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Dear Workforce How Do We Boost Employees’ Pay and Performance Levels Simultaneously

My casino’s compensation strategy is to pay our employees the market rate for the jobs they perform. We have some employees who are paid below market value for the title they hold, but they are not doing as high a level of work for the title. In most cases, these folks were promoted from within but did not have the proper skills and abilities for the job (poor selection). We would like to increase both their pay and their level of work. Which comes first? We’re considering two options: (1) set higher performance standards with specific time targets. When they bring their work up to those standards, we will increase their pay; or (2) increase their pay immediately and let them know that their increase comes with higher expectations. We will make training available in either case.
May 19, 2006
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Related Topics: Compensation Design and Communication, Performance Appraisals, Dear Workforce, Compensation
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Dear Which Comes First:

First of all, think of the "market rate" for a job as more of a range than a fixed number. Although it's possible to calculate an average marketplace salary data for a job (and thus call it the market rate), it doesn't follow that all employees in that same job should be paid at market rates. Factors such as experience and performance come into play. For example, individuals who are less experienced in a position would--all other things being equal--tend to be paid less than seasoned individuals in the same position. Similarly, strong performers would tend to be paid more than weak performers.
It sounds as though you have a number of employees who are failing to meet responsibilities andperformance expectations. Because of this, they aren't being paid the marketplace average. There's nothing wrong with this. They're not yet operating at a level that would justify being paid at that rate. For them to earn higher pay, their work level and performance must improve.
My recommendation: Performance improvement comes first, salary increases later. This is not being unfair to the employees from acompensation standpoint. This simply recognizes that different employees in the same job can be operating or performing at different levels. When this occurs, and it sounds as if it is occurring in your organization, employees' pay should reflect those different performance levels.
Explain your organization's expectations to these employees. They need to understand the job requirements and the performance behavior they're expected to demonstrate. As you make training available, and the employees' level of work increases and performance improves, you will have ample opportunities to increase their salaries over time.
SOURCE: John D. White, President, JD White & Associates, McLean, Virginia, April 28, 2005
LEARN MORE: How Do You Give a Group a Raise and not Alienate Others? Also, read175 other articles on compensation design.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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 The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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