High emotion over low pay

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This article was published 24/09/2022 (1329 days ago), so information in it may no longer be current.

Our local weather is changing as fall approaches; however, just as most people are expecting cooler temperatures, government employees are feeling their temperature rising. That’s because approximately 1,000 full-time employees who are considered “political appointees” are slated to get a salary increase of 2.4 per cent, retroactive to 2019 versus the 1.4 per cent that unionized employees will be receiving as part of their arbitration board settlement. Part of the “hot under the collar” response by union representatives is the residual anger resulting from the earlier government wage-freeze legislation and the need to involve the court and an arbitration board in order to get an agreement.

Readers will also notice the link being made between the pay issues described above and the emotional descriptions this columnist used to describe the situation. The descriptions were intentional because, believe it or not, pay is emotional! In fact, one of the well-known early researchers on pay and job satisfaction coined the now popular concept, “fair felt pay.” This concept suggests employees have an intuitive knowledge of what they should be paid for their work and their capacity to complete their work tasks.

In other words, an employee “feels” whether or not they are being paid fairly. This is an emotional response to their pay rather than what they are actually paid. Therefore, if there is a gap between actual pay and the fair felt pay, then an employee will begin to feel dissatisfied and may develop morale problems that could influence other personal work behaviours.

As a result, fair felt pay has also become known as “emotional pay.” At the same time, the concept of emotional pay goes beyond the concrete dollar amount and includes other compensation elements such as reward and recognition, the ability to participate in training opportunities, options for schedule flexibility as well as other employee benefits.

Organizations offer employee pay increases for a number of reasons, with a key rationale being attracting new employees and retaining current staff. This is the main reason cited by government for the retroactive pay bump and is completely legitimate as there is much research to support the fact pay is a key criteria for job search candidates and is also key for job satisfaction for current employees.

It is well known that a favourable compensation system with integrated benefits contributes to a positive overall morale within an organization. That’s because when people feel valued, they are more willing to work to their best capacity. This in turn creates employee loyalty.

Compared to other years, and because of the current inflationary issues and lingering personal safety issues related to the pandemic, employees are reporting that compensation is even more important to them in this time of economic volatility. Organizations on the other hand are recognizing they are confronted with a competitive job market and are planning for larger salary increases than normal.

For instance, salary.com, an online salary survey resource, suggests that the median salary raise will be four per cent across all employee categories. In addition, readers may also see an increased differentiation of rewards for high-performing employees as well as moving employees faster through their salary ranges.

Unfortunately, the practice of underpaying employees is more common than one thinks, no matter the location, industry or job position. Sometimes this is because management doesn’t track their salaries with competitors, while sometimes they simply lose touch with the value of employee skills for certain positions. Still others do not fully understand just what constitutes fair pay or pay equity in general. When this occurs, employees will often find discrepancies between male and female employees doing the same job. Finally, I have also encountered inexperienced managers who make their pay decisions based on their own emotional evaluation of a job. This results in comments such as “he/she doesn’t deserve that amount” or simply, “I am not paying that amount.” Many times the emotional evaluation is really a personal evaluation of an individual personality rather than the work completed.

The overall result of poor compensation management in general, leads to high employee turnover, lower employee morale, a weak organizational culture, an unattractive corporate brand and reduced employee loyalty. And this turmoil isn’t a situation of a single incident of compensation challenges, it is like a disease that eats away at the success of an organization, often leading to closure or employee layoffs.

At the same time, reviewing your compensation plan is more than simply comparing market rates for a variety of salaries. The first step is to undertake a complete compensation review of all the jobs within an organization, especially if this has not been done recently — if ever. This is called a compensation review and although very time consuming, it is well worth the effort because the system revisions will last several years and can be updated quickly.

The review requires that all job descriptions are reviewed in depth as this allows managers to learn how employees see their jobs versus the view of management and allows managers to see how a position has changed from its original job description. Each employee is provided a lengthy questionnaire that explores the specific job tasks and time required, the number of people reporting to the position, budget responsibilities, the nature of problem-solving, the risks encountered when doing a job, along with many other key job features.

These job analysis documents are reviewed by an evaluation team made up of participants who understand the organization, have knowledge of specific jobs and are known as objective decision makers. Points are assigned to each job which are then ranked into a hierarchy of groups. A key benefit of this process is that jobs with different titles and responsibilities are compared for their value to the organization and then grouped into the same salary band.

Once this is complete, the organization undertakes an external market salary study through which they can compare the salaries and benefits for the various jobs and determine where they stand in comparison. This assists the organization to create a budget that will enable them to bring their jobs up to market rates.

Again, while the process is time-consuming, the benefits are overwhelmingly positive. That’s because the organization will have a concrete, rational and defensible compensation system which is easily implemented and monitored. Employees are notified and are given an explanation as to where they fit in the salary scale and why.

As suggested earlier in this article, employee pay is an emotional issue. If an individual is underpaid, they feel a sense of pain and will either start looking for another job or may stay and be unproductive. Their negativity will soon be absorbed by others leading to low turnover and low morale. In today’s economy and competitive job market, organizations cannot afford to take this risk.

Source: Canadian HR Newswire, Sarah Dobson, Sept. 8, 2022; 7 grave consequences of underpaying employees, Coann Labitoria, HRD, June 22, 2022.

Barbara J. Bowes, FCPHR, B.Ed, M.Ed, CCP is a human resource professional, author, radio personality, speaker, executive coach and workshop leader. She can be reached at barb@bowesleadership.com.