The Immutable Laws of Compensation (Part 1)

Editor's Note: Today's post comes to us courtesy of guest contributor Joe Thompson.  Because of the breadth of his topic matter, we've decided to feature his post across two days.  The first two Immutable Laws are covered here.  The remaining will be addressed tomorrow.

I was happy to see the repost Dan Walter’s article of the Newtonian Laws of Compensation Motion since I had been ruminating on the laws of compensation. 

For quite some time, Sir Isaac Newton’s laws of motion have become well-known.  To paraphrase another Isaac, Isaac Asimov, everyone can rattle them off now, from the highest to the lowest; from the rarified intellectual heights of the Compensation Café reader, through nuclear physicists, college students, newspaper reporters, … busboys, all the way down to congressmen.

But here I want to discuss a few lesser-known, though equally fundamental laws: I’ll call them the Immutable Laws of Compensation.  These laws are meant to supplement, not to replace, Dan’s laws of compensation motion, much as there is a broader corpus of laws that describe classical mechanics which include Newton’s Laws of Motion.

While these laws had been rattling around in my head for some time, it was a recent exchange of comments on Fishbowl, one of those “go ahead and share your unfiltered thoughts with everyone” stream-of-consciousness apps for the consulting industry, that prompted me to solidify my thinking.

The original poster on Fishbowl had stated:

“Is there anyway [sic] to see what the average [X-Level employee at the company] makes?  I want to ask for a [market-based salary increase] since I know I am paid way less than the average [X-level employee] and I would like some evidence to back this up.”

I’m sure we’ve all experienced some form of such a statement.  In and of itself, there is nothing terribly novel, I suspect, in the original poster’s comment, though we could have some lively conversations around pay transparency (and whether transparency means the posting actual employee salaries or just the posting of salary ranges).  But what struck me were some of the responses.

Of course, there were people quick to point out the poster’s rather confident articulation of what they knew to be fact in the absence of facts.  But there was also a vein of responses that asserted what the poster felt to be immutable pay truths, such as this one:

“… wanting to get paid more is a justifiable goal.  We should be supporting out colleagues in their efforts to do that …”

So there it was.  We should all be supporting our colleagues’ efforts to get paid more, period, untethered from revenue, profit, market competiveness, internal equity, external equity, or any other compensable factor.  And, of course, there was the preceding argument that wanting more pay is unqualifiedly justifiable.

Which brings me to:

The First Immutable Law of Compensation: All employees always want to be paid more. 

First Corollary: Employees always want to be paid more for the work they already do, and in the location they already do it, rather than for new work or work in a new location.  (I’m sure that in the dusty archives of our collective experience, if we search hard enough, we can find an example or two where someone declined a pay increase for doing the same work, but I suspect those examples would merely be the exceptions to justify the rule.)

Second Corollary: Employees always want to be paid more for the same or decreased level of effort rather than for increased level of effort.

Third Corollary: Some managers always want to pay their employees more in order to motivate them, to make them more productive, and to improve the quality of the work they perform.

The Second Immutable Law of Compensation: Some employees will always be paid less than the average employee. (This law can also be expressed in terms of occupations, companies, industries, etc.)

First Corollary: Some employees will always be paid more than the average employee.

Second Corollary: Employees paid more than the average employee will often harbor the opinion that they are, in fact, under paid.

Third Corollary: Every employee paid below the average employee will be certain that their pay should be increased based solely on the fact that they are being paid below the average.

Fourth Corollary: For every employee who is paid below the median, there is another employee who is paid above the median. [Yes, I know, statistically speaking, there may not be an exact one-for-one mapping below and above given the size and distribution of the sample size.  But, if we want to get that precise, we would say that statistically speaking, the average compensation professional is a mean compensation professional.]

Please stop by tomorrow for the Third through Fifth Immutable Laws and their Corollaries!

Joe Thompson, CCP, CCMP, is currently employed as a Human Capital Strategic Consultant at Booz Allen Hamilton where he assists clients with a wide range of human capital challenges.  He has delivered human capital solutions across the talent management lifecycle including recruitment, job analysis, hiring, compensation and incentives, workforce planning, HR policy, attrition, performance management, change management, cyber human capital, and human capital program design, implementation, and evaluation.  Joe has worked in the area of compensation for 10 years and, prior to Booz Allen, he has worked in the U.S. Intelligence Community and in the U.S. Navy.

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Comments

[E. James (Jim) Brennan]

"I want fair pay" means "I want more money." Everyone wants to be paid exactly what they are worth, as long as it's more than they're getting.

Practical experience (and other research) tells us that:

1. employees are more sensitive to internal equity relationships than to external market competitive realities;

2. when people feel that they are being paid fairly, they are frequently being overpaid compared to objective measures of the external competitive marketplace; and

3. when workers cease to complain about unfair pay, they are generally extremely overpaid and reluctant to call management's attention to the fact.

[Chris Dobyns]

A fun posting Joe. And probably more than a small iota of truth in that last statement (I'm reflecting mostly about myself . . .).

It's nice that Jim responded to this (from deep in the heart of Texas), because he reiterated a couple of points (almost verbatim) that he and I have discussed in the recent past. And Jim is too humble to highlight his personal efforts in developing something very similar - known in the discussion channels as Brennan's Laws (https://drive.google.com/open?id=0BxQ1vlrfGZxsZFd4MWZ5NEV4bmc).

[Chris Dobyns]

Someone was nice enough to point out that apparently another immutable law (of human behavior) is my occasional inability to embed a properly working hyperlink. Here's the fix to hyperlink referenced above (which goes nowhere): https://drive.google.com/file/d/0BxQ1vlrfGZxsZFd4MWZ5NEV4bmc/view?usp=sharing