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Derek Irvine

Globoforce

Senior Vice President of Global Strategy

Read more about Derek Irvine

Blog: How to take the pay issue off the table

moneygrabber

Recognise This! – Recognition and rewards cannot replace compensation – it’s an entirely different “currency.”

Fellow blogger and Compensation Café founder Ann Bares recently ran a survey looking into what level of pay (or pay increase) would be needed to “take the issue of pay off the table.”
 
This is a highly complex but critical topic. Until a fair and appropriate base compensation is paid, employees will not see recognition and rewards as what they are meant to be – a celebration of the “extra.”
 
Ann reported the results of her survey, along with her “(very) initial thoughts”: “What it requires to ‘take the issue of money off the table’ – let’s call it the pay angst factor – like reward fairness, is a complicated, murky and highly personal thing."
 
She continued: "It is also a relative thing, influenced not only by external and internal comparisons and living expenses, but also by the overall reward package in which the base wage resides, and by the work experience itself.”
 
Truer words could not be spoken. Like recognition and rewards, perception of “fair pay” is highly individual. If your goal is to pay enough to “take money off the table,” you’re starting from the wrong point. Instead:
 
1. Don’t look to pay employees the least you can get away with (tempting for many in this economic environment). Employees know what they are worth. Pay them fairly based on their efforts and contributions to your organisation’s success.

2. Have frank and honest conversations with your employees about their pay. This is an issue often skirted over. One way to take the issue of pay off the table is to stop trying to hide it under the table.

3. Get over the mindset “but that’s what I pay them for” and recognise and reward employees frequently for demonstrating your values and contributing to achieving your strategic objectives. After all, research shows 78% of employees say being recognised motivates them in their job and another 69% say they would work harder if their efforts were better recognised.

Check out the survey results, then come back and tell me how high the “pay angst factor” is in your organisation.
 
Derek Irvine is senior vice president of global strategy at HR software provider, Globoforce.
 
We welcome any and all contributions from the community, so please feel free to share your views and opinions with us, your colleagues and peers via our blogs section.

2 Responses

  1. Take pay off the table.

    Great comment and question. I’m in both Dublin and the US throughout the year, so I have an interesting perspective from that angle. Yes, unionisation does add another element to the discussion of "fairness," yet we at Globoforce have several clients with union shops that see the benefit of being able to recognize (and reward) employees individually. This approach tends to work because we do not advise singling out a group of people, but rather ensuring ALL employees are eligible to participate in recognition and rewards – both the giving and receiving of recognition, which lends to an understanding of "fairness."

    The discussion of base pay and annual merit increases (also called pay for performance) is another wrinkle. I wrote an entire post on Compensation Cafe on why that approach should be done away with. May I refer you there for more insight?

    http://www.compensationcafe.com/2011/04/are-annual-merit-increases-the-right-approach-to-pay-for-performance.html

  2. Recognition and Rewards

    Interesting to read how the UK is handling the present economic climate, which just this morning looks even more bleak with news the finance ministers have called off their planned meeting until later.

    Some negotiators/advocates in New Zealand where hopefully we will be slightly less affected by the problems in Europe and the US, are recommending lump sum increases so as to leave the base rates as they are and thereby removing the need to maybe either try and reduce pay later when things really turn bad, or at worst, lay people off.  I believe we have some slight advantage here in that there is less Union influence hence more people on individual employment contracts so the ability to target individuals is easier than having to ‘reward’ everyone the same.  That is currently being played out in the public service which is dominated by Union collective contracts, where the only opportunity is to make people redundant, given the refusal of Unions to recognize individual contributions to the organisation.

    What kind of support does this approach have in your part of the world?  Cheers.  Don Rhodes.

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Derek Irvine

Senior Vice President of Global Strategy

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