The return of “pay” and how to optimise it

Abstract

Purpose

There is a strange paradox at play in workplaces today – and it has all to do with that most basic of needs: “pay”. Employees might well be working longer hours and taking out more second jobs, but the amount of money they have left in their pockets simply is not keeping pace with the cost of living.

Design/methodology/approach

This paper examines how pay has shot back to the top of the things employees most want from their employer, but (despite this) it also examines the extent to which pay – the greatest cost most businesses face – seems overlooked in terms of being measured with the same sort of ROI rigour as other business costs.

Findings

Most firms would not invest hundreds of thousands of pounds in new IT if it did not yield some form of efficiency/productivity return but, as this paper argues, many firms can quite easily see the total pay of their employees’ pay rise by the same amount, and yet they know nothing about whether paying some staff more than others will actually boost productivity and profitability.

Originality/value

It is this paper’s view that compensation measurement and management is vital if businesses are to understand how what they pay impacts performance. Firms that use data may discover they do not need to improve everyone’s pay by the same amount to boost their productivity, but they can do more targeting compensation around key people and key performers.

Citation

Thomas, R. (2017), "The return of “pay” and how to optimise it", Strategic HR Review, Vol. 16 No. 4, pp. 182-188. https://doi.org/10.1108/SHR-05-2017-0030