If you haven’t already done so, you’ll soon have to deal with annual salary increases. It’s a task I’ve always found challenging. Apart from the fact that I never like increasing overhead costs, it invariably means upsetting someone. Amazing isn’t it? You give money away and end up making someone unhappy! But then, if you think a good salary or wage is a motivator, you are very much mistaken.
As psychologist Frederick Herzberg points out, money itself is never a sustainable motivator. It attracts employees and may retain them, but it can also be a potent source of dissatisfaction if you don’t have a well-designed remuneration system. And that system should have two key objectives: competitive pay rates and equitable pay rates.
Offering competitive rates
The level of your pay rates should be pitched at just the right level. They should not incur more cost than necessary, yet be high enough to attract and retain the best people possible. How do you know that your rates are competitive? At unskilled and semi-skilled levels this is fairly easy – minimum-wage legislation provides a clear starting point.
At skilled and managerial level it might be more difficult, especially as there are significant differences in the quality and cost of ‘remuneration-in-kind’ provided from farm to farm, such as housing and so on. Sign up a reliable company to carry out a remuneration survey in your industry. If you are unable to source such a service, a web search will give you some idea of rates in the fields you are benchmarking (I’ve found www.payscale.com particularly useful).
Another option is to carry out your own survey. Persuade your neighbours to participate by agreeing to share whatever information you glean. Make sure you are comparing jobs on a like-for-like basis. For example, a workshop foreman’s job in one organisation can be quite a different position in another, with entirely different responsibilities and a far greater or lighter workload.
Employees must understand the basis on which they are paid and feel fairly treated in relation to their peers. While it is widely accepted that jobs higher up in an organisational hierarchy earn more than those at the bottom, the relative positioning of jobs is often a matter of diverse opinion.
A formal job grading system involving input from staff across the organisation will therefore always gain far greater acceptance from everyone. A number of different job grading systems are available, but it’s the Paterson system that has found most favour in South African agriculture. This provides a way of grading jobs based on the decision- making requirements of each specific job. The more complex the decisions required, the higher the job grade.
The system provides a set of guidelines that are logical, easily understood and provide a sound basis for differentiating between jobs. Make 2015 the year you fine-tune your remuneration administration, and never again face pay-based dissatisfaction.