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Why Aren’t I Paid A Fair Wage?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 22-01-2018

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Storm Troopers carrying reward, by pasukaru76Do you think your pay is a fair reflection of your experience and job performance?  What about the person in the office/cubicle/workstation next to you?  Do you think their pay is fair?  If you asked 100 of your fellow employees that question, what percentage would say yes?

Would you be surprised to find out that, at any given moment most employees feel they’re deserving of more than what they’re receiving?

So if that’s a common employee perception, are the majority of companies intentionally underpaying their employees?  Or are these employees filling their heads with overly ambitious fantasies of their own self-worth and entitlement?

Perhaps we should first understand, what exactly is a fair wage?  Most would agree that it’s being properly rewarded for an individual’s experience and effort.  Not in relation to the employee next to you, but as a reflection of one’s own value to the organization.

You may be nodding your head now, but what confuses the issue every time is – what do they mean by “properly”?

Many employees have a tendency to consider themselves underpaid.

  • They hear stories about what their friends and relatives are being paid – and the stories are always about higher pay
  • They learn of colleagues whom they consider as less valuable to the company being paid more than they consider “fair”
  • They’re exposed to a steady drumbeat of outside influences (recruiters, the media, those same friends and relatives) suggesting they could do better elsewhere
  • In today’s business environment an employee’s natural skepticism allows that the company is offering only what it has to

Given the subjective and emotional nature of the above, even where the pay levels are high in relation to the competitive environment employees may well remain convinced that their lot is average at best.  Unless the company makes a serious effort to communicate the relative market value of their pay program(s), left to their own devices employees may not appreciate what they have.

So what’s an HR Manager to say when confronted by this most common employee gripe?

Focus on how the individual is being treated, because if you get caught up defending anyone else’s pay you’ll have lost the point from your opening breath.  Your questioner has only one employee in mind, and they won’t be all that interested in listening to generalities of how the company has everyone’s interest at heart, how they strive to provide opportunities for competitive pay, blah, blah.

Also, most pay-for-performance systems have a critical flaw, in that company reward practices don’t keep pace with the increased value of employees – thus creating a risk of disengagement and eventual separation.

  • Salary ranges are increased in relation to marketplace movement (usually), but individual pay is increased for different reasons.  Thus employee growth within the salary range can be painfully slow
  • Over time it’s likely that an average employee could stand still within their salary range, even as their experience and marketability improve
  • Company budgetary policies often limit merit and promotional increases, restricting the pay growth of high performing employees
  • Squeaky wheels do get greased, and more often than we’d like.  But those situations are exceptions and shouldn’t be pointed to as benchmark practices.

Companies don’t react directly to the Cost of Living, either in midpoint or salary movement, but employees, on the other hand, react to the COL as a barometer of whether their pay is fair.

Also, as companies continue to “carry” some employees they leave limited resources for the reward of high performers – and who is it that tends to leave the company?  It’s the good workers, while the mediocre ones remain.  When a reward system is flawed the average level of performance tends to gradually decrease as good workers leave and other qualified staff realize they won’t be rewarded for their efforts.  Over time a broad leveling effect takes place, to the detriment of your business.

How can an employee test whether or not their pay is fair?

  • If the salary range is known, learn how present pay compares to what the company considers the “going rate” (midpoint). Significant job experience and consistently good performance ratings would suggest an above average pay level.
  • They should talk to HR or their first line management, in order to gain the company’s perspective on their individual value and what opportunities may be available
  • Caution: several internet sites offer a distorted view and aren’t reliable. If quoted by the employee, your best tactic is deferring market pay questions to internal professionals
  • For most employees it’s an act of faith that the company is playing fair – and if they come to believe otherwise it’ll be difficult to regain their trust

Do you consider yourself to be fairly paid?  Be honest now.  There’s a line of thought that suggests there is little to gain in saying yes.  Then the company will do nothing.  But if you said h*** no! then perhaps the company will do something.  Cynical?  Skeptical?  Yes on both counts, and that is exactly what your employees are thinking right now.

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