What you need to know before you talk about pay

September 29, 2013

For many employees, salary is a scorecard they use to measure their worth in a company. From the janitor to the chief executive, they believe the more highly compensated they are, the more highly valued they are. ¶ And there’s no question many feel their salary should be higher and that they deserve a raise. ¶ “There is research out there that says within six months of joining an organization, most employees will feel that they are underpaid,” said Bruce Elliott, manager of compensation and benefits for the Society for Human Resource Management. ¶ In every negotiation, there are two sides. When it comes to salaries and raises, there is a give and take between the employer and employee. Here are some considerations for both sides before they enter into the discussion.

— Kathy Orton

Employers should:

1. Do research. Mercer, Aon Hewitt, Towers Watson and WorldatWork are among the top providers of salary data.

2. Have a structure in place. Peter Cappelli, director of the Center for Human Resources at the Wharton School at the University of Pennsylvania, suggests companies take a “Moneyball” approach to their compensation philosophy — a reference to the book and movie about the Oakland A’s frugal approach to building a baseball team. The gist: The amount you pay for players is a function of how you measure their ability to help win games.

“You should have a pretty good sense of what people are worth to you,” he said. “For the most part, companies really don’t have any idea about that.”

3.Don’t treat everyone the same. Kathy Albarado, chief executive of Helios HR, a human resource consulting and recruiting firm in Reston, calls this the peanut butter approach. Companies distribute pay evenly among employees, like you would spread peanut butter on a piece of bread.

“Reality is the high performers will get discouraged if they don’t feel that they are appreciated, recognized and rewarded,” she said.

4.Don’t forget about the worker bees. “You don’t want to alienate them because you want them to continue to do those jobs,” Elliott said. “That’s where incentives really, really help employers differentiate compensation.”

5. Think creatively. Bonuses and lump-sum payments are ways of taking care of top performers.

Employees should:

1.Know what you should be paid before taking a job. A recruiter or sites like Glassdoor.com can give you a sense of what the market will bear.

2. Come armed with hard data. “You go in there with real examples of what you’ve done to improve efficiency, to improve productivity, to improve customer relations,” Elliott said. “You always want to go into those meetings with your boss with data.”

3.Don’t push too far. Kevin Hallock, director of the Institute for Compensation Studies at Cornell and author of “Pay: Why People Earn What They Earn and What You Can Do Now to Make More” recommends employees be wary of overreaching.

“You don’t want to negotiate so hard that the person you’re negotiating with is happy to walk away,” he said.

4.Salary isn’t everything. Consider flexibility, autonomy, professional development, collegiality at the workplace, your relationship with your boss and work-life balance.

“It really depends on what’s driving you in terms of your whole psychological makeup,” said Jim Stoeckmann, senior practice leader at WorldatWork. “All those things determine what each of us do.”

5.Know what matters. “Maybe that’s doing something beyond your normal work requirements, doing something to help the bottom line, and I don’t mean that in a strictly economic term,” Hallock said. “Advancing the objective of the organization, then convincing those people who make the pay decisions that you’re helping to do that.”

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