The compensation dilemma

What is the point of commenting on issues, if you always avoid the contentious ones?

Today, I would like to look at an issue that has been frequently debated and will continue to be debated until the end of time. What should a business owner pay his employees? Contrary to what might be considered popular believe, I believe that employers want to be fair and that fair is difficult to determine.

I’m going to use an example that is just plain silly to try to make a point. In this scenario there is a company that employs school crossing guards. The employer wants to pay a fair wage, but it is difficult to determine what a school crossing guard should be paid. The school crossing guard union believes that their negotiations with other companies have determined that guards should be paid at least $200,000.00/year, because they are protecting the future of our country. They have presented solid arguments, backed up by years of research and as a result, some employers have settled with their unions and are paying the wage.

DISCLAIMER: I have no idea what school crossing guards are paid, I just picked a big number to make a point.

A new employer has considered the union arguments, read the surveys, written the job descriptions, determined the required skills and believes that the union’s proposed wage is unjustified. He sets his wage scale somewhat lower and starts advertising in an attempt to staff up. He gets a few applications, but generally people have had their expectations set to expect a higher wage, so he is unable to meet his staffing needs.

He is not crazy about dealing with off-shore workers, but he knows that he will be able to pay a fair wage for a fair days work, if he can get outside of his current prospective work force. In the end he has no choice but to hire from neighboring provinces, states and countries. His employees are treated to free lunches, given opportunities to buy stock in the company and everyone shares in the profits with a bonus program based on sales.

He realizes that there are cases where crossing guards should be paid more so he instructs his human resource organization to continue to research the value of skills and to adjust his pay scales accordingly. Some months later, the employer gets a contract for a crossing guard at a private school, where the job description requires the guard to protect students from potential kidnappers. The guard must be able to be licensed to carry a weapon, trained in Marshall arts and ideally ex-military. The guard will be responsible for campus security and required to install and maintain a campus wide video security system. The employer has no problem paying a higher wage given the additional requirements. In this case, the wage paid actually exceeds the recommendations from the local unions.

I guess my point with this post is that:

  • People should not assume that employers are out to hire employees for the lowest possible wage.
  • It is hard to find the right wage for a specific job and it is easy for the importance of a job to be inflated.
  • People should not assume that employers want to hire off-shore work forces. They are difficult to manage and don’t always produce the best results.
  • Just because people get better at what they do does not automatically mean they should be paid more.
  • Unions always start out with the best intentions, but often end up causing imbalances because they are driven by their membership to maximize salaries.

There is so much more that could be said, but this is enough for today. I understand that there are evil people out there that take advantage of others, but I would like to believeĀ  they are a minority. We are our own worst enemies when it comes to a reasonable wage for an honest days work.


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