From National News, the newsletter accompanying the BLR book,
to Do About Personnel Problems in [Your State]
In workplaces all over the country, it seems employees believe raises are completely
arbitrary. When they imagine how pay decisions are made, they're likely
to conclude it's something like pulling a rabbit out of a hat. That's
why Ruth Wimberly, SPHR, called her presentation at the recent Society for Human
Resource national convention "It's Not by Magic." She is HR director
for Pacific Coast Companies, a building products manufacturer headquartered
in Rancho Cordova, California, and operating in 10 states and Canada.
There are compelling reasons to explain practices. When employees don't
get raises or feel their raises are too small, they're typically resentful
and demotivated. Even someone who gets a raise that he or she is initially pleased
with can get irritated after finding out that someone else got a bigger one,
or others on the team make more money. So, to quell the bad feelings, should
you ban all workplace conversations about pay grades and amounts? Wimberly thinks
that's not the way to boost morale, nor is it the way to keep your top
performers from jumping ship to a competitor. Instead, she recommends training
your supervisors to understand and explain pay practices to their subordinates.
There are also barriers. Wimberly is quick to acknowledge that the task
isn't easy. Not many companies communicate even their most basic compensation
philosophyand some are not aware that they have one, much less what it
is. Wimberly gives examples of such philosophies, such as paying somewhat below
market but offering richer benefits. Here, benefits can be seen as total rewards,
including cutting-edge training or plentiful flex scheduling options rather
than gold-plated healthcare coverage.
Another philosophy might be to pay a bit over market but be extremely selective
in hiring, such as requiring recent graduates to rank in the top 10 percent
of their classes. Thinking through your company's philosophy can be an
enlightening exercise, and HR should be part of the top-management team that
tackles it. Strategic philosophies should be closely aligned with business goalsand
those goals will become key parts of training for supervisors.
Even after identifying the organization's pay philosophies, structure,
and practices, many top-management teams will resist communicating them. They
won't want employees to know what the pay grades and ranges are, lest they
question the wisdom of the structure. More important, shining a strong light
on structure and practices is very likely to reveal at least one, if not several,
instances of true inequitycases where the guidelines have been bent or
ignored to allow someone to be paid substantially more than his or her pay grade
would allow. 'What will we do about Stan in accounting and Margie in Dubuque?'
managers will ask.
The answer? Address such situations and rectify them. Continuing to coddle
the individuals who've benefited from the inequities is less important
than a comprehensive communications program regarding the company's pay
practices that will pay off quickly in greater overall satisfaction and better
retention and productivity. (Meanwhile, Stan and Margie don't have to get
pay cuts, just endure a suspension of raises until their pay rates are sufficiently
in line with those in the same grade.)
Keep training simpleand short. Wimberly recommends that supervisors
attend a single 90-minute training session each year (or less often if turnover
is quite low). Don't use any jargon, she cautions, adding with a grin that
you should definitely avoid words like 'paradigm.' What should be
covered? Here's a sample outline that Wimberly uses in her company:
Explain the company's compensation philosophy and how it is driven
by the business mission and strategies, the organizational design and structure,
and the critical skills and people needed.
Cover the role of job descriptions in delineating duties and responsibilities,
determining exempt and nonexempt status, and facilitating pay comparisons.
Describe the company's pay ranges, including how they are determined,
such as by market surveys, benchmarking, maintaining internal equity, and
Help employees understand the competition by including salary and benefit
comparisons. Present the organization's total compensation (or rewards)
package, explain the minimum, mid-point, and maximum in pay ranges, and
talk about the role of skills in placing employees in the range.
Wind up by discussing how salary increase decisions are made: on the
basis of an annual budget, prevailing economic conditions, and individual
Wimberly also recommends that supervisors deal with one more prevailing misconception.
Employees are likely to wonder why CEOs make so much more money than forklift
drivers, considering how "cushy" the top jobs are. Using role-playing
techniques, supervisors can illustrate how much responsibilityfor employees,
shareholders, and other stakeholderstop management has and why that's
What's the best thing about communicating pay practices? The process enhances