Pay

by Lua Leggett

Introduction

Pay is the most emotive and controversial topic any line manager is likely to encounter. It touches on motivation, fairness, equality, reward, proof of status and career progress and is never enough!

A number of major studies have attempted to determine the importance of pay to employees, relative to other potential motivators. When asked directly about pay, people tend to give answers that place it somewhere around the fifth in a typical range of 1 to 8 in a list of potential motivators. However, in contrast, met-analytic studies of actual behaviours in response to motivational initiatives consistently show pay to be the most effective motivator. The main source of this discrepancy in response appears to lie in the psychology of responding to socially acceptable norms –including the notion that money is a less noble motivator than factors such as challenging work or work that makes a contribution to society. This feeling that it is somehow ‘crass’ or ‘undignified’ is particularly predominant in the UK!

Pay your people the least possible and you’ll get from them the same.

Malcolm Forbes (publisher of Forbes magazine 1919-1990)

The broad usefulness of money, as well as its many symbolic meanings (status, stability, security, growth and so on), suggests that, far from being a mere low-order motivator, pay can assist in obtaining virtually any level on Maslow’s motivational hierarchy, including social esteem and self–actualisation. While it is well established that pay (or money) of itself is not a motivation, a lack of it or a feeling that your pay is insufficient or unfair compared with that of others is a huge de-motivator.

The best you can expect, as a line manager, is to hope that the individuals in your team are paid enough to get the topic off the table as far as motivation and discretionary effort are concerned and that team members feel fairly treated.

As a line manager, you are unlikely to have any control over the pay scales of your team. These are likely to be set by the organisation, communicated by HR and negotiated by a number of factors outside your control, such as union negotiations, local pay rates, industry thresholds and even the macro-economic factors of supply and demand (recession or boom?).

Most of the time, your HR department will handle pay disputes and your finance department or operations head may manage and implement reward reviews. However, you are the first line of contact (and often of attack!) when an issue arises around pay or reward; so what can you, as a line manager, do to use the pay scales and rewards package available to manage the responses and behaviour of your team?

Knowing and understanding your pay structure, the criteria for progression and the key elements that dictate what your team can earn will all contribute to you being better able to argue the case for your team members in the future when pay rounds and reviews are on the table.

In the past decade, pay has not been a major topic of discussion, as we have been enjoying boom years and low inflation. However, since 2009 the tables have well and truly turned, and now many employees are facing a second or third year of pay freezes, while at the same time inflation is increasing. This makes pay a very topical and sometimes thorny issue. As a manager, you need to be prepared and armed with the tools to handle this conversation.

Appraisals are where you get together with your team leader and agree what an outstanding member of the team you are, how much your contribution has been valued, what massive potential you have and, in recognition of all this, would you mind having your salary halved.

Theodore Roosevelt