February
2004 - Pay and recognition
People were much more concerned
to get broader responsibilities and new challenges
from a job promotion than they were to get a pay
rise, the results of a survey suggested this week.
The report by reed.co.uk, the
internet job site, was drawn from 3,700 responses
among UK employees to a web-based survey. Reed
had asked people who had received a job promotion
in the past five years to state what was the one
change in their working lives they had most wanted
from the promotion.
Three out of four people decided
that "being given bigger responsibilities"
was their priority. About 17 per cent of respondents
placed "getting a pay rise" first. I
have seen this kind of report before and I do
not take issue with its headline findings. What
I would challenge is any assumption from the results
that a pay rise is not considered important.
The idealist in me would love
to say that what we earn matters not nearly so
much as other things in the workplace such as
opportunities for development, promotion, recognition
and satisfaction for a job well done.
Another sense - the common one,
perhaps - rejects this proposition.
I could dig out plenty of old
surveys to support Reed's findings. It is the
accepted wisdom among human resources workers
that people tend to place other things above pay
when listing the aspects of a job that they prize
most. The surveys speak for themselves. But we
would be mistaken to dismiss the importance of
pay.
One reason that it is not listed
as a priority, I suggest, is that a pay rise is
expected in a promotion. It is almost taken for
granted. More than that, few people would want
to show, even to themselves, a belief that their
career aspirations are motivated by the desire
for financial gain.
That we live in a state of self-denial
over many aspects of our lives is a weakness of
public opinion polls. Few of us, for example,
would choose to describe ourselves as mean or
distrusting or lacking in vision. Fewer still,
when offered a career advancement, would be brazen
enough to deliver that famous line in the film
Jerry McGuire: "Show me the money."
But most of us would be disappointed if a promotion
did not include a pay rise.
The motivational strength of
pay has been disputed for the best part of 70
years, ever since workforce experiments at Western
Electric's Hawthorne factory in Chicago, ending
in 1932, emphasised the role of employee recognition
in productivity increases.
In fact it is arguable that it
was not the outcomes of the experiments themselves
that revealed the strength of recognition, but
the interpretation placed on the results by Elton
Mayo, the Harvard psychology professor who was
invited by the company to extend its initial research.
Some believe that Mayo's strongly
held views supporting employee recognition and
job satisfaction shaded the results of the experiments.
A company personnel manager, for example, recorded
that employees in one of the test rooms had stressed
the importance of achieving higher earnings. He
drew this to Mayo's attention but the observation
was discounted. In line with most of us, it seems,
the professor was more comfortable with the idea
that we work for love than that we do so for money.
The relationship between reward
and recognition, however, is more complex than
the bald results of employee surveys would suggest.
Pay is emotional and as such can prove a powerful
tool of business. We could be forgiven for believing
that in investment banking it is an overused tool.
There the levels of pay and bonuses have become
so consuming for traders that managers no longer
seem capable of restoring a sense of proportion
to their reward systems.
Some of the blame for these distortions
might be levelled at an over-reliance on pay comparisons.
HR managers no longer seem capable of making a
move without consulting industry comparisons that
always define rates in their respective quartiles.
Few employers or employees want to see themselves
in the lower salary quartile. The result is an
endless game of pay catch-up.
Why do managers take so much
notice of these comparisons? Why is there an obsession
with paying the rate for the job? Why will people
not recognise that pay levels are an important
aspect of recruitment and motivation? People prefer
to work for love and money - not for either one
or the other.
A few days ago I was discussing
with a senior HR manager the relative rates of
pay for new starters and trained employees in
a large company. The terms of the conversation
do not allow me to reveal its name. Trained employees
were earning well above the rates paid to those
in similar jobs among competitor companies. But
starter pay was about the same or, in some cases,
less than that offered elsewhere.
The nature of the work - in a
traditionally low-paid sector - means there is
a high turnover of staff during the training period
in the first six to eight months. Those who stay
are soon earning hourly rates in the region of
20 per cent higher than competitors' rates. Moreover
the training input, promotion prospects and long-term
career prospects are excellent. This company did
not grow out of chance or serendipity. Yet its
entry-level pay did not match its determination
to be better than the competition.
The company did not explain its
rationale but I suspect it has something to do
with a desire to reward those who stay. Its reasoning
probably goes something like this: if you accept
that you are going to lose a certain proportion
of new starters, why waste good money on unknown
quantities who may lack the commitment to stay?
A pay specialist, who joined the conversation,
suggested that low entry-level rates could discourage
some people from the very beginning. They did
not reflect the company's strength elsewhere in
the marketplace.
The HR director defended the
rates. In a survey of employee concerns, pay was
down at number nine on the list, he said.
His findings, with those of the
Reed survey, are consistent with those of Frederick
Herzberg among a group of secretaries at the Bell
Telephone Company in the 1950s.
The closely supervised secretaries
were demoralised about their work and a pay rise
did nothing to improve the quality of their work.
Only when supervision was relaxed and their responsibilities
were broadened did their productivity increase.
Yet Herzberg himself recognised that pay could
not be divorced from the factors that influence
performance. The difference is that we react negatively
to pay - it is never enough - but positively to
a pat on the back.
So pay and recognition each colour
a different set of responses. But we should be
assured: both matter.
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