Pay equity as a measure of a person’s worth

January 7th, 2014 → 6:22 am @ // No Comments

Entrepreneurs tend to measure their worth through their achievements.  They see close links between their actions and outcomes… “I work more, and I get more”, “I find a new product/sales model/market and I make more sales.”  They also spend a lot of time negotiating and fulfilling contracts, so the link between agreement and delivery is also clear.  In the entrepreneur’s world, “I eat what I kill” or “I stand by the deal I made” often sums up his/her view.  And the ultimate measure of performance (and often self-worth) is the value of the company which is created.

The employee often does not have such clear measures.  Individual performance is often hard to measure in a team, and the employee seldom gets the satisfaction of being able to say “I built this company.”  So entrepreneurs should not be surprised to find that employee self-worth may be tied to quite different factors, with “relativity” being one of the commonest.

I was painting at home the other day, when my mind wandered back to one of my earliest entrepreneurial ventures, a painting contracting business.  I knew little about painting, but I saw an opportunity in that painters seemed to be charging huge prices at the time (suggesting high demand), and I had one asset (a friend who was a master painter).  I tendered for some jobs, with my friend briefing me on what materials I’d need and what painting process I should follow.  My first tender was accepted so I hired a couple of students (Greg and Colin) as brush-hands, after getting them to do a small painting job so I could test their skills.  The deal was simple and clear.  I offered them twice what they could earn at any similar job, but they would work long hours and would redo any substandard work.  They loved the idea of earning big money during the University holidays.

The job was in a city 100Km from my home, and I had other work commitments, so I set the students up and left them to it, visiting every few days to check their work and set up the next part of the job.   Both students performed well, but Greg went beyond our agreement, showing a great store of initiative in solving and anticipating problems.  I was impressed, and recognised that his extra efforts were making me more money.

At the end of the job Greg came to collect his pay, and I gave him a large bonus to reflect the extra value he had added.  When Colin arrived later that day, I paid him the agreed sum.  He was furious.  Greg had told him about the bonus, and Colin expected the same amount.  They had worked the same hours on essentially the same work.  Colin was no longer happy to be paid twice the going rate, as agreed.  He saw it as a matter of equity, and was insulted that I was paying him less.  Since he had only an employee’s perspective, he saw all the value as being in the brushwork, and thought any extra “sorting out” that Greg had done was not significant.  He became red-faced, and spat as he yelled at me.  Clearly, the amount he was being paid was not inherently an issue.  We both knew he was receiving twice as much as other students were getting.  But Colin’s self-measurement was tied to the benchmark he had set when he heard what Greg was paid.  And Colin’s vitriol showed that his self-worth was diminished.  His rage could not be calmed, and he left spitting insults at me.

I struggled to understand how Colin’s self-esteem could depend so much on being seen as “worth” as much as Greg… but then… what other measure did he have?


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