The Zen of Compensation Paying People the Type I WayEverybody wants to be paid well. I sure do. I bet you’re the same. The Type I approach to motivation doesn’t require bargain basement wages or an all-volunteer workforce, but it does demand anew approach to pay.Think of this new approach as the Zen of compensation In Motivation 3.0, the best use of money is to take the issue of money off the table.The more prominent salary, perks, and benefits are in someone’s work life, the more they can inhibit creativity and unravel performance. As EdwardDeci explained in Chapter 3, when organizations use rewards like money to motivate staff, “that’s when they’re most demotivating The better strategyis to get compensation right—and then get it out of sight. Effective organizations compensate people in amounts and in ways that allow individuals tomostly forget about compensation and instead focus on the work itself.Here are three key techniques.1. ENSURE INTERNAL AND EXTERNAL FAIRNESSThe most important aspect of any compensation package is fairness. And here, fairness comes in two varieties—internal and external. Internal fairness means paying people commensurate with their colleagues. External fairness means paying people inline with others doing similar work in similar organizations.
Let’s look at each type of fairness. Suppose you and Fred have adjoining cubicles. And suppose you’ve got pretty much equivalent responsibility and experience. If Fred makes scads more money than you, you’ll be miffed. Because of this
violation of internal fairness, your motivation will plummet. Now suppose instead that you and Fred are both auditors with ten years experience working in a Fortune 200 company. If you discover that similarly experienced auditors at other Fortune 200 firms are making double your salaries, both you and Fred will experience a largely irreversible motivation dip.
The company has violated the ethic of external fairness. (One important addendum Paying people the Type I way doesn’t mean paying everyone the same amount. If Fred has a harder job or contributes more to the organization than you, he deserves a richer deal. And,
as it turns out, several studies have shown that most people don’t have a beef with that. Why It’s fair.)
Getting the internal and external equity right isn’t itself a motivator. But it is away to avoid putting the issue of money back on the table and making it a
de-motivator.
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