Imagine. You’re not the manager any more. You’re now an employee working in your firm. You’re looking at management and asking about a pay rise; without saying a thing. Is it clear what you need to do to persuade management to award a decent pay rise? Is what you’re paid fair, compared to your colleagues? And are you discriminated against? Do you feel that you have a career – will your pay rise incrementally as you want it to, when you gain more experience, skills and knowledge?
Or instead, are you stuck? Stuck on a salary with no real prospects of a rise, kept back despite what you see as your good efforts to progress.
Now flip back to your present role as manager.
Most SMEs have no salary structure and no associated salary system. For most employees in SMEs, they’re paid what the boss thinks they’re worth, or what she had to pay them to get them to join her all those years ago.
Most SME managers use what’s termed a ‘spot’ salary system. Employees occupy a unique spot in the range between the lowest and highest salary. Few understand their prospects of a pay rise over time. Few know what to do to drive that rise. And few can be confident that their pay is fair.
Such a vague system is dangerous.
Inequity and feelings of injustice in vague systems lead to a degradation in employee commitment and lay the firm bare to claims under the 2010 Equality Act. It’s not that anything’s automatically wrong – just that management can’t demonstrate fidelity when challenged. And management is secretly challenged every day.
So if you have a vague salary system, it’s time to act.
Salary System Benefits
There are two big benefits of implementing a robust salary structure. First, fair, transparent salary systems engender a feeling of commitment in staff. Commitment is fundamental to all. Without strong commitment to the firm, management can’t manage. Management action is ineffective; employees are not listening. Second, by knowing where they fit on a structure and where they are going, employees have a sense of career with the firm. Folk with careers enjoy better job satisfaction and perform better.
So, two good reasons why a little bit of effort is worthwhile when developing your salary system. Any firm from small to large can implement a salary system and reap the benefits.