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Friday, May 26, 2006

First Installment: The Touchy Issue of Pay

Questions about how much we're paid are some of the most complicated matters we deal with both as supervisors and in HR. As issues go, these are consistently emotionally loaded and never fully go away; pay is ever-present as long as you're in the workforce. In our January employee survey, and in our April focus groups, this issue came forward as it has in every survey I've ever done or read about across three separate industries. What I found striking about our results was how much the pay issue differed from division to division, and how different the understanding of how you look at pay in the corporate environment differed by age and experience. Let's look at what makes pay issues soooo touchy.

Job vs. Personal Worth
The pay issue is deeply personal when people define themselves by what they do ("I am Vice President of Human Resources") instead of by their relationships ("I am Vonnie's husband and Rachel's dad") and who they are (Kentuckian, Catholic, miserably poor guitar player, etc...). The first step in being able to discuss pay issues is to remember one fact: jobs have calculable finite dollar values, but people do not. Your compensation is a reflection of all those things that go into job pricing that we'll discuss in future posts (market value, internal equity, scope of responsibility, potential cost of mistakes, customer exposure, etc...), it is not a reflection of what you are worth as an individual. Getting this one point will help you look at pay more clearly.

Another touchy issue is the question of whether you're going forward or backward in your pay and standard of living. I've only met a couple of people who ever made more, and now make less, that didn't let it eat at them the rest of their careers. The unfairness of these situations is that their former employer closed up shop, fired them, pushed them out, or they left for their own reasons; but its' their subsequent employers who take the beating for not paying enough. Understanding that what happened to you happened somewhere else will help you see pay issues more clearly.

Idealism vs. Reality
This is a huge issue among younger, college-educated staffers. Professors recruit you to take a major in their department and give you stories of those who got their degrees there and won big. Those are great stories, but are the exception rather than the rule. Remember, professors tend to not get off campus much and what they either didn't know or didn't tell you is that almost everyone graduates college, starts at the bottom, and works for a few years in unappealing work developing their skills and readying themselves for key positions. Your college degree typically starts paying off 3-7 years into your career when you start to compete with equally-skilled but less educated co-workers for key positions. Until then, your degree indicates potential but doesn't usually return much value to your present job or make you worth more money.

Ambitions vs. Outcomes
No matter how much you play with titles, the truth of all organizations is that they are pyramids; the farther you go towards the top the fewer jobs are available and the more competitive the situation. Also, over the years you tend to specialize in something specific that the company needs or that pays well in the current market. If that something isn't in the core business competency of your employer then your expertise makes you a niche player not eligible for promotion to positions that run the business as a whole. For example, VP of HR in an HR consulting firm like Watson Wyatt or Mercer might track you to be CEO; VP of HR in a manufacturing or publishing company makes that highly unlikely. At some point in our careers we face the ceiling, and our earliest indication is usually that first pay increase that's less than the company budget. At that point we can use the disappointment as motivation to change jobs, change industries, or enhance our skills. Another choice is to accept the limitations that the situation places on us and stay in the comfort zone that expertise often gives us or where we feel we're called to be. The worst choice, and the one that too many make, is to get angry and the blame their boss or company. Chances are that the same thing would happen under a different boss or different employer in the same industry.

One of the hardest situations for managers is the situation of employees in need. There are some cases where a person's situation outside of work (caring for a sick family member, personal illness, etc...) places them in dire financial need. I work with a group of executives with big hearts who want to help people in these situations. The problem is that some financial need is self-inflicted, and when managers start deciding between the needy and truly needy we get into issues of favoritism and why you help one and not the other, as almost no company can afford to control the financial outcomes of each of its employees and still stay in business. I don't have an answer to this issue and welcome anyone's suggestions. Needless to say, employees in need are more likely to take pay issues seriously and personally.

This basic human emotion will always plague conversations about pay. I heard someone say the other day that the world's worst and most common problem is "somebody got something I didn't and I want it". I tell anyone wanting a career in HR, payroll, or especially compensation management that they can't be successful if they pay attention to what everyone else gets or if they're money motivated. The best way to understand if you're paid fairly or not is to focus on your job in your industry and market, not on what anybody else gets or does.

Remember, in this post we're not discussing what is or isn't fair pay. Here we're discussing what you should and shouldn't focus on in order for us to have a much-needed and candid conversation about pay. I welcome your professional and constructive feedback, even if you disagree with me, and invite you to participate in this discussion by posting a comment. If you want to privately comment or ask a question , you can email me at or IM me on AIM at jthom140.

Monday, May 01, 2006

Immigration Protests and Unemployment in Perspective

Well May 1st has come and gone and all the hype and hysteria inspired me to do some research. If you listened to Phil Valentine (those of you around Nashville) you might think that your job is going to be done by an illegal immigrant at half pay some time next week. If you watch NBC news you'd think this was a spontaneous civil rights campaign. Neither is correct.

The Center for Immigration Studies, and independent, non-partisan think tank that studies immigration issues published findings in 2005 that estimated the number of immigrants in America to be 35.2 million. An estimated 7.9 million of these arrived between 2000 and 2005 and about 3.7 million of them were illegal/undocumented. So, talk radio jocks might say, this is the smoking-gun-proof that we must build our own Berlin Wall in Texas to keep the Latinos out before we all lose our jobs, right?

Well, not exactly. The Bureau of Labor Statistics of the U.S. Department of Labor tracks unemployment by month, quarter, year, age, race, occupation, and just about any other data cut you can imagine. Total unemployment by year since 2000 looks like this:

2000 4.0%
2001 4.7%
2002 5.8% (the beginning economic impact of 911 terrorist attacks)
2003 6.0%
2004 5.5%
2005 5.1%
2006 4.7% (annualized data for the quarter ending March '06)

So combining these two data sets we see that the growth in the U.S. economy has absorbed the "911" job losses and 7.9 million immigrants, including the 3.7 million illegals, with no appreciable impact on unemployment. It looks like your job might be safe after all.

Now what about this spontaneous civil rights movement? Don't buy it! Check out,1,7009105.story to see the role that organized labor played in the May 1st demonstrations. Organized labor has for years shot itself in the foot by not targeting immigrants as potential members, treating them instead as cheap labor and a threat to "good union jobs". This was a major factor behind the recent breakaway of former AFL-CIO member unions like the Service Employees International Union which views immigrants, even illegal immigrants, as a rich source of new members. They are the most disenfranchised and vulnerable segment of the workforce and thus a natural to need organized labor's protection. Now that labor has awakened to this fact it hopes that becoming the advocate for guest worker amnesty and other immigrant rights initiatives ingratiates this demographic group to labor much the way that 1960's Democrats' embracing of the civil rights movement brought African Americans into their party for a generation. The May 1st demonstrations would not have happend without Big Labor organizing expertise and money.

So what's the takeaway here for the average working person? Not much, really and that's the point of this post. You're not going to lose your job to a cheaper foreign worker anytime in the forseeable future if at all. The only thing of significance that happened this week on this issue was how much TV news and talk radio ad time was sold telling you that something important was happening.