WHAT TO DO WHEN EMPLOYEES SAY
THEY ARE PAID UNFAIRLY
By Bruce L. Katcher, Ph.D. President, Discovery Surveys, Inc.
Less than half of employees
think they are paid fairly compared with
people in their own organization
who hold similar jobs.
A few years ago the operations group of a small airport hired me
to improve employee morale. This 150-person department managed the grounds,
security, and maintenance of the airport facilities.
The majority of the employees were unionized. One common
complaint was how they were paid. A maintenance employee working on a team
responsible for taking care of the grounds complained, "Although I've only been
working here a short time, I work harder and do a much better job than anybody
else here, but Im paid far less."
A member of the rescue squad had a similar complaint. "The people
on our squad who have been working here the longest do the least amount of
work, he told me. They come to work late, leave early, and take
hour-long coffee breaks, yet they make the most money because of their
When I pointed out to them that their union had negotiated this
pay-for-seniority arrangement, they just shrugged their shoulders and said it
was still management's fault.
Another client, a retail organization, had a related problem. One
of the sales people on the floor complained to me, "I've been working here for
3 years and make virtually the same as new employees." (This is called "pay
Employees want to believe that their good performance is
recognized by management and appropriately compensated. Most don't want all
employees to be paid the same. Instead they want the best performers to be paid
the most. However, most if not all, believe they are among best performers in
The problem is that when employees feel they are not paid fairly
compared to others performing the same work in their organization, they become
resentful of the organization and their coworkers. They think to themselves,
"That lazy SOB in the next office makes the same as I do. Why should I work
harder when I'm not going to see it in my paycheck?" These thoughts are not
good for employee morale or for maintaining a motivated workforce.
Although many organizations would like to pay employees
performing the same work differently, thats often very difficult. Here
are some reasons why:
- Measuring Performance is Not Easy
It is often difficult to measure job performance.
One must usually rely on the subjective ratings of supervisors, which may be
biased and are often not comparable to those of other supervisors.
- Employees Distrust Management
Employees don't trust supervisors to properly
differentiate between the good and the poor performers. They thus ask their
union to negotiate across-the-board pay raises or raises based solely on
- Management Doesn't Want to Make Waves
Organizations find it much easier to pay everyone
performing the same job equally. This way they don't have to worry about
accurately measuring performance. They also believe this approach will be
easier to sell to employees. They can say, "Look, you're all part of the same
team and we want to pay you the same since everyone needs to contribute equally
to the team."
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THE UNDERLYING PSYCHOLOGY
Using the principles of "equity theory"
social psychologists predict that employees will most likely do one of two
things when they believe they are receiving the same outcomes (e.g.,
compensation) as those working at the same job but performing poorly. They will
either reduce their own job performance so that there is more equity, or leave
the situation. Neither of these solutions are good for the organization.
WHAT TO DO
- Widen Pay Ranges
The "pay compression" problem is a common one. In
order to attract employees to join an organization, publicly advertised
starting pay rates are relatively high. This annoys job incumbents because they
see that new employees are earning the same or almost the same as they are
earning. Expanding the salary range can help.
- Avoid Paying by the Hour
Paying by the hour makes little sense for most
jobs. Here's why:
Employees spend more time looking at the
clock than they do focusing on achieving tangible results. Employees develop
ingenious and often unethical approaches to stretching their work into the full
8 hours even if it can be accomplished in far less time.
Employers spend time looking at the clock as
well. Wouldn't it make sense for employers to be focusing on the
accomplishments of employees rather than how long they spent hanging around the
If paid by the hour, the faster and smarter
employees work, the less money they will make. Does that make any sense?
If you pay be the hour, you will be paying
primarily for attendance and will not be able to compensate people differently
based on their performance.
- If Possible, Keep Pay Levels Secret
There is no need to make individual pay levels
public. It's really nobody's business how much their coworkers are being paid.
Unfortunately, in unionized and government organizations, pay levels are out in
the open. However, many organizations can control what information is shared
with employees and what is not. Keeping individual pay levels secret is the
best policy. It can help minimize resentment. Employees, of course, may tell
each other privately what they are paid, but this is unusual.
- Don't Stop Trying to Pay for Performance
Don't give up on properly measuring the
performance of employees. Continually refine how you evaluate their
performance, involve employees in setting performance goals, and train
supervisors how to use the performance review process.
Employees want to feel that they will be
paid more than their coworkers if they perform better for the organization. Do
your best to make sure this happens.
I am very much
interested in your views on this topic.
Please reply with your comments and
suggestions to .
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