A few weeks ago, a client asked me to fix her company’s salary administration problem.  I was told, “My people are taking jobs with several of my biggest competitors and I need you to tell me how much to raise my salary and benefits structure so they won’t leave.”  To this company CEO, the problem was clear; my people are leaving for higher paying jobs so I must raise my wage and benefits structure to at least match the competition.  While a possible option, it may not solve the real problem at this company and create additional problems down the road.

Let me paint you a picture of what happens in many companies today.  Bob has worked for the Widget International Company for 10 years and for the last four as a sales representative.  During that time, he has become one of the company’s best sales people consistently meeting or exceeding his sales goals.  But during the last six month he has become dissatisfied with his job because he can’t work with his new boss, John.  John is 10 years younger than Bob and has his own ideas of how the company can increase sales and service.  Whenever Bob offers suggestions for product or service changes to John, he is met with skepticism.  Even though Bob knows he has a good performance record, he also knows what he reads in the paper about older workers getting the shaft when younger bosses come on the scene.  Real or perceived, Bob is worried and starts to look elsewhere for job openings just to be on the safe side.

Four weeks later Bob hands John his resignation and says he is going to work with their closest competitor.  All John can see is how he has finally rid himself of the “deadwood” in his department.  Incidentally, Bob’s new job has a 20% base salary boost and a more generous incentive plan.  When asked by the CEO why Bob left, John says their salary and incentive plan is too low and that is why Bob left.  The CEO sees one of the company’s best people leaving to work for the competition and the reason is clear - salary administration.  Their salary and incentive plan is under market and needs to be fixed and fixed fast before they lose anyone else.  Being a decisive CEO, it’s quickly changed based on the assumptions presented.

Of course, we know better.  We know that if the company does nothing more than to increase the base salaries for their new hires and to increase the incentive plan, nothing will change.  Actually, something dramatic will change.  The company will be paying more for their people than necessary and still have their turnover problem.  Instead of getting better it will get worse.  Like grabbing a water can to douse a fire and finding out you grabbed a gas can instead.

The old adage, “don’t fix the symptom, fix the cause,” applies here.  But we have a problem - how do you know or find out what the real reason is for your people leaving your employ?  Who do you trust when people tell you why they are leaving your company?  What can you do to get an accurate feel of what your employees think?  What can you do to identify problems before they get out of hand?

The answer is simple.  Just ask.  There are two primary options you can consider.  1) You can ask them with a written questionnaire or 2) you can ask them in person through focus group sessions.  The major difference is focus group sessions work well for small to mid-sized companies and written questionnaires can be more cost effective for larger organizations.  In either case, the key is to ask your employees for their opinion on those things that matter the most to them; their jobs and how to make the company a better place to work.  You may be pleasantly surprised at the breadth and depth of the answers you will receive.  Your employees really care about their company and want it to be the best it can possibly be.  They know it is a long-term relationship, or at least they hope it will be, and want to do all they can to make their company successful.

A note of caution.  Either method of surveying your employees carries with it certain risks and responsibilities.  Mainly, whenever you ask a question you had better be ready to deal with the answer.  So, if you ask your employees what they think about your company’s safety procedures, supervisor staff, salary administration or other such things, you must be ready to make significant adjustments if they are necessary.  If you don’t, you may as well close up shop because your employees won’t trust you as far as they can throw your building.  But there is an even bigger trap here.  That trap is in not asking the question in the first place.  If you never ask, you may never really know until it’s too late.

Just as surveying your market is important in keeping your products and service on track, so is regular communication with your employees.  And, just because your employees don’t complain to you directly doesn’t mean they don’t have suggestions to improve their own productivity, reduce waste and expenses and increase the company’s profitability.  You may think you have a good dialogue with your employees.  But you may only be fooling yourself if you don’t use one of these methods to see if your information is accurate.  There is too much at stake not to be absolutely sure.

For more information on possible solutions to this, check out our Employee Communications and our Salary Administration pages of this website.

The media coverage of the brouhaha about public employee unions is fast and furious these days.  We are seeing, and hearing on radio, many inaccurate statements about the loss of unionization rights for public employees in several states.  One headline I just read: “Wisconsin Lawmakers take up bill to cripple unions”. 

I believe this headline (and many others I have read) to be highly inaccurate.

The National Labor Relations Act governs labor relations of private employers.  There are approximately 22 states with “Right to Work” laws, basically allowing unions and labor negotiations, but baring Union Security Clauses (a clause in the labor agreement that forces all employees working for that company to join the union within a specified period of time).  From time to time, either the union side, or the management side will complain that this system is skewed toward one side or the other, but after three decades of working with this system, i believe that it is a fair system.

In the public sector, state laws govern unionization on the public sector.  There are 37 states that allow public employees to join unions.  Many states have restrictions on strikes with certain public employees. 

Remember, private employers can declare bankruptcy, and through the bankruptcy process, void some union contracts, or portions of union contracts when it is economically essential for change (ergo, the Auto Industry, the Steel Industry, etc.).  State and local governments cannot declare bankruptcy, and as recently as January 24^th, House Majority Leader Eric Cantor said that he objects changing the laws to allow bankruptcy (which would allow an avenue to make changes to some contracts).

In other words, the public employee collective bargaining laws in most states have not evolved over time to be a system of checks and balances.  With the increasing economic power of political PACs, the candidates with the largest PAC contributions are elected.  Then the elected officials are in the position of negotiating with the people that had the most to do with their election.  In addition, there is a “mandatory binding arbitration” system that has emerged in many states.  In this system, neither side has the opportunity of bargaining hard at the table, because they will end up in “binding arbitration”, and an arbitrator (with absolutely no responsibility over the economic effects of the contract) actually deciding the final outcome of the contract.

I remember the days when a public employee received lower pay and benefits than the same job in the private sector.  Not anymore.  The average pay of most public sector jobs is competitive with the private sector.  The average benefit package (health, pension, holidays, and vacations) of public sector employees is superior to the private sector.  There needs to be a way to bring the cost benefits for the public sector to be more in line with the private sector.

Getting back to the Wisconsin headline I started with.  We hear that the Governor wants to take away all or most of the public employees’ union rights.  Not so, the proposals are:  public sector employees would still be allowed to bargain on wages, but not on health or pension plans; raises would be tied to the inflation rate, unless higher raises voted by the public; Public sector employees would have to pay more (e.g. 12.6% for health, when they are currently paying 6%) for their benefits than they are paying now, but the amount they would have to pay would still be lower than those of the average private sector employee; they would have to pay 5.8% of their salaries toward their pensions (in the past decade, they have paid less than ½ % of the total cost of the pension system;  Police, firefighters and other public safety workers would still be exempt from the new restrictions.

In exchange the Governor is willing to save about 10,000 state and local jobs. 

I believe public sector employees should receive pay and benefits commensurate with the private sector.  In many states this is no longer true, and needs to be remedied.  Without the checks and balances afforded the negotiation process through the NLRA and the National Labor Relations Board available to public sector bargaining, changing state regulations is the only method available. 

I believe the large predominance of unionized media companies, the news we receive on this topic may not always be accurate. 

I also believe that we as a nation do not pay the people that teach our children enough, a problem affecting our competitiveness internationally.  Seems like a topic for the future.