To everything there is a season. A time to plant, a time to reap. A time to gain, a time to lose. A time to build up, a time to break down.
After a long season of loss and tearing down it is time to build up, reap and share the gain. The economy is turning and we are in a season of growth. The pleas for an increase in wages and a share of the financial gain has devolved into a debate on the minimum wage.
Focusing on the minimum wage ignores many other facets of pay management that could have a real impact on wages and better serve both employee and employer.
Make employee pay a priority. If I could mandate one change in how pay is managed it would be this: Make employee pay a priority in the budgeting process.
And if you manage a business and don’t create a budget or spending plan and hope there will be funds available for pay increases at the end of the year — well, winging it and hoping things work out isn’t good for the business, your own income or the financial stability of your employees. Hope doesn’t pay the bills.
You can hope there will be dollars available for promotional increases, merit increases and maybe a bonus. Or you can plan and budget for what should be normal costs associated with having employees.
If you were an employee, what would you expect the boss to do?
Focus on skill and pay growth. A solid, reliable, problem-solving employee hired at $10 an hour who receives annual increases of 3 percent a year will make $12 an hour after working in that job for six years. What a shame.
If that worker’s pay was increased by 5 percent a year he will be paid $12 an hour after four years of employment. Not much of an improvement.
Every job should have a start rate. But if the employee demonstrates solid skills and reliable performance within the first few months after starting the new job, why not increase his pay to $11 or $11.50? Or go hog wild and bump his pay to $12.
It costs much, much less to keep good employees than to hire, train and say farewell as they move to another company that offers $1 more an hour.
Every job should have a range of pay attached to it that allows for a conservative starting pay rate, with the understanding that pay will be reviewed within a few months and may increase to reflect the new employee’s actual skill and performance in the job.
The pay range for each job should accommodate employees who meet the basic requirements of the job and are developing skills, who have proven themselves, who take on the big problems, and who help out their co-workers and get their own work done.
A pay range for each job, with room for pay to grow as skill and performance increases makes the budgeting process fairly easy and controls pay growth.
If new employees have proven their abilities — why make them wait for years to slowly climb to a wage that barely reflects their performance and contribution to the company?
Now, moving new employees to the middle of a pay range quickly may also mean their pay growth will then slow down. That’s fine. Employees understand there are limits to pay growth for every job.
If they know the range of pay for their job is $10 to $13.50 an hour and they are paid $12, they will accept a range cap so long as they have seen their pay move through the range at reasonable speed.
Far better to move quickly to the middle of the pay range and see your pay growth slow down than be forever stuck in the bottom of the pay range.
Training is a small investment that generates big returns. Many businesses cut their training budgets to the nub during the recession but employees consistently report that training — updating their skills and building new knowledge and skills — is one of the best ways to motivate better performance.
With just a little bit of effort employees can be cross-trained to handle a variety of tasks. They feel a sense of growth and accomplishment, understand the workings of the business better and are more valuable to the business.
Whether they are sent to a class for a couple of days or partnered with someone who will provide on-the-job training, it shows the boss cares enough to invest in them.
If the boss doesn’t have time to research training options then ask the employees to propose some ideas.
Building skills, growing pay and sharing in the gains — to everything there is a season.
Virginia Detweiler, based in Walla Walla, provides human resource services and management training to businesses in southeastern Washington with her firm HR Partner on Call. Her columns are written as a service to employers and employees and rely on reader questions and comments for topical material. Contact her by email at firstname.lastname@example.org or phone at 509-529-1910. Because of job and employer sensitivities, care is taken to protect identities.