Pay increases LO5479

Tobin Quereau (
Fri, 9 Feb 1996 10:25:46 -0600 (CST)

Replying to LO5447 --

On 8 Feb 1996, Roxanne S. Abbas wrote:

> Yesterday, I was talking with a compensation specialist with one of the
> largest financial services companies in the U.S. She told me a story of
> how the compensation staff had been challenged by an employee in a meeting
> where they were presenting next year's compensation plan which was based
> on a 3% pay increase budget. They were asked how the voice of the
> customer was considered in this plan. This question opened up a
> discussion of identifying the real customer of the employee compensation
> plan. The corporate compensation staff had determined their customer to
> be the stockholders since this was the group who was paying for the pay
> increases. And since stockholders have a clear goal that the company
> maximize profits, the compensation staff saw their charge to be to
> minimize payroll costs without causing too much turnover. The employees
> felt they were the customers. My own mental model says that the employees
> are "paying" for their own pay increases with their time and their labor.
> A pay increase is not a gift that is given by the company.
> Their thinking helps to explain the small increases that employees are
> receiving even as dividends sore. I'm interested in how others view this
> question: Who is the customer of the compensation staff? Who should the
> pay plan be designed to serve?

This note, Roxanne, raises issues related to the earlier posts on the
"two-tiered" pay system--one for workers and one for executives. Could it
be that the "customers" might be seen differently in these two groups? Is
it possible that the customers of the compensation staff are the customers
of the organization? Surely they are the ones who are "paying" for
everything! If the pay is inadequate, the customers will find lower
quality products and services and respond accordingly. If the pay is
exhorbitant, the customers will balk at the added costs--unless the
quality of products and services is equally out of line with the

Perhaps we could use another metaphor and look at it in the sense of a
healthy balance as in any organism. Too lean a mix and we get unnecessary
stress and damage to the system--maybe even anorexia? Too rich a mix and
we get problems of excess weight and clogging of the arteries.

Personally, along with Herzberg, I think the issue of pay is largely one
of potential dissatisfaction more than a true motivator. So rather than
the quantity of the pay, we may want to work on how we flavor our work
with a variety of spices and textures to make it more attractive and

I'd better stop here, I'm beginning to feel a snack attack coming on...

Tobin Quereau
Austin Community College

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