“I work harder than everyone else. Plus, I’m loyal. I’ve been here forever. Why am I not paid more than the others?”

For a manager or business owner, conversations about hourly compensation are perhaps the most dreaded of all discussions. For many people, their personal self-worth is inextricably linked to their paycheck. Some people believe that they should make more money than others because they've been employed for a longer period of time. Others may argue that because they have more responsibility, their compensation should be higher. Then, there are those who believe that because they perform their duties better than others, they deserve a higher rate of pay. The very idea that the job they’re doing has limited upside, regardless of loyalty, tenure or job quality is very troubling.

In an integrated order fulfillment and call center the issue of hourly compensation takes on another dimension. The two divisions do very different work. It’s not uncommon for the staff in the distribution center to think that they work harder, as their work is physical. After all, how hard could it be to sit in a call center all day? Meanwhile, the call center associates sometimes wonder if the “heavy lifters” in the fulfillment center have the mental horse power to power up a computer.

Our company recently underwent a thorough review of its compensation philosophy. In a nutshell, we needed to remove the ambiguities and subjective measures that had crept into our comp plans. We had to objectively measure the jobs being done and we had to provide our employees with a clear path for advancement.

After a great deal of research and discussion, the management team decided upon three integrated systems of performance measurement. The new system assigns a point value for each measurement. When the three point values are tallied they match a dollar value on an hourly wage matrix. The three measurements we used are:

1) Skill: The ability to perform a task or multiple tasks. The more you are able to do, the greater the reward;
2) Scope: The depth and breadth of knowledge and responsibility;
3) Overall Performance: How well you are able to perform based on the metrics set for your position, reviewed quarterly through performance evaluations.

At a recent quarterly meeting, the new system was explained and the floor was opened for questions. The room was quiet. While we reassured our team that over 90% of our employees would see an increase in their pay under the new system, no one offered a peep. Change is anxiety provoking.

In the week that followed, our management team individually met with all of our employees and carefully went over the new system. While the handful of people whose pay was reduced weren’t happy about their pay decrease, they agreed that the adjustment was fair (most had moved down from one position to another, but retained the higher rate of pay).

In the end, the change was successful. Our staff is relieved to know exactly how they are measured. The system is easily understood and provides a clear path for advancement. Most importantly, our staff believes in it’s fairmess. For management, there is relief that we’ve moved beyond ambiguous measures and subjective systems. Our system shows that we value excellence across several categories and that we’ll pay for it. A win-win.

Written by Thomas E. Unterseher, CEO and Stewart Buskirk, VP of IT