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Hello all,

I work for a company where traditionally annual merit increases is the only way to get a better wage. The company, when necessary, makes market adjustments to certain highly competitive jobs. Anyway, I have a direct that has a direct concerned about her salary. Unfortunately, she knows that the other two employees at her site (same job code) are getting about $1.50/hr more than her. She has less time invested in the company (3yrs vs 5yrs), so unless she gets an individual adjustment, she will always be below them to some degree. I have told the employee there's not a whole lot I can do for about 1 yr, but now her boss is telling me she is looking for another job and that she is their best worker. If I bumped this employee up to the others as a correction, would this be inappropriate? We are hiring new people in the same job code with similar experience at a higher rate than her current salary.

Help!

-Anthony

rwwh's picture

Anthony, I am confused. You are writing she is your direct, but lower that her boss came to you. Can you clarify the working relationship?

I am not from the USA, but my opinion is that you should be fair in pay by yourself, and stick to your principles. If you bow for employees that rebel and tell you they will look for something else unless you pay them more, you will encourage that defective behavior. If she has said that she will go, it is too late for you to correct the salary.

AManagerTool's picture

If your staff member is willing to leave the company for $1.50/hr ($3000/year), let them go. They are being silly and there are enough silly people at work already.

cwatine's picture

Rwwh, it seems that Rxman is talking about the direct of his direct (n-2). So your remark makes more sense : if he says "ok", his direct (the manager of n-2) will be tempted to take it as a rule.

This person seems to know the other's pay. So they will know if you do something and the game of "I am better than him" will start.

When I get his kind of request, I ask the person to justify the raise she thinks she deserve, and NEVER in comparision to the other : she is not here to judge about the other's work.
I never give it right away, but I promise her that if she reached this and this target, she will get X (in the form of a bonus or a raise).

I am surprised also that this person is saying she would leave for such a small difference.

But the really important points here are :
- I don't accept when the person compares with the others (I would accept market comparision, or better : this person compares her current level with her level before or future ...)
- I VERY rarely give pay raises in the middle of the year.
- I overpay excellent people and underpay medium people (compared to market)

akinsgre's picture

I'm not sure I agree with most things being said in this thread.

First, the original poster indicated that they are hiring new people at hire rates,and that this direct is has good performance. Why wouldn't you want to pay her for her performance (even if it's out side of the normal cycle)?

I can appreciate not wanting to feel like your directs are pushing you around. But maybe you should be paying more attention to compensation before this situation arises?

Finally while $3000 might not seem like much, the OP didn't mention what the job was. For some people an extra $3000/year might mean a vacation for the family, or a more reliable vehicle for their spouse.

I was in a position a number of years ago where I asked to be able to work flex time so I could take a single class and finish my Bachelor's degree. At first my company said "No", because it was against policy. I talked to my boss and asked why, if I did exceptional work, couldn't I expect a exception in policy?

garyslinger's picture

[quote="AManagerTool"]If your staff member is willing to leave the company for $1.50/hr ($3000/year), let them go. They are being silly and there are enough silly people at work already.[/quote]
That may be true for a $100,000/pa employee, but not so much for a $30,000/pa employee. What's the job?

Not to mention that personal pride can come in to play - if folks with the same experience are being fresh hired at a higher salary (not uncommon), there's grounds for going "hey!" and standing up for yourself.

G.

rwwh's picture

[quote="akinsgre"]But maybe you should be paying more attention to compensation before this situation arises?[/quote]

Exactly my point! We agree more than you think. :D

HMac's picture

[quote="RxMan"]We are hiring new people in the same job code with similar experience at a higher rate than her current salary.[/quote]

That's justification enough for me to bump her pay. You can't be bringing new people in at higher rates and expect to hold on to your existing staff.

Talk to HR about this practice - it undermines employees' trust in the company.

-Hugh

cwatine's picture

Mmmm ... Isn't it also a justification to raise pay of her two colleagues, if I follow you? This puts you on a very slippery place, in my mind.

Of course, I can't give any judgment on your company policy in general. I just can warn you about the side effects of your decision.

You have a direct, who manages an employee who bases her demand on a comparison with her peers' salaries. She feels the system is unfair for her because she gets less. This is her mind.
Again, I would not base any pay increase in comparison with her colleagues', but on the results she gets.

