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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.

Momentum
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.

Need
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.

Envy
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.

Summary/Next
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 jthomason@thomasnelson.com or IM me on AIM at jthom140.

6 comments:

Sal said...

stumbled upon your site because we have a loved author in common. Thought your kiss up kick down thing was great. I saw Fast Food Nation and Babel in Cannes, both of which touch upon your concerns about migrant labour; would be good to discuss these things further with you

Jim Thomason said...

Thanks for the comment. Would love to discuss these issues either off-line via email or IM, or publicly on this site. Thanks again.

Jim

Anonymous said...

I am very happy that you have started this blog. It is important for any company to balance out the perceptions of what pay expectations are and what the reality of the situation really is.

I myself and many others work in the WOF side of the world, So I really can not speak to the corporate culture and over all goodness of the Thomas Nelson side of things. However I can speak with you based on what I have seen here and people I have talked to and things I have discovered.

1. Job verse Personal Wealth.

2. Momentum

3. Idealism vs. Reality

4.Ambitions vs. Outcomes

This is an area where I think we are having the most difficulty as employees on the WOF side of the world and I would like to explain why I think its so important going into this that we have a broader brush to paint with.

In a nut shell I do not think that our Pyramid of job structures over here has ever really been done. It seems that the jobs were created in a time of absolute need and never revisited. Between workloads, Crazy insane deadlines and simply no one understanding the effort time and stress it takes to do anything to put on our fantastic shows.

One of the funniest comments I have heard from some of the heads of our departments and also the heads of TN is no one can believe so few staff can do so much.
I personally believe its God because we are all so over whelemed over here we are starting to lose it. We care a great deal about what we do and I think that this is the reason we are successful.

Some great steps have been made in this direction though. The onsite Hr person and the question and answer session you had with us here I think things are getting better. I feel that we actually have an advicate now.

I am just very weary of low hanging fruit. Like everything else and I have lots and lots of examples personally here that nothing will actually come of this.
No one really believes that anything will get better in this area at least no one I have talked to. Everyone is just here wating for the next best thing. That is why so many people have been moving along. Equivalent jobs are just paying so much more.

I love what I do so I hope this changes.

5. Need

6. Envy

7. Summary/Next

Mr Thomas I am very thankful that we are having this discussion. I know how hard the discussion of pay can be for a company and even harder for the people who have to buffer it. Your staff should get medals for even coming close to this topic.

Most companies don't even deal with this. They pay what the can and wont increase it as long as there are people who they can find to fill the needs they have.

The fact that its even coming up is pretty signifigant.

For me the discussion of pay is not about what I feel I am worth or what my expectations really are. It's not about what Joe blow down the road is doing or anything else because first and formost the Lord will provide.
Now that being said It is disheartening to give a 5 dollar effort and be able to spend a buck 25 in return.

Thanks for reading.

Jim Thomason said...

Thanks for your comments; I'm particularly glad to hear that having on-site HR is helpful. Just to clarify, we did price and build a job structure at WOF about 4 years ago, but the organization is dynamic and has changed and grown to the point that we are currently re-doing that project. Up to now, with the workload and lack of HR person on-site, that work wasn't possible. Thanks again,

Jim

Anonymous said...

I want to begin this post by saying how great it is that this topic is even opened up for unscreened employee comments. That is very rare amongst companies. With that said, I am a little sad by the tone of the first post. It didn't strike me as a definition of terms, but leaned a little more to the "be happy you have a job" spectrum of things. I am fully aware of the business-wide difficulties and opposition to increasing compensation, but I feel a desire to be "the best employer in Middle TN" would be lip service without it.

Having worked for years in other similar businesses, here are my observations:

Job vs. Personal Worth
I could not agree more with your comments here. Nothing is more sad then when a person's only description of themselves is the corporate title they carry. However, I think there is some difficulty in detaching your identity from your job when you are expected to be accessible nearly 24/7 or at the office for as long as the job takes knowing you are accountable for getting it done. When individuals are pushing the 50 to 60 hour a week range consistently, I think the division between job and personal worth become rightfully entangled and then the bottom line pay does equate with your value as a person.

Momentum
Personally, I do not know of anyone who is in the situation you explained, but I agree with your take on that in particular. Everyone here has accepted their position and was not forced into it. Therefore, to hold this company accountable seems unfair. By the same token, it is frustrating to tread water or fall behind in standard of living while at the same company. Raises of 2-4% do not go a very long way when annual inflation averages 3% and gas prices have nearly doubled in the past year not to mention medical costs. There are creative solutions to tackle these issues without having to increase pay.

Idealism vs. Reality
I found this commentary to be the most disheartening. The fact that a degree indicates potential is true, but it will be very difficult to keep the people with the most "potential" around if they are not compensated and nurtured. I feel it is a slippery slope when we hold a compensation moratorium until a certain time of service has been reached. I think there are several examples of individuals with great potential finding their potential appreciated and compensated quicker elsewhere. Although difficult within the "entertainment" industries, the establishment of an attainable and defined career track would serve to show people with high potential that they are wanted and will be rewarded monetarily sooner rather than later.

Need
I think few could argue that this company is one of the vanguards in the area of helping those in need whether they are employees or members of the community. I have never worked for one better. I also think it is very bizarre that anyone would feel a company is responsible for bailing them out of self-induced financial trouble.

Envy
I think this is just flatly incorrect. I do not believe anyone harboring feelings of envy will get anywhere, but to assume that looking at others and comparing your pay and benefits situation with theirs is envious is incorrect. It's simply a good business practice for yourself. I think it is necessary to compare both with those not in as fortunate positions and those doing better in similar positions and then reflect. An aspiring leader in employment, like we have declared we want to be, should embrace a goal, even though not entirely achievable, of: "Look and Compare...You Won't Find Better."

In closing, I don't intend for this to be viewed as a rant from a disgruntled employee, but the quest to be a leading employer is muted without the realization that there will be some pain to the bottom line. It is simply necessary to weigh whether the benefits of lower turnover and higher satisfaction are worth the cost. Sometimes they are and sometimes they aren't. There are also many other ways to increase compensation without increasing pay directly, and I truly believe we are making strides in those directions, but hope we reach further. Comprehensive and full tuition reimbursement, generous personal/vacation days, quarterly bonuses (as simple as $25 or $50 retailer gift cards) are all benefits that go a long way.

Thank you for allowing and opening up this forum.

Jim Thomason said...

First of all please know that this doesn't sound like a rant at all. Also, please don't consider my comments about envy to convey that I think any looking across the aisle at your co-workers or peers in other companies is envy. Its smart to benchmark and make sure you're treated fairly...its unhealthy if it becomes the focus of your work. That said, thanks so much for contributing.