Do you pay the person or the role?
Published over 6 years ago by Medet Ali
There is certainly something to be said for equality in terms of pay across similar roles and levels. In fact in some cases (people doing the same work for the same pay) it is actually a legal requirement and we would never advocate paying people less than they should receive for their work. However, there is also much to be said for paying a person based on their skill level, rather than simply on the role they are doing. Actually it is possible to achieve the objective of equal pay while rewarding the best people within your industry.
- Attract the right people What we need to recognise is that offering a great salary will attract the right people to your organisation regardless of what that role would normally attract in terms of pay. This person may be highly experienced, a go-getter or specialised/well known in their area. This person may cost you more money in the short term, but could possibly make you money in the long term. They have the ability to put your business on the map and that is worth paying for.
- Retain the right people If you have a problem with retention of staff, the pay and other benefits should be the first place you look. People don't leave good jobs unless they know they can get a better salary elsewhere. These special skilled individuals know that they can pick and choose their role and will be looking for a position that recompenses them adequately. The pay offer that you make to your employee needs to reflect the fact that you want them to remain a part of your business for years to come.
- Moving up the ladder is passé The days of stepping into a role at the bottom and working your way up is long gone. Employees expect much more from their experience, their education and their training. In fact businesses have a much more linear approach to their hierarchy these days, with the skills of the individual dictating their role and their pay rather than the number of years they have been employed. If you are paying someone because they are on a particular rung of the corporate ladder, you are missing their true potential.
- Businesses want results While retention is important, it is also wise to recognise the importance of the short term, highly paid employee. This person may move from company to company, making huge changes, restructuring or building it up and then they move off to their next challenge. This relatively short term employee wants good recompense for this important results driven role and they deserve it. They are paid on their performance.
Why not just offer bonuses?
If you feel tied to your pay structure, you may feel that it is easier and more constructive to offer bonuses based on performance of the business as a whole. This works in some cases to attract the right talent, but it tends to focus on overall or average improvement. It doesn't ask one person to shine and it ignores the individual actions of that one person in achieving the overall success.
The simple act of paying that person more for their achievements as a salary rise or a better package offers them real time results for their efforts rather than the hope of something down the line – that may be shared with others. The incentive disappears and they fall to the level of other employees. That extraordinary person will move on, leaving the business in the same place they were before that person arrived.
This is about value for money
You need to carefully consider the value that your employees are adding to the business and are they being paid in a way that reflects that.
You have two main types of employee:
- The solid, dependable and hard-working employee who gets on with their job, completes the tasks asked of them and delivers the results that you would expect. These people are happy in their role, they are happy with the pay they receive and they don't necessarily want to or have the ability to deliver more. Some of these people may also be under-performing.
- The over-achiever is the employee who delivers much more bang for their buck. They are the person who is excited, experienced, full of ideas and able to make them happen. They offer incredible value for money and it is these people who deserve that to be recognised in terms of their pay offer. They are something different and special and it is often very clear to see, even in the pay negotiation stages.
When you identify these individuals you need to pay them accordingly or you have all the retention issues we have already discussed. You need to come up with a pay package that attracts and keeps these people. It may be salary plus a performance bonus or it may be a flat salary – whatever works for your industry.
Be competitive and remember that employees work hard for you if they are treated as individuals. So pay the person, rather than the role and see how someone extraordinary can help your business to take off.