Money says something about an organization’s values.
Organizations have only so much money. Many organizations, especially in the public sector have much of their money embedded in ongoing obligations: they enter a new budget year with nearly all the money spent. Where they do have spending options, organizations must respond to market forces that price some things, skills, and opportunities as much more expensive than others.
The crunch comes when people interpret money as reflecting the value organizations place on people. Despite perfectly reasonable economic and fiscal explanations, people interpret differences in pay as reflecting how the organization values their contribution. At times, pay can be quite out of line with the effort or quality of employees’ contributions.
For two years, quite a while ago, I worked at a clinic that decided to pay everyone the same salary. That was a lovely idealistic policy, but one that did not endure the test of time, although the clinic continues to thrive (visit their website here). I’m pleased to have had the experience, as it did bring a sense of belongingness to the group.
The challenge to leadership is finding other ways of confirming its recognition of everyone’s contribution. A colleague, Julia Costich, provided these suggestions from her experience working at organizations with large salary disparities.
- Open acknowledgment on the part of the highly compensated individual that reimbursement structure is not an endorsement of personal worth.
- Highly compensated employees could demonstrate equity for their compensation by working very hard, taking on thankless tasks and extra responsibilities.
- Management could support staff at lower compensation levels for their participation in executive leadership training and other opportunities for advancement.
- Management could throw parties, holiday events, etc. that convey appreciation.
- Management could be alert to opportunities for employees’ spouses and children such as scholarships, recommendations, introductions.
Money does reflect values, but so do a lot of other policies and actions.