Income … Salary … Wages … Action!

Previously I've written about the three conditions that influence an employee's decision to stay with their employer. Here's the summary, along with posts on the first two conditions, What Makes a Boss Great and What Makes a Job Great.

The final condition, income, is the trickiest to write about as our attitudes and motivations* about money are complex, and it’s ability to influence our decisions has many angles.

At the extremes, there are employees who'll chase income by rotating through roles - their only consistent commitment being to make more money. There are employers who are blind employees’ contribution to a company's success. They see employees as an overhead and resent being forced to pay fair compensation (recall Gina Rinehart’s $2/hour speech).

So to be clear, this article is not written for the employee whose life purpose is to grow their income, or the employer who feels every dollar paid in wages comes out of their back pocket.

But let’s acknowledge each of us has a preferred income range that sits somewhere between survival and desired lifestyle. And let’s also acknowledge that companies have a commercial responsibility (and entitlement) to manage salary expenses.

So, I write this post from the perspective of mutuality - where the employer and employee agree a fair compensation for fair effort to perform agreed responsibilities. Both employer and employee are riding a salary seesaw, and the only way to keep that seesaw balanced is fairness.

Both parties have equal responsibility to research** the value of the role performed. This applies not only at the time of recruitment, but throughout the employment period. Outside of working environments that operate legislated pay grading, there’s also a need for (at least) annual salary conversations, with both parties having responsibility to contribute to these discussion. Of course this isn't a formal requirement - but important for openness and keeping that seesaw balanced, 

If the employee becomes aware that their salary does not reflect effort required (or market rate), they need to start a discussion with their employer. These conversations can be awkward, and even emotional, but preferable to a build up of resentment. It's important to document any discussions about salary because over time - to monitor agreed review dates and changes. Also, we can forget benefits that have been agreed as a trade off for salary (education, shortened working week, additional superannuation).

Super important - if the boss ever says words to the effect of 'we'll review your salary again in (x period of time)' - have them put that statement in writing. Again, awkward - but if they mean it, they won't have a problem writing it down.

As an employee, if you're disgruntled about your income - be thoughtful in understanding what's happened to influence your thinking. It's unfair to put your unhappiness down to money, if your real issue is that you've outgrown the role; or you want private education for the kids; or you need a career break. There’s clearly a need for a conversation with the boss, but that’s not a salary conversation. Your former colleagues won’t be thanking you if you get a salary increase you don’t really care about, only to leave the job a few weeks later. Big black mark!

But, it’s perfectly reasonable, even essential, to talk salary when you know you are underpaid or haven't received an increase for 2-years.

As we already know, the employee is likely to tolerate being unhappy with the salary if they love their boss and love their work. However, they’re not going to love a boss who treats them unfairly. And if the boss is treating the unfairly over salary - a double whammy – the employee will, inevitably, leave!

To the employer - before allowing an employee to leave when they've identified that their salary is 10-30% out of whack - and a figure you don't want to pay - consider the cost in letting them go. Lost productivity, lost knowledge, cost of recruiting and retraining, impact on culture.

I want to finish up with a true story. I worked in a medium sized company where two of us performed similar roles. A couple of years in, my colleague learned I earned a few thousand dollars more than her. She raised it with the boss, he bluffed, she had to chase him up weekly to get a response and 8 weeks later he announced an increase would take effect ... the following month, with no back pay. She was quite reasonably furious and I came to see the boss as a greedy thief.

Although she loved the work, she no longer trusted the boss and while the salary was ok, she remained resentful about the money.  After considering her options, she left and successfully commenced a brand new career ... not for a second has she looked back. Yaaay! The company on the other hand had to recruit 1.5 people to replace her. It also helped me make the decision shortly thereafter. More downtime, more recruitment and training costs. So a double ouch to them!

In closing, I think there needs to be more openness and professionalism around discussing*** income - negotiating salary is a life skill. 


* For me, one of life’s mysteries is that people are happy to share the most intimate details of their personal life – but remain completely silent on sharing their income, except in the most general terms.

**If you need assistance in researching salary ranges, drop me a line and I'll send through some tips for your profession/industry.

*** One of the services I provide is conversation coaching