The Employers' Association

The Employers’ Association (TEA) is a not-for-profit employers’ association, formed in 1939, with offices in Grand Rapids serving the West Michigan employer community. We help more than 600 member companies maximize employee productivity and minimize employer liability through human resources and management advice, training, survey data, and consulting services.

TEA is in the business of helping people. This blog is intended to address human issues, concerns and the things that impact people - be they self-perpetuated or externally imposed. Feel free to respond to the thoughts presented here, for without each other, we are nothing!

Friday, September 25, 2015


Most studies find that pay is not the most important reason people join (and stay with) an organization.  The way they interact with peers, are treated by management, and their overall satisfaction with job challenges (and opportunities) are far more critical than pay (and/or benefits) when attracting or retaining talent.  Pay and benefits, however, must be relatively competitive in order to attract qualified candidates (people will take a pay cut but typically only when offered the opportunity to advance or the chance to do something they were not previously doing).  In order to retain talent once attracted, however, compensation MUST be internally equitable (noting that “equitable” does not translate as “equal”).  During this time of strong talent demand and relatively soft candidate availability, retaining employees is much more cost effective than hiring replacement workers – and building an internal talent pool is a much more reliable source from which to identify individuals able to contribute to an organization’s growth.  To help in this regard, consider the following:

1)      Organizations without an objective means to establish a job’s value or worth (that will link value to defensible compensation practices) tend to pay employees more based on who they are and how long they have worked than what they contribute.  Whenever employers make pay decisions based on who is in the job rather than on what the job does for the organization, favoritism and inequity (whether real or imagined) will begin to destroy internal employee relations. 
2)      Strong merit pay systems tend to attract and retain high performers (and over-achievers) while “time in job” based systems tend to attract risk-averse employees and retain mediocre employees.  When goals and objectives can be established AND FULLY COMMUNICATED that link additional pay and/or bonus opportunities to their accomplishment, capable employees will step forward.  Systems that pay all individuals equally, regardless of their results, tend to equalize abilities (at a minimally acceptable level) along with pay (typically at an “average” rate).  Paying for time on the job, for effort or for “acceptable performance” fosters and promotes mediocrity within the workforce.  High achievers will not tolerate mediocrity as understand that a chain is only as strong as its weakest link.  The very individuals that most companies seek will flee an organization that allows (or tolerates) sub-standard performance.
3)      Internal equity is much more important than external competitiveness – and consistency is MOST important.  Employees who know (and trust) you will be fair and equitable (not necessarily equal) in your dealings with them become a big part of the organization’s ongoing success.  When employees doubt management credibility, or see the inconsistent application of policies or practices, they become more a part of the problem than the solution. While employees do not (nor should they) like everything we do as an organization, consistent and predictable practices must exist.
4)      Do not be fooled into thinking that business has established a “new normal” in regards to paying people at reduced rates.  Paying people the minimum for their talents, thinking they cannot find work elsewhere, is a “penny-wise” practice that may generate a short-term profit BUT will prove to be “pound-foolish.”  High-performers will abandon such a sinking ship quickly, leaving for organizations that recognize (and will reward) their value.  It is strange how many organizations will pay more for an “unknown replacement” than they will pay to retain a known commodity! Pay, however, is not the ONLY reason employees join (or stay with) an organization.  Some companies have found that raising their “entry rates” by $2.00 to $3.00 per hour MAY help them to attract workers but that, in and of itself, will not overcome a negative environment.
5)      Compensation Administration IS NOT a static science.  You should review pay ranges against market regularly to reflect changing conditions.  Individual pay rates should be adjusted (based on an organization’s ability to do so) to reward exemplary performance.  You should also review benefit offerings (and costs) annually to insure that adequate competitive coverage is provided in a fiscally responsible manner.  Finally, equity is potentially more important than competitiveness OR equality.  Remember, fairness IS NOT equality (many top achievers have left organizations when treated “the same” as everyone else) and culture IS often more critical than “being competitive” when managing talent.

Some have said that “attracting talent” is easy but retaining talent is a lot harder (as it takes a personal investment of time and energy).  Establishing INTEGRITY, however, is potentially the most important aspect of managing talent.  As with any relationship, when we say what we are going to do then do what we said, we establish and gain credibility.  Not everyone will LIKE you when leading through change BUT it is your role to “make a difference” in the lives of those around us.  Begin by making a difference in YOUR OWN life as well.