I recently received this email message from a storeowner: "I am the owner of a store with 40 employees who do mostly unskilled work. Many of them have been with us for more than 10 years and they have reached their maximum earning potential with us. My concern is that we have 'trapped' them in their jobs by treating them well, paying them decently for this type of work, and providing them with medical and dental insurance."
Most organizations have fixed pay grades that specify the amount of money that can be paid to employees in each position. The pay grades have a minimum and a maximum salary. Typically new employees start at the bottom of the salary range and gradually move up as they receive pay increases.
The purpose of the pay grades is to make certain that the organization maintains good control over its total labor costs. The pay grades also help to maintain internal pay equity. For example, supervisors, understandably, become upset when their direct reports make more money than they do.
But what should organizations do when their loyal, high performing employees reach the top of the pay grade? Typically, these employees continue to work with no pay increases except, perhaps, cost of living increases.
The problem is that these top-of-the-pay-grade employees may become frustrated and lose their motivation. They feel trapped.
HOW TO HANDLE THE TOP-OF-THE-PAY-RANGE BLUES
Many organizations adopt this strategy. To maximize profits, they hire the junior-most employees who can handle the work. As their pay increases, they replace them with other low paid employees. It doesn't sound fair, but after all, it's business.
Try your best to keep top-of-the-range employees, but sometimes it's best for all involved to just part ways.
- 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.