Ranges. Sometimes the pay is simply too low. "When there’s a pay range and you’re a 13 year employee and you’re still on the bottom, it’s insulting",  “We get paid weekly- very weakly", “Starting pay is too low- almost with fast food", "The pay stinks."  In my opinion, the best approach on setting salaries can be summed up in another comment I've heard- "If you want quality workers, you need to pay them."

I've also heard companies use the following approach: "Well, we don't want to be the highest payers and we don't want to be the lowest." I would suggest (assuming it's affordable) why not be the highest? Do you know how many good workers you could attract? Do you know how much allure that being known as the highest paying company on the street gives you as a company? It may not be priceless but it's good business.

I believe the subject of pay gets neglected sometimes by managers who may not have issues about it for themselves. But the good manager realizes pay is important to employees. It's something that needs to be thoughtfully analyzed at least yearly- the linkage between pay and results, compression, raises and pay ranges. If this fundamental issue of the employer/employee work bond is not in sync, cancer results- cancer that eats away the foundation of company strategy, mission and results. And how does it impact loyalty? I'll discuss employee feelings around that in another column.

Steve Wyrostek MBA, BA
President- Gentle Ears, Inc.
541 N. 5th Ave.
Des Plaines, IL  60016
[email protected]

Member HRMAC, SHRM, ASTD, Association Forum of Chicago, Regular Contributor to the Business Ledger

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Steve Wyrostek MBA, BA