Less than half of employees think they are paid fairly compared with people in their own organization who hold similar jobs.
A few years ago the operations group of a small airport hired me to improve employee morale. This 150-person department managed the grounds, security, and maintenance of the airport facilities.
The majority of the employees were unionized. One common complaint was how they were paid. A maintenance employee working on a team responsible for taking care of the grounds complained, "Although I've only been working here a short time, I work harder and do a much better job than anybody else here, but I’m paid far less."
A member of the rescue squad had a similar complaint. "The people on our squad who have been working here the longest do the least amount of work,” he told me. “They come to work late, leave early, and take hour-long coffee breaks, yet they make the most money because of their seniority."
When I pointed out to them that their union had negotiated this pay-for-seniority arrangement, they just shrugged their shoulders and said it was still management's fault.
Another client, a retail organization, had a related problem. One of the sales people on the floor complained to me, "I've been working here for 3 years and make virtually the same as new employees." (This is called "pay compression.")
Employees want to believe that their good performance is recognized by management and appropriately compensated. Most don't want all employees to be paid the same. Instead they want the best performers to be paid the most. However, most if not all, believe they are among best performers in their group.
The problem is that when employees feel they are not paid fairly compared to others performing the same work in their organization, they become resentful of the organization and their coworkers. They think to themselves, "That lazy SOB in the next office makes the same as I do. Why should I work harder when I'm not going to see it in my paycheck?" These thoughts are not good for employee morale or for maintaining a motivated workforce.
Although many organizations would like to pay employees performing the same work differently, that’s often very difficult. Here are some reasons why:
THE UNDERLYING PSYCHOLOGY
Using the principles of "equity theory" social psychologists predict that employees will most likely do one of two things when they believe they are receiving the same outcomes (e.g., compensation) as those working at the same job but performing poorly. They will either reduce their own job performance so that there is more equity, or leave the situation. Neither of these solutions are good for the organization.
WHAT TO DO
If paid by the hour, the faster and smarter employees work, the less money they will make. Does that make any sense?
If you pay be the hour, you will be paying primarily for attendance and will not be able to compensate people differently based on their performance.
Employees want to feel that they will be paid more than their coworkers if they perform better for the organization. Do your best to make sure this happens.
- Bruce L. Katcher
Bruce Katcher, PhD is President of Discovery Surveys, Inc. His firm conducts customized employee opinion and customer satisfaction surveys. Learn more at www.DiscoverySurveys.com. He can be reached at BKatcher@DiscoverySurveys.com or 888-784-4367.