7 Ways to Keep Your Wage Practices in the Black
At least once a month there is a news story about some company and how they pay their employees. The bigger you are, the more eyeballs are watching you, and the more outside perspectives and half-stories get published about you. Those stories question ethics, fairness and, in some cases, weigh the greed of executives. While I don’t think it’s possible to completely avoid being in the red for pay, business leaders can do a few things to defend how they decide to pay the wages for the jobs they provide.
Prize your value system
Globally the social issue of minimum pay is debated ad nauseam. Government representatives are asked to set minimum wage requirements and pundits dicker over the pros and cons of raising those wages. Let them debate the merits of the minimum wage and what is at stake to raise it. When it comes to your company's pay scales, it’s your company – you create the standards. You need to create a pay scale that aligns with your values.
A business is its own ecosystem. That’s why terms like 'culture' and 'morale' are part of the overall employment conversation. Wages are but one piece of the overall value system of a company. In your own ecosystem, the leadership sets the tone. So, figure out your philosophy on pay and define your wage policy around the values that make that philosophy real. Creating a wage policy is good for the company and good for the people that work for the company. If you don’t have one, get one.
Separate skills pay vs generalist pay
One size doesn’t fit all when it comes to pay. Generalists, like managers and executives, have a broad set of skills and abilities and do their jobs effectively. Sales professionals are hunters that are motivated by different things than your management team. Specialists develop their skills and expect to be paid on the level of expertise they have. Treat them differently because they are different.
Figure out your demand roles by season and by project
Sales and revenue pipelines trump all. When your widget is in demand, the people power that you need is in demand too. Adjusting wages based on demand is the ultimate efficiency for a business. The value of that efficiency becomes exponential when you can access on-demand Talent to fill those roles without long-term employment commitments. When operators use tools like pepelwerk, this becomes easy to execute. If not, the sheer amount of meetings, planning, vendors conversations, and third-party programs make doing this unnecessarily costly and difficult.
Be aware of competitor’s job posts
You should already have your finger on the pulse of your competition for the sake of competitive advantage. But, this is one of the times that I ask you to specifically look at your competition to enhance your already established wage policy. Know what jobs they need to accomplish their strategy. If you need the same jobs, you should ask what other values you bring to the table that they can’t. Or if they have posted on public marketing sites, instead of private match platforms, you can determine what their next step might be and pivot, not only your people strategies but your business strategies.
Separate base pay and performance pay
People like to be rewarded for their efforts. It’s not rocket science or an ah-ha moment. Some jobs can only have base pay because the criteria necessary for fair measurement is hindered by processes, systems or variable performance metrics. Think about what you are asking someone to do for your business and reward them when they meet or exceed that expectation or goal.
Cut out the middlemen
Figure out where you have additional people involved that aren’t directly involved in getting the work done. Every cost in the company influences your ability to pay wages that you think are reasonable.
Find your highest unnecessary people-related costs and reduce
This usually is in the legal area or how you approach benefits, perks, and programs. If it's legal, determine what kind of people-related claims are hitting the company. Asses the ones that can have preventative measures, evaluate those countermeasures, and put them in place. Lawsuits can cripple a business’s wage practices. If you are still using the same services, methods or approach to providing the total rewards that you were 5 years ago, you are wasting money. Learn new ways.
As a business leader someone will always question your pay practices, people always want more, people always talk about what they get paid. So, do yourself a favor and follow these 7 principles and you will not only have something defendable you will be able to sleep well at night knowing you are doing what’s right for all stakeholders in your business – yourself, your people and your investors.