What to pay?

February 19, 2015

Two puppet with piggy bankMoney motivates – a least that is the popular view. It is partially a myth. In reality, it is fair reward that motivates and, even more specifically, unfair reward that demotivates. So, to pay less than an individual perceives to be fair is likely to cause them to be disengaged with your business, mark time or even be a thorn in your side.

A fair wage?

It is relatively easy for many employees to assess fairness. Jobs such as care assistant generally bring a standard ‘fair wage’. But what about that of a registered manager? A glance at the internet shows such jobs advertised from £22K to £50K and beyond. How then does an employee decide whether they are fairly rewarded? Indeed, how do you as an employer decide whether your manager is fairly rewarded?

Advertised jobs often involve a ‘pull’ factor – a slightly higher salary than the norm to tempt good candidates join a new employer, with all of the unknowns and risks that this comes with. Recruitment agencies, too, like to encourage high advertised salaries. It produces more applicants and a greater chance of a placement (and therefore of a fee for the agency).

The value of knowledge

So the answer is to know what other employees in the same positions are actually paid for each particular level of job role. Armed with that information you can show your employee that he or she is engaged on a fair rate (or you get the chance to adjust it if not).

Perceived under payment costs. It demotivates, increases turnover, fosters risk of absence and creates vulnerability to stress and all that stress can lead to. The cost is almost inestimable.

But overpayment costs too. We see many employers who are happy to pay, or who are unknowingly overpaying by £5,000 a year and more. If that applies to more than one appointment the cost is substantial. Yet for a fraction of that £5,000, reliable pay data, grounded in reality, are available.
There is no value to be had from overpaying. Contrary to the popular view, it does not generate motivation.

Malcolm Martin of Employer Solutions – QCS HR Expert contributor.

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