What about her managers' mind (HE is your direct) ?
I would ask him to give argument and ideas about the situation. It seems that he is just carrying the problem up to you and wants you to solve it for him.

Is it a normal practice that you skip her manager to directly talk to her about her salary?

You say her manager rates her higher than the other ones...
So is he ready to explain it to the others we they realize she gets what she asked for?
Does he have "hard fact" to prove that she is "best worker"?
If he has metrics, he can compare her to the others.
If he has metrics, he can ask her for a result that can justify a pay raise.
It is a way to go from the "I want a pay raise because it is unfair" to "I get a pay raise because I get results".

WillDuke's picture

I've never been a fan of seniority based pay scales. I think they send the wrong message. "No matter how good you are at your job it won't make a difference to your income."

Not very motivating is it.

Now you have an employee who is a good performer and who is making less than a new hire would. If you were her mentor instead of her boss, what would you suggest she do?

If this is the company policy, I would work on changing the policy. I don't think that salary should be the only, or even the primary, incentive to perform. But this policy is forcing your top performers to leave.

Oh, and I agree with earlier comments that $1.50/hr might not seem much if you're making the equivalent of $50/hr. But if you're making $10/hr that $1.50 is a 15% raise.

hrjen's picture

[quote]I've never been a fan of seniority based pay scales. I think they send the wrong message. "No matter how good you are at your job it won't make a difference to your income."
[/quote]

I agree...My mantra as HR is "equal pay, equal work." Sometimes an extra year or two of experience warrants more pay, however many times there is a point at which additional experience doesn't contribute any more to the job. All jobs have a leveling out period where additional years only provide marginal increases in a person's depth of knowledge - some jobs level off at 6 months, some level off at 25 years. If they are performing the same duties at the same level of skill, then they should be paid in an equitable fashion.

HRJen

cwatine's picture

I fully agree with you too. In a perfect world, performance and skill drive bonus and pay levels. It also can be argued that being loyal with one's company could be taken into account. Some markets need employe retention because it costs less to pay more loyal employee than to hire and have to train again new employees.

And ... I don't think our friend can have any quick action on his company pay policy. Of course, over time, he may be able to change things, but for now it seems he has to comply with it.
More important : he has to send the right message to his direct (the manager of the employee). If he sends a message which is contrary to the company policy, things could get complicated for him...

So, if this manager (Rxman's direct) wants a pay raise for his employee he needs to come with arguments. "It is unfair" just doesn't make it. "I have a situation" is not better. In my opinion, "proving" this employe has better performance and results than the average would be better. The employee has to show this to her manager who then has to decide to raise the subject AND propose a solution to Rxman.
Then Rxman may take action.

AManagerTool's picture

I am usually the first one to want to fight the good fight but here was my thought process around this situation. My first post was terse...I wrote it from my blackberry.

Givens:

1. Everyone has a right to be paid what the market will bear.
2. In an ideal world, everyone would be paid based upon the merits of their performance in consideration of number 1.
3. Company policies sometimes get in the way of 1 and 2
4. Every employee has the right to change jobs whenever 1,2 or 3 are not right.
5. Every manager is there to represent the company in all transactions with the employee.

Assumptions:

1. A $3000/year increase will cause this employee to stay with the company.
2. The employee is probably a lower salaried individual because of assumption #1.
3. Lower salaried employees are, as cold as this may sound, generally easier to replace. Folks, please don't hate the player! Hate the game!
4. The company policies seem to reinforce the viewpoint that the company believes strongly in assumption #3.
5. RxMan has indeed [quote]told the employee there's not a whole lot I can do for about 1 yr[/quote]
6. #5 tells me that RxMan has very little skin in the compensation determination factoring that his company does so changing their policies are not an option.

