The Blog

You Might Benefit From Paying a Little More

Blog #301

No doubt you are aware of the growing push for pay transparency. Are you ready?

People evaluate fairness at work by comparing themselves with others. Specifically, we compare the ratio of what we put in and get out to the ratio of what others put in and get out. In other words, we compare our performance and reward with the performance and rewards of others.

We perceive it to be fair if the two ratios are approximately equal. The problem, as is so often the case, relates to perception. Fairness is a matter of perception and individuals can perceive inequity if they feel under-rewarded and, surprisingly, if they feel over-rewarded.

Here is how you, a manager, can capitalize on this fairness-perception. You can increase someone’s performance by rewarding them slightly more than what they believe to be fair. Research has shown that people who believe they are over-rewarded tend to be more productive than people who perceive themselves to be under-rewarded.

Now let’s revisit the title of this piece: You might benefit from paying a little more. And the catch is… “might.”

It seems that the size of the entitlement cohort is still growing. This means that you likely have one or two people who believe that they are entitled to earn more than they contribute, and thus don’t need to up their productivity.

Your job, as manager, is to enlighten them. Or to weed them out.

(Let me remind you: Serious gardeners weed out unwanted plants to encourage desired plants to flower and bloom. Prudent managers do the same.)

Welcome to my side of the nonsense divide.