Forums

BLUF:  I'm looking for a resource or a strategy on how to fairly compensate an hourly direct vs his salaried supervisor.

 

I have been tasked with reviewing the compensation of our local government staff.  We do this about every 3-4 years - comparing to other local governments, private sector and provincial government employees.  From this, wage ranges are set & employees are awarded raises based on performance.  There is a cost-of-living adjustment done annually as well.

Here's the situation:  I have an hourly direct who ends up earning a higher annual income than his salaried supervisor.  Both employees are very long-term, both highly skilled though the direct is only 2 years into this position.  The supervisor has +25 years experience in the position.

The DR is allowed to earn overtime pay, the Supervisor is not.  The DR's work schedule shows him working more hours but in truth, the salaried employee puts in far more time. 

Ideally, the Supervisor should be earning much more, as much as 20% more.  Other than the obvious strategy of increasing his wage by 20% (which you can imagine, in government, is not going to easily happen), what can be done?

Can someone point me towards compensation strategies - I've been looking at banding, but got a thumbs-down from the boss so far.  I need a few more ideas!

JohnG's picture

I don't think you can resolve this issue, and I'm not sure it's really your job to either. Hopefully someone smarter will come along and prove me wrong. The reason I say this is because the problem is likely to be to do with work not being effectively managed, or pay being widely inappropriate for the job.

You say that ideally the supervisor would be paid 20% more. However, I would question that ideal. Are they truly that badly underpaid for the job they are performing, are they a future star of the organisation who needs to be kept or are they going nowhere and managing them out of the organisation would be the prudent course. Could the organisation think of nothing that adds more value that it could do with the money?

Your company isn't going to offer the supervisor a gigantic pay increase, the only other way of using pay to fix the situation is to give the worker a 10%+ pay cut (good luck with that) or make the workers position salaried (with a salary 10% lower than he is typically taking home now) which will almost certainly be rejected, or lead to him clock watching. You could effectively give the DR a pay freeze and increase the supervisors pay, which over 3-5 years will make a significant difference but has obvious risks.

Potentially the problem could be that the supervisor isn't controlling overtime well. It would be counter-productive to give someone a pay bump because they have failed to manage priorities (and drop small balls when required) for example.

I've worked in production enviroments where hourly paid workers considerably out-earn salaried superiors. Almost without exception it was caused by an unwillingness to manage overtime effectively.

acao162's picture

Thank-you for crystalizing my thought process.  On one hand, you are quite right, the supervisor is not managing OT effectively, in my opinion.  The 20% difference in pay is because similar positions (supervisor vs assistant supervisor) have a 20% spread.  The other issue is the DR is being paid for more "hours worked" even though the supervisor is probably working just as many.

If I was to recreate the positions (and scales) the DR would be earning quite a lot less & the supervisor slightly more.  He is worth the 20%, I'm not sure the next supervisor would be.  My problem is always to keep "people" out of position ranges.  First, set a range the position is worth, then slot the person in.

Is that how others view compensation ranges? 

robin_s's picture

I would have to heartily disagree with keeping "people" out of position ranges, but that may be much  easier in the private sector than in the public.  I strongly believe in paying well for excellence in any position.  If an individual has to be promoted to get a better wage because that's what the position pays, then we are in the danger of the "Peter Principle", promoting people out of their areas of greatest strength and contribution.  An excellent individual contributor may make a lousy manager, but that's the track he'll be on if that's the only way he can make more money.  I don't see a problem, when the level of excellence warrants it, for an IC to make more than his supervisor.

If you haven't already, I highly recommend reading "First, Break all the Rules". 

JohnG's picture

I think you'll find that a lot of manager tools 'advocates' would argue that the ideal is to keep the best staff, even if that meant paying them beyond the normal range until a better role for them came up. In practice this can be (I suspect normally is), effectively' impossible. Robin suggests "First, break all the rules" and I will happily second it. The book makes a compelling case for wide pay banding, and why managers should ensure they don't forget to help their best staff improve (rather than trying to improve only those at the bottom of the barrel).

Unless you’re in a position to completely re-imagine how compensation works in your organisation then you will ultimately end up spec’ing the job and producing a pay band based on the role. If you want to try and widen the job pay band (upwards) then in my opinion the best way to do that is to define what an employee needs to do in that role to justify the higher compensation. For a customer complaints operative you might for example use calls handled, and customer satisfaction measures to decide. It is a lot easier to justify paying someone well compared to others in similar level roles if you can show their quality in reliable metrics.