How to handle salaries

8 Oct

Employees often feel they aren't being paid enough.

Only about half of employees believe their fellow workers are being paid in a way that reflects their performance, according to a study by Towers Watson. Additionally, 4 in 10 employees are highly engaged with their work. Although Entrepreneur reported that most employees are happier in a job they find more satisfying for less pay versus a higher paying job that is not as enjoyable, the research by Towers Watson would seem to indicate most people choose work based on salary.

So, who's at fault here? Are employees putting too much of the burden on managers, or are managers not working efficiently enough at finding appropriate salaries? According to Human Resources Executive Online, it's a bit of both. Some managers are able to get away with doing poor work because they aren't properly reviewed by those in a managerial position. Other times, salaries are handled by people who are too far up the chain of command to make accurate decisions.

Employees can't all be star performers
Laura Sejen, global practice leader of rewards for Towers Watson, suggests that most employees are able to do about the same level of work in comparison with other workers doing the same job.

"Put yourself in the shoes of a manager with pay decisions to make," Sejen said in conversation with HRE Online. "On average, people tend to do their jobs well. Some do better and some do worse, but on average, most of your employees fall into what I call the 'steady Eddie' category. [As such,] it becomes difficult to have these conversations with these steady Eddies year after year, it becomes difficult to tell them their merit increase is only about 2.5 percent or 3 percent, because that's what's required to be able to give more to star performers."

Managers must be willing to tell their employees that ultimately not everyone is in a high-performing position where a greater salary would be appropriate. In a best case scenario, the largest bonuses rightly should go to the few workers who truly make a big difference for the company.

How employers can make employees feel valued
Money is a major incentive for getting workers motivated, but ultimately it is not the only tool in a employee management's toolkit. According to Entrepreneur, giving employees an opportunity to make a positive work/life balance for themselves may help inspire them to work harder when they are doing their job, as well as to rest thoroughly when they are not working.

One example of this is to allow employees to customize their work schedule. In theory, employees should be able to work however they want as long as they show up to the appropriate meetings and get work done on time. If giving them the opportunity to work early in the morning and leave early in the afternoon is appropriate, then consider doing that, as it may positively impact their job experience.

Opening up the salary process
A suggestion by HRE Online is to make salaries more transparent by showing how the numbers are generated. Additionally, professionals across different units can work together to identify true high performers and reward them accordingly.

An example cited by Sejen is that if a company only wants to reward the top 10 percent of its employees, then it should evaluate what makes an employee a "top earner," and then make this information well known. After that, it should clearly and precisely evaluate those 10 percent and ensure the number is accurate, so it doesn't grow to 20 percent or shrink to 5 percent.

"One of the best things HR can do [when it comes to payroll] is to shine [a light on the process] by measuring and making visible what is really happening," said Jim Kochanski, a senior vice president with Sibson Consulting.

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