Or does your management care enough to ask this question? Perhaps the collective attitude today is more often either, 1) “they’re lucky to have a job,” 2) “where are they going to go"? or 3) my personal favorite, “I pay, you work.”
When employees feel mistreated or taken advantage of in the performance = reward equation you'll see the result through lowered morale, mental disengagement, reduced productivity and even separations. Given the business risks involved it’s discouraging that not enough of those in charge are able to view the issue of pay from the perspective of those doing the work .
What's the problem?
Any manager worth the title should be expected to anticipate employee issues, especially those that have the power to harm the business. It’s about knowing your employees, about being prepared.
Payroll is likely your largest single expense, representing 40% - 60% of revenue. Shouldn’t how you handle pay be as carefully considered as the way you would view the cost of raw materials, the acquisition of a new business, or the financing of more brick and mortar? You should analyze this expense from every possible angle, to better understand the underlying causes and learn how you can improve. To manage reward dollars without harming the business you need to understand those factors that impact employee pay, as well as the attitude of those being paid.
Taking that hard look will mean trying to understand the human factor behind the cost of labor. It will mean understanding how company pay decisions are perceived by those on the receiving end.
It can help when you think of pay from the other side of the desk. Employees provide a service and you pay them for it. But that shouldn’t be the end of the equation, as money doesn’t manage people – you do.
What do employees expect?
Do you know what employees expect from managers, and from the company? Their basic wants and needs have a direct connection to their performance, as well as their commitment to your organization. While individual circumstances might vary somewhat, it's reasonable to say that employee expectations fall into several broad categories:
- Competitive pay: No surprise here, because that’s probably what you want too. You don’t need to be a premium payer, but should avoid the label of “low baller” as you ensure that pay opportunities are consistent with market practice.
- Opportunity to earn more: Employees should know that opportunities are available to them through pay increases, variable compensation, promotions and perhaps even overtime.
- Regular pay reviews: Don’t let employees hang in the wind; avoid the comical stereotype of employees concerned over how to ask the boss for a raise. You don’t have to grant anything, but let employees know that you have scheduled reviews of pay and performance.
- Fair treatment: Employees have a distaste for “favored sons” or special treatment cases – especially if the perception is that such treatment isn't deserved. Recipients will become known, so don’t start putting skeletons in the closet.
Do you understand these expectations? Do you consider them reasonable? Are they the sort of expectations that you have yourself, for how you want to be treated?
How you and other managers react to someone’s expectations, by either actions taken or by lack of attention (ignoring) will set the tone for your employees; you dismiss their concerns at your peril. You don’t have to do anything, of course. But your eyes should be open and your decisions based at least partly on knowledge of what your employees are thinking – and expecting.
Otherwise you’re making decisions in the dark, and how many gems of wisdom come from that process?
Think about whether your management treats employees as “we” vs. “them.” Are employees viewed as boxes on an organization chart or as real people? Are they considered an important asset to the business, or a cost item to be managed (dealt with)? Whatever the answer, your attitudes will become known and discussed among the staff.
Take the time to understand where your employees are coming from. That bit of research will provide dividends down the road – no matter how you choose to pay your people.
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.
Creative Commons image, "Friends," by S. Baker