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’Tis the Season for Annual Salary Adjustments – Part One


’Tis the season for giving raises! Fa-la-la-la-laaaahhhh-la-la-la-lah! Wouldn’t it be great if sitting down to discuss annual salary adjustments were this joyous? Our managers may not break into song this year, but we are arming them with more information and a different context to remove some of the anxiety. This is the first installment in series of posts on adjusting salaries.

Fortunately, there are loads of studies and information about current trends in compensation. Unfortunately, if you’re looking for the magic carrot (monetary incentive) that will yield increases in satisfaction and productivity, it does not exist. Or, as Dr. Paul Marciano, our guest speaker at the upcoming Best Places to Work in Pennsylvania seminar writes, “Carrots and Sticks Don’t Work.”

A classic synopsis of new-school thinking on employee motivation is offered by Daniel Pink. He masterfully summarizes contemporary research on motivation and it is worth every one of the 648 seconds it takes to view it. Of particular importance is his statement at 4:56, “Pay people enough to take the issue of money off the table.”

I vividly recall when I first saw the video and heard that statement in a management meeting about four years ago. Finally, someone had synthesized the relationship between intrinsic motivators and fair pay. Even the rosiest view of human needs cannot ignore the reality that everyone has bills to be paid. Work is still about money, just not all about money. Love it. I decided to buy his book and join the fan club.

Seconds later, he reiterates, “Pay people enough so they’re not thinking about money, they’re thinking about the work.” Hmm. So we just ask employees how much they need and pay them that amount? Surely not. My newfound idol had skipped over the “how” part of paying enough. Luckily, it isn’t hard or expensive to figure out:

Step 1: Know the work. Pink says this is what we want the employee focused on, right? It follows that we need great clarity and consistency on what is expected.

Last year we reworked all the job descriptions across the organization. Not surprisingly, our Best Places to Work scores jumped in agreement with the statement, “I have a clear understanding of my job role.”

Step 2: Pick a pay strategy. Are we committed to acquiring the best talent in existence and a reputation for the best pay? Aiming high is simplistic but expensive. Are we dependent on the lowest cost possible? Aiming low may save money on the front end but carries unpredictable costs of turnover and poor performance. Or are we seeking a competitive cost structure where replacements do not come with sticker shock and we use our culture and intrinsic motivators to defend against poachers? This, our let’s-just-aim-at-a-reasonable-target strategy requires more energy and skill than the first two options. It also brings confidence and peace of mind in doing the right thing for employees and the business.

Next week we’ll look at Step 3 Draw some lines and Step 4 Use real terms.

This blog was written by Brian Hodge, manager of culture development, at Journal Multimedia. Be sure to check back in a week for part 2 of Brian’s annual salary adjustment blog.

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