How much should I pay you?
by Andrew on 01/04/09 at 11:05 pm
4 comments
Compensation of staff is a tricky subject in any sized business, but perhaps more so in small business where there is no HR department to hide behind and years of past practice to follow. Is there such a thing as “market-related”? How much is flexibility worth? Should staff know each other’s salaries?
Joel Spolsky, a software business owner in New York, describes his solutions to these problems in this article:
“Why I never let employees negotiate a raise“
Here is an extract:
What would happen if you got to work one day, went into the kitchen, and saw a list of your employees’ salaries taped to the fridge? Would you freak out? Would you expect to find half of your staff weeping and the other half waiting with pitchforks outside your office door?
Because salary information is viewed as particularly sensitive, employers often go to great lengths to keep it under wraps. Some companies even make it a fireable offense for employees to compare salaries, or they write something into the standard employment contract prohibiting workers from disclosing their pay. (In the United States, this kind of rule is unenforceable, by the way, but some bosses hope their workers won’t know that.) The trouble with keeping salaries a secret is that it’s usually used as a way to avoid paying people fairly. And that’s not good for employees – or the company.
Do you have any thoughts?
Andrew Smith is the pedantic systems guy behind Live Alchemy, a SA e-commerce company. Andrew writes for Ideate in an attempt to make the world a more efficient place. View more articles by Andrew.
Fred
Apr 2nd, 2009
There’s no real hard and fast rule. The only thing I can think of is that if what you’re paying someone feels wrong, then it probably is wrong.
Bruce Wade
Apr 2nd, 2009
It would be an interesting experiment to post all employees salaries on the notice board, including the bosses. Past companies who have done this had a few days of complaints and issues but it all sorted out and people actually worked harder. This can only work if the business was authentic to start with and do not use pay to leverage and manipulate people or positions. Well worth a try.
nic
Apr 2nd, 2009
I’m not sure if you’ve heard of one school of thought (although it may not be completely relevant)
Your pay is dependant on:
1. Amount of people your job has an impact on
2. Amount of responsibility your job assumes, and
3. How many other people can do your job.
Schoolteachers don’t get paid well because they don’t have #3.
Tiger Woods and Sachin Tendulkar have all three.
Michael Phelps botched it because he forgot about #2.
The Springbok Waterpolo Captain has #2 and #3 but not #1(probably has a day job).
I think if you apply these criteria you may get closer to what you should pay someone.
Brad
Apr 6th, 2009
Andrew, the question we ask ourselves all the time.
Here is an alternate way of looking at it.
My experience has shown that most people are not paid what they are worth, because of point 3, thanks Nic. The reality is that most people are paid what they accept!!
If an employee is willing to accept a figure, why would the employer insist on them taking more?
It is only when an employee realizes that they are worth a good 40% more to another employer that the employee offers a real increase.
As an employer, the trick is to know what salary is acceptable to the employee, without destroying your companies cash flow, and, to know what is going to result in a productive and happy employee!
What would you accept, if you were to do the same job?