If money alone could solve all problems, every issue could be reduced to an expense item. Life would be simpler. With unlimited budgets, HR could improve every enterprise with payroll adjustments alone. Compensation would merely be a matter of dispensing the right sums. All employees could be fully engaged by a simple cash payment.
As long as each pressing social crisis could be resolved by spending more, solutions to long-standing problems could be purchased with the stroke of a pen. All issues would be resolved by simply reallocating wealth. Student school test results would improve with each additional “investment” of money. Teachers will immediately become more effective when their salaries reach higher levels. (Haven’t you noticed that happen? Me neither.) Roads and railroads would approach the safety record of airlines, whose safety and customer satisfaction metrics would also improve. Cures to diseases would be discovered and homeless would disappear from their nests under rebuilt bridges which would become universally safe.
Happiness would abound throughout creation if financial constraints were abandoned, some believe. Could the real answer be that simple? Might paradise on earth be so easy to reach? Checkbook diplomacy might indeed bring world peace… but haven’t we been trying to buy answers to every global challenge for a long while? Despite the simplistic temptation to constantly point to money as the solution to every problem, actual experience doesn’t seem to bear out the assumption that all negative conditions can be bought into a positive state by a proper (greater) expenditure.
Companies don’t find that a higher payroll burden per employee makes for a fatter bottom line... even if their top executives seem to pay themselves as though that were true. Low-paying enterprises frequently outperform their bloated bureaucratic competitors who spend more on everything. Higher medical expenditures apparently don’t automatically translate into superior health care results. Fact-based medical research studies show that some of the most efficient health clinics spent less on patients than their peer competitors. Most nations around the world produce smarter students while incurring educational costs per student far lower than ours in the United States.
Spending more doesn’t seem to change much except to increase our costs for poor results.
In reality, money is noticed most when it is deficient. People are hypersensitive to personal underpayment (noted at the 90% felt-fair level) but rationalize high pay to themselves as appropriate (pay must reach 120% of felt-fair level before behavior changes). Since pay is a relatively weak positive motivational tool, it seem to confirm the general trend: money fails the acid test as the universal solvent.
If higher pay to everyone is not the answer, we need to find some other panacea to flaunt as the future source of promised perfection and pure economic equity. Maybe pass laws to criminalize wealth? Legislate an end to poverty? Gesture politics always seems to work well. Yeah, that’s the ticket. Go for image over reality, as usual.
And then I woke up. What is your similar nightmare… or dream?
E. James (Jim) Brennan was Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. 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.), serves on the Advisory Board of the Compensation and Benefits Review and will express his opinion on almost anything.
Image "Money Concept" courtesy of ponsulak/FreeDigitalPhotos.net