The Value of Highly Competitive Pay

An aggressive and highly competitive pay system is the best defense against mediocrity and low standards of performance. 

When you pay low or merely average rates, you frequently get what you pay for in terms of performance output.  Many is the time I have heard tight-fisted bosses growl, "They ain't much good; but, then, I'm not paying them diddly-squat, either."  How stupid.  How much better off all would be if you paid them enough to care about their output! 

Best if your pay is too high to justify indifferent work results and sufficient to easily replace incompetents, laggards and shirkers.

When you pay well or even generously, smart employees will usually respond appropriately and similarly give you what you have paid for.  Loyalty down creates loyalty up.  The dumb employees will take advantage of you... for a while; but it should not take long for their supervisors and even their peers to quickly realize this hurts them, threatens their livelihoods and increases the weight of work they must assume to cover for the shirkers who are not carrying their share of the load.  It can be a positive thing when the non-contributors are being paid too much to be ignored.  Their payroll costs can easily be transferred to hard workers who will recognize and appreciate a good thing when they see it.

When you pay handsome sums for reasonable output expectations, you will have absolutely no hesitation to demand full value for your investment.  And there are always plenty of highly capable replacement candidates available who will make the most of their opportunity and will exert themselves to fully earn their salaries.  Reciprocity rules.

One of the very best attributes of a strongly competitive pay value system is your absolute confidence that you can afford to pay for fully competent and proficient contributors.  You therefore should be unwilling to pay such sums for less.  When you pay top dollar, you have a right to insist on top productivity.  You can't afford to do otherwise. 

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 "Trophies" by terren in Virginia