Paying Appropriately: “How much is enough?”

Joe
Joe Sherren
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My friend Jack MacKinnon of Crapaud asked me this question, “How do you know how much is enough to pay staff?” The answer is more complex than you might expect.

At the core is this: you must pay within the bandwidth or range associated with that occupation or profession in the geographic where the work is to be performed.

Every job has a pay range based on many variables. Some include education level achieved, skills required, risk involved, experience, supply versus demand and the financial performance of the company.

Keep in mind that paying in the range is only a “show up” factor. Do not mistake this for motivation. If you do not pay within that range, workers will just not show up.

Motivation comes from many other factors such as: interesting and challenging work, opportunity for growth and development, management feedback, degree of engagement, a sense of control, recognition from peers and management, and much more.

One study has a very interesting hypothesis that not everyone is going to like to hear. It is this, “People will ultimately earn up to a level that is consistent with their own belief of self-worth.”

A person’s image of where they should fit in the food-chain of success will compel them to achieve a level of accomplishment that is in alignment with their belief system. That, in turn, will intrinsically motivate them to work at a level that provides compensation in alignment with their self-worth. Please note, this is not the same as a person who has an attitude of entitlement.

Subconscious activity is stronger than our conscious thoughts. Our subconscious is made up of values, assumptions, beliefs and expectations and drives the direction for our life, just like our hands on the steering wheel provides direction for our car. How we think and behave will determine the level of success we will achieve.

So what does this mean? Take people who believe (subconsciously) they are worth $100,000 a year. They will engage in activities, acquire the education, display a work ethic and attitude, dress accordingly, have a drive for learning and, most importantly, make the sacrifices necessary that will “cause” them to earn at that level.

Conversely, if a person’s self-esteem says they are worth $30,000, they will behave in ways that that will “cause” them to earn at that level. This includes showing less interest in self-development, higher absenteeism and working at the minimum level necessary to keep their jobs.

However, there is a surprising twist. If an employer decides to provide a $40,000 a year pay increase to a worker whose sub-conscious personal self-worth is at the $30,000 level, that worker’s performance is likely to decline along with their level of commitment. This occurs because they are being paid above their (subconscious) comfort level and they will unknowingly sabotage themselves by engaging in “work to rule” activities. You just cannot maximize earnings while at the same time maximize time at the beach.

I suspect that some of you are already preparing to comment that this is crazy and supporting the oppression of workers. Absolutely not, it is just the opposite. You might even think the evidence is flawed. But, it plays out this way in many situations. Consider professional sports. An NHL player who truly believes he is a million dollar player will practice, exercise and perform at an intensity that will cause him to earn at that level.

Then what happens when he goes to another team for a much higher salary of, say, two million? It is very common for that player’s level of performance to decline; this is because he is being compensated above his personal sense of self-worth.

We also see this in studies of poor people who win millions in a lottery. It is very common that within a few years they will be right back to the poverty level they were at before their winnings. They had exceeded their concept of self worth.

What does this mean for organizations? The best thing a company can do for workers is to provide opportunity, education and encouragement to build their confidence and self-esteem.

By doing this, workers will think more constructively, behave more productively and act more professionally. This will give the company the ability and a purpose to pay them more. To be competitive, employers must be deliberate about keeping great employees.

My question for managers this week is, “What are you doing to increase the self-esteem of your employees which will inspire them to choose productive activities that will create opportunities for them to increase their earnings potential?”

Joseph Sherren, CSP, HoF, and CEO of Gateway Leadership Inc. is P.E.I.’s Management Effectiveness Expert. For information on our speakers and programs contact Kevin at www.gatewayleadership.com.

Organizations: NHL

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  • UPWESTER
    November 17, 2012 - 16:46

    I agree with what he is saying.A lot of people are not willing to think they are worth more than what they are earning. That is not to be confused with thinking you are worth a lot more than you really are. A good friend of mine who became very wealthy always had a saying that he lived by. "Think Big And You Might Get Lucky"