Both sides of the employee pay conversation
"If you would take, you must first give, this is the beginning of intelligence." Lao Tzu
“You can never pay a soldier enough for what they do…,” I heard the U.S. Army Chief of Staff state years ago when I was a young Army officer. Military pay is known for being below what employees in the private sector make. Each year, the Army would distribute a document which did a comparison between military and private sector compensation. I never understood the purpose of the comparison. I always viewed it with a sense of, “so what…” It was known we were paid less for what we did and the awesome responsibility we carried. Pay was never a conversation in the military. Uncle Sam was in charge, and he didn’t have an open door policy. In my small businesses, pay is among the first considerations when hiring and retaining employees. I’ve always wanted to pay my people more. Pay is an emotional topic. Pay usually finds itself in the ‘hard conversation’ family. Here are my leadership thoughts on the conversation – from both sides of the table.
The leader
Of course, a private business, like the ones I own and operate, lives and dies off the cash it receives and manages. Leaders, therefore, not employees, carry the responsibility of the calculations required to determine how much payroll they can manage. They must determine how much they can afford to pay an individual and what return they expect to receive – how it will generate revenue. This math equation is easier for salespeople – they sell or do not sell products or services and their monetary impact is clear. The equation for administrative employees (who are equally important) is harder. Leaders must do the math but must be cautious of how the math should be presented.
I’ve always operated under transparency. My ‘books’ are open to my people. I don’t hold the ‘books’ over the head of my people. It is my responsibility to balance them and create fairness. “Larry is producing this revenue – it’s clearly visible in this document. Your contribution Conrad, is more ambiguous.” If you want to deflate one of your teammates and create employee disengagement, use that statement. Better stated, “I can clearly see how much revenue Larry produces but his numbers would look very bad without the work you do each day Conrad. Don’t think for a second you are not contributing to the financial health of the company.” I digress here a bit, but this is an important topic.
I believe leaders can (and should) outline how much the company can afford to pay individuals. People are intelligent beings. They understand a company does not have endless pools of cash. Leaders should know generally how much a position should be paid – what industry average wages are. Leaders should strive to pay their people more than the average yet demand exceptional performance. Future pay should be in the conversation. Leaders do not have to make promises. “As the company grows Leslie, I want to raise your pay to this level…” Leaders should present pay as one part of a greater compensation package – healthcare, retirement plans, flexible hours, hybrid (work from home) work, etc. Too often employees see only through the lens of pay. I see it as a pizza –the whole pizza being the whole compensation package, pay being only one slice. When raises are given, leaders should present them as part of a celebration of employee performance. They should also be presented as part of an expectation of improved or greater performance. Leaders should contemplate what this looks like and share it through an enduring conversation they have with their people about performance (and pay). These conversations are hard, but they must be done. Sorry, no easy button.
The Employee
“I need a raise.” That statement is woefully inadequate and incomplete. To me, it has an inconsiderate and selfish tone. Indeed, people should stand up for themselves. They deserve to be compensated for their efforts. If asking my boss for a raise, I would do my homework to determine what industry averages are. I would highlight my contributions and how much I was committed to the mission of the organization. I would make the case for my increase in pay. I would act grateful and be responsible in my request. I would be polite, and I would not demand an immediate answer. I would ask for consideration for my raise in the short term or at a point in the future. I would demonstrate my loyalty to the company - how I have gone above and beyond for the greater cause. I would offer to do more under a bigger paycheck – to commit myself deeper. If able I might make the monetary case for my pay raise from past data or a future projection. I would consider the whole ‘pizza.’ I would ask for my raise as part of a greater compensation package. I’d do all I could to ‘solve’ the problem for my boss, not dump it on his or her lap – “I need a raise, figure out how.” Sorry, no easy button here either.
Some of this might seem unfair. It can be but that is life. It is hard to achieve a perfect balance – to be totally fair. Leaders, however, should strive for fairness. Employees should challenge leaders tactfully and professionally when fairness is not achieved. The key to success in this pay conversation is to have it maturely and unemotionally – for both parties to do their homework and present their case and to arrive at an agreement. There will be compromise, but through a deliberate, mature, and responsible conversation, the best option will emerge.
Have the conversation. Don’t avoid it. Both sides of the table will appreciate it.
Make it personal!
Rob
Rob Campbell