My answer:

1. If I bumped this employee up to the others as a correction, would this be inappropriate? - No, it would not be inappropriate. That said, everyone knows each others salaries. That means they all talk. Expect to be approached with this over and over when the "wronged" employee starts telling everybody in sight about how he took a stand against the man and got his way.
2. Don't "fight" your companies system. You can only change it from within and if you "fight" it you will not be within for long. Some of the posters actually can set company policy. Will owns his company, I work for a 50,000 + employee multinational. Unfortunately, there is a diminishing return on fighting a policy in that kind of environment (BTW, I learned this the hard way). If you have the ability to change the system seeking to change policy has [u]some[/u] merit. For the rest of us though, this is simply not the case.
3. You are there to support your employer's policies....all of them....even the ones that completely suck. If you don't like it...LEAVE or work to become the shot caller that gets to make the stupid policies that everyone else thinks sucks.
4. Is righting this "injustice" really worth it? Is this person replaceable? Once again, that sounds cold but if you don't make that determination, somebody else will and they might just start to ask themselves the same question about you. Do a return on investment calculation with your political/emotional capital vs this employees $3000/year raise.
5. Your direct should be the one talking to the employee in question. You say yay or nay...and they relay that to the direct. Be wary of undermining your direct.

I know, I know.....BOOOOOOO! Tool, you suck!
*[i]Everyone throws garbage at Tool[/i]*

I'm sorry but I call them like I see them. I'm all for employee rights, human dignity etc. I'm more for making sure my family stays fed, the company stays in existence and that I can keep the [b]majority[/b] of my employees happy. You don't have to and probably should not fight every battle put before you.

cwatine's picture

AManagerTool,

Can I give some (public and friendly) feedback ? :wink:

Ced.

WillDuke's picture

Tool - I won't throw garbage. I very much agree with you. It's why I said to "work on changing the policy" rather than saying "give them the raise."

It is nice being the owner and having complete control over this. If you're not, then you absolutely have to follow company policy. Heck, there might be a reason for the policy that you are unaware of.

For instance, maybe it makes sense to roll these employees over on a regular basis to keep other benefit costs down.

Or maybe it's just a bad policy that nobody has pointed out yet. :)

AManagerTool's picture

[quote="cedwat"]AManagerTool,

Can I give some (public and friendly) feedback ? :wink:

Ced.[/quote]

Please do. :D

AManagerTool's picture

Sorry Will,

I didn't mean to single you out. I just wanted to illustrate that everyone on this thread has a different perspective and without knowing where the original poster lies on the spectrum between the absolute power over policies that you have and the absolute lack of power over them that I have, it's hard to prescribe anything other than follow company standards.

cwatine's picture

[quote="AManagerTool"][quote="cedwat"]AManagerTool,

Can I give some (public and friendly) feedback ? :wink:

Ced.[/quote]

Please do. :D[/quote]

Sorry if the form is not perfect because it is an "adjusting positive" feedback.

[i]When you post from your blackberry, your post are so much less structured, interesting and value adding than the one you just posted from your computer. What can you do differently? [/i]

AManagerTool's picture

Ahhhh....

Not post from my blackberry?

:oops:

Thank You ...

cwatine's picture

Or ... More post from your computer? :D
This one was perfect. I feel we needed it.
Thank you.

corinag's picture

I just ran across this post, which echoes many situations in the companies I've worked for. I also work for a company with a traditional annual merit based raise, and it's fine, in essence, unless you run into the kind of situation described by the original poster.

Here's my two cents:

When the company ties money to merit, the employees also tie money to merit - i.e. perceive their value / worth to the company in terms of how much they are getting paid. So, by paying a long-term employee who delivers on their tasks less that new hires who had no chance to prove themselves and bring results for the company, the company is essentially telling its employee: you are less valuable to me than these people / you are worth less / I can afford to lose you. Not a good position for the employee to be in, and not a smart message for a company to send. It could lead to a lot of turnover, or a tarnished employment brand, and repercussions on the ability to recruit good staff in the long term.

I don't think much can be done in the above mentioned situation, except adjust the next annual merit raise in such a way that more senior employees are at least at the level of the new hires (which would not change the system of annual raises, but would rebalance it).

Still, I understand the employee's frustration. No matter how experienced, skilled, "enlightened" they are, most people want to be treated fairly and equitably (although the definition of fairness can vary widely). When people feel they are not dealt with fairly, demotivation ensues.

My guess is that this is why the employee wanted to leave, not because of the money, but because she felt devalued, and it demotivated her.