Jeff Haden wrote a great piece recently on the “7 Things Employees Wish They Could Tell Their Boss About Salaries.” These include items such as “We don’t care about pay scales,” “We will sometimes let you take advantage,” and “Reasonable pay is okay.” I like to think I have learned these things and more during my long experience as a CEO, and I’ve used them to develop HR and management processes that I believe work.
For example, I’m a firm believer that organizations should make salary as much of a non-issue as possible by paying fair market value. Contrary to the way many organizations work, you should not include pay as a part of the performance review process. Tie starting pay and regular raises to each employee’s value in the market, based upon objective, industry specific salary survey data. This data makes regular pay conversations much more straightforward.
As Daniel Pink has taught us, employees are motivated more by intrinsic rewards – such as being able to do what they do best every day – than by external ones such as pay, especially if they believe they are getting a fair deal. While many managers claim that their employees leave over salary issues, the research does not support this. Top performers cite lack of leadership and poor management much more often than salary and benefits as the reasons they quit jobs (never underestimate the importance of the relationship between an employee and his or her immediate supervisor). Whenever a manager tells me that a top employee left over salary, I am always suspicious.
See the rest of Jeff’s list here: http://www.entrepreneur.com/article/236572
I have much more to say about compensation in my new book – “The CEO Tightrope: How to Master the Balancing Act of a Successful CEO” – which publishes September 9!