The conventional wisdom is that true employee engagement has little to do with pay, and more about collaboration, open communication and an overall sense of feeling good about the work you do. Yes, all true. However, let’s not kid ourselves – pay matters. All the communication, atmosphere, collaboration and perks will not help build an engaged workforce if they feel like they’re getting screwed.
The gap between worker productivity and wages has been widening since the 1970’s. According to the Bureau of Labor Statistics, worker productivity has grown by over 80% since 1973, but wages have grown by only 10% when factoring inflation into the mix. From 2000 to 2012, productivity increased by 23% while wages remained flat. Since the start of the global financial crisis, productivity grew by 2% (even with massive layoffs), and wages have fallen.
Tons of macro factors here…globalization, technological advances, how you measure productivity/wages disparities (Consumer Price Index vs. Implicit Price Deflator), increases in non-cash benefits like 401(k) matching, health & wellness benefits, vacation time, etc. There are necessary and valid arguments for practices that may be perceived as more business or shareholder-friendly as opposed to employee-friendly. Sound operations and profits drive the overall economy.
One of the critical factors in sustained profits are people. For every executive in an organization there are dozens of people actually doing the work that furthers the corporate strategy. For every marketing campaign, there are hundreds of brand advocates out there talking up the company. If their work is appreciated and fairly compensated, it’s the best marketing you can buy. When your people feel like they’re getting rogered, look out. I doubt there is a PR firm out there that can repair that kind of viral damage.
Work and the nature of the employer-employee relationship is changing rapidly. From startups to lumbering giants, we need to understand the entire picture and not just the pieces in which we want to focus. Startups are all about the innovation, collaboration and doing something new and cool. But, there isn’t a startup out there that doesn’t care about making money. I have been involved with a lot of startup entrepreneurs, and in every instance their goal is growth and sustainability. And, with many the promise of an eventual sale and cash out.
The days of getting in with a big corporation and hanging out until the big, fat pension kicks in is evaporating. With a more educated workforce and a younger generation taking over, employees are jumping ship every few years on average. Millennials want it all – cool work place, their ideas heard, open and honest communication, career growth – and pay.
As leaders, our job is two-fold: grow the company and grow our people. We really need to do both. Focusing on only one of these objectives will not further either. From my perspective, I believe that if you take care of your people there is a natural link to a better organization and higher profits. Is it anathema to think that we should take a bit of those profits to pay our people a bit more for their increased productivity? Isn’t it a bit short-sighted not to? If your desire is to have better employee engagement, let’s not forget pay. The bigger picture will show it’s well worth it.
HR Rebellion 