Money operates as a scorecard. It not only puts food on the table and pays for the roof over your head, but it also supplies a measure of your achievements, for psychological comfort. The cash portion of compensation and total rewards is the only part that can be easily converted to a number for keeping track of relative status. No surprise then, that people tend to obsess about pay when the issue is really something else. The amount of the income becomes a proxy metric to give feedback and context about their success in life. That's a lot to ask of a paycheck.
Reponding to a recent blog post on compensation as appreciation here, I observed that, "Pay buys groceries but no amount of cash can fill the hunger of the heart, the mind or the ego." A prior article talked about the same thing, as well, but from the perspective of the broader overview of the problem diagnosis process. The way people react to pay issues can't be discussed too often, because there is always something new to learn.
Handling I.R.S. reasonable compensation cases over the years, I interviewed hundreds of the most successful and highly paid top executives (mostly men) in the United States. In virtually every case, they were more incensed at the inference that their pay was "unreasonable" than anything else. The perceived slur on their accomplishments was taken as a personal insult. That attitude typically inspired them to spend millions defending their reputations over what was essentially a technical issue of fact regarding the tax deductibility of corporate sums.
One cannot underestimate the power of pay as a measure, a sign, a symbol and a reflection of self-image. Cash is how people keep score in their own minds. Compensation is not just a number but a communications concept. What recipients think about it is frequently more critical than its absolute amount.
As compensation people, we have to be total rewards professionals and see the actual role that pay plays in the psychological dynamics of workers. Anyone operating globally knows that there can be dramatically different cultural views of pay both within and between nation. In a very real sense, we have to be multi-lingual in this respect: to comprehend how a lever pressed in one country can generate positive output results while the same action elsewhere will stop your economic engine.
How much it is is often much less important than how much it means to the person receiving the pay.
Observations from others, either pro or con, will be welcomed, because the more we discuss the subject, the more we stand to learn about it.
E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.) and will express his opinion on almost anything.
Image: Creative Commons Photo "Score Card" by Shorts and Longs