What's the Point of Base Pay?

What's the point of base pay? Oddly enough, that's the kind of question that writers for Compensation Cafe kick around!

Employees have told us -- through research -- that incentives, career development and performance management may change behavior. Base pay, on the other hand, has been shown to be a satisfier not a motivator. But something about that was bugging me though I couldn't put a finger on it.

 So, I spent the last few days searching around for a concise way of communicating what was in my muddled mind. Here's what I found, and I think it gets us half way there at least. (More on the other 50% in a minute.)

This is Towers Watson's Linkage Model -- a model that I was trained on as a Towers Perrin consultant, so I guess it was lurking back there in my grey cells. 

Yes, as you can imagine, base pay is a foundational reward not a performance-based reward. But, but, but. Get base pay wrong, let it get out of date, misaligned with current job responsibilities or somehow feel unfair, and engagement, retention, productivity and customer service will all suffer.

The other 50% that I mentioned earlier? It's not behaviors, but emotions. Strong, deep employee emotions that can flay behaviors alive.

Let base pay drift or do a poor job of communicating it and watch employee trust drip, drip, drip away. Then watch what happens to engagement, retention, productivity and customer service.

Thanks to Towers Watson for reminding me. The rumors about base pay's limited influence on behavior seem premature.

Hey, by the way . . .

Want your own say on pay? Here's your chance to be heard! It takes less than five minutes to get it all off your chest.

Click here to take our survey about your pay.

We're planning to turn up the volume, encouraging everybody who wants to to share their opinions. Pass the link along, tweet it, mention it at meetings. Anyone who has a full-time job is welcome to participate.

And you can depend on us to listen. The findings will be shared at this year's WorldatWork Total Rewards conference and reported here at the Cafe.

Margaret O'Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming. 

Comments

[Dillweed]

Margaret,

We would say that base pay is the price of admission, the price that allowed us to play in a particular ball park... While we got it right most of the time, occasionally a fly ball would go foul and we'd strike out and have to clean up a mess, usually a hiring manager mistake of paying more than the person was worth.

Best Regards,

Dillweed

[Margaret O'Hanlon]

Dillweed, I'm thinking that I would take your idea further because "price of admission" is a bit of a passive idea when it comes to employee behavior. Employees have to make active decisions to join your company and commit the extra attention that is involved with being engaged.

Think about all that your base pay means to you -- status in the company, your department and in some ways in your neighborhood. It also affects your self satisfaction and sense of self. I think those things (and more) are evidence that it's a pretty powerful active influencer of your behavior at work.

[Dillweed]

Margaret,

Absolutely and I agree with you.

Dillweed