Every employer likes to think they pay people to Do The Right Thing. It is NOT smart to pay according to the theoretical value of potential mistakes. (Note that many job evaluation approaches are designed to do exactly this.)
Don’t pay for errors. Don’t even consider paying for what someone possibly COULD do wrong. Instead, pay for proper performance. People in a position where mistakes have serious consequences are correctly compensated for the value of their positive (not negative) expected outcome results. An airline pilot is not paid for failing to crash but is paid to safely and efficiently transport valuable human cargo. The night guard is not paid for declining to open the doors to thieves but is rewarded for appropriately following your security protocols.
The whole concept of paying for the potential value of errors is wrong-headed and confusing. That logic would argue that operating room nurses should be paid almost as much as the surgeons they assist, because they could do as much (if not more) harm to the patient.
The selection decision process includes considerations about the potential hypothetical chance for error. Anticipated competence is established upon employment. Employees are selected, assigned and paid due to assurances they can satisfy the higher demands of proper performance for their specialized roles. Once someone has passed your entry screening protocols and completed any required additional training, you expect proper work performance thereafter.
Next, their job should be designed to minimize or totally eliminate the negative effect of deficient performance. Most organizations are clever enough to recognize their vulnerabilities. They erect protective buffers to prevent problems and install reactive options as contingent responses to quench sparks before they erupt into fires. Management control systems are installed to detect results outside acceptable parameters early enough that timely interventions can assure that deficiencies are corrected before failure levels are reached.
Most individual contributors are not permitted to hold positions where they are granted the freedom and power to wreak unrestrained havoc upon the entire enterprise. It is not wise to pay someone more because you failed to properly screen them, refused to place essential quality assurance controls on their work or declined to install feedback alarm systems. That course of action enables recklessness and invites disaster.
It is preferred to reward workers in line with the effect of their actual positive contributions rather than give weight to their possible potential hypothetical negative blunders. Maybe this is why compensation professionals have such a hard time getting high pay for themselves.
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.
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