Share this Page URL

Chapter 17. Show Me the Money! > The Basis of Base Pay - Pg. 210

Show Me the Money! 210 As teams become more and more collaborative, the leader becomes less of a manager and more the "first among equals." Under these conditions, how should the team leader be compensated? Is it equitable to pay leaders more when their work is much the same as associates'? In the future, as teams become more and more a part of the corporate culture, the base pay of team leaders will be only slightly more than team members' to accommodate the additional administrative details they perform. The real financial rewards will be based on team productivity. Pay for a Team Member Team Terms The going rate is what companies are paying people with similar backgrounds in the industry or the community. It has also been defined as what you have to pay employees to keep them from going. As noted, base pay is determined by the skills of the jobs involved and the market value or going rate of a job. If there is a shortage of qualified personnel, salaries will be higher; if there is a surplus, base pay may be lower. In most companies, employees are reviewed annually and, unless their performance is unsatisfac- tory, they will usually receive an increase. In many organizations every employee gets at least a cost-of-living increase or an annual raise just for still being on the payroll. This is changing. New trends in compensation programs are developing. Here are some of these developments: · Rank will not determine pay; contribution and performance are becoming the primary bases for compensation. The sales rep who brings in the most business may be paid more than his boss, the sales manager; the engineer who develops a viable patent may receive a higher bonus than the chief engineer. · Increases in base salary will be reduced. With inflation more or less stabilized, cost-of-living increases have become minimal. · Pay for performance plans are replacing fixed salary increments. Workers who contribute to the company's productivity and bottom line will be rewarded. Marginal and average employees will be given minimal increases or none at all. · Lump sum merit bonuses are gaining in popularity. Instead of raising salary, companies are paying production bonuses. Because bonuses are not part of salary, they do not become the basis on which benefits and future salary adjustments are based. Because team members will be paid bonuses based on the team's performance, more productive workers will be penalized because of their marginally productive associates. This can lead to discord in the team. Peer pressure from the high producers on the low producers often brings up productivity, but team leaders will have to work hard to keep the team working effectively to build and maintain high performance. When compensation is performance-based, and some team members pull down the productivity of the team, the high priority of the team leader is to help marginal workers boost their productivity, and if that fails, remove them from the team.