Are you paid too much? Or are your staff paid too little?

A nice, non-controversial title for this week…

…Sparked by reading a review of Thomas Piketty’s book, Capital in the Twenty-First Century. I’m sure plenty of you have read it – only 700 pages and a bargain at thirty quid or thereabouts.

Just in case you haven’t, let me summarise. Piketty spends a lot of the book talking about inequality – specifically that the US is evolving into an oligarchy in which wealthy elites exercise far more power than they should. And he defintely has it in for overpaid CEO’s. I can see his point…

Henrique de Castro collected a $60m severance package when he was fired from Yahoo – on top of a $40m annual pay cheque. JC Penney paid its former CEO, Ron Johnson a salary 1,795 times that of an average department store worker.

In 2012 the average CEO in the US was paid 273 times the salary of the average worker. The growth rate of the CEO’s pay has been more than a hundred times faster than the growth of his average employee’s.

Even in a country as fervently capitalist as the US, this has started a few murmurings of discontent – and a few op ed pieces in the newspapers suggesting the previously-unthinkable. Should the US have a maximum wage as well as a minimum wage?

What about the UK? In the week when Barclays paid fat bonuses to bankers who’d overseen a slump in profits – and with a General Election on the horizon – expect to see the same questions asked here.

But all that’s a long way from North Yorkshire – and I can emphatically state (or I’m pretty sure I can) that none of the members of TAB York are paying themselves a thousand times more than the people they employ. But pay in small businesses is crucial – get it wrong and it can destabilise the whole team. Read this blog from Castle Employment in Scarborough: there are some really pertinent points, especially if you’re thinking of hiring a ‘superstar.’

The good news though is that confidence is improving and for the first time in a long time several of my clients have the words ‘pay rise’ on their to-do list. But even giving someone a bit more on their bottom line can be fraught with difficulties. Specifically, how do you keep the payroll fair?

However hard employers try, all too often people are paid different amounts for doing what’s basically the same job. The main reason is simple: ‘Bill’s been with us for ten years. It’s only right that we should reward his loyalty.’ Or maybe Bill joined before the business was as rigorously run as it is now, maybe – dare I suggest – before you joined TAB.

The problem is, that causes resentment with the new member of staff who’s doing the same job – and who may well feel that she’s doing it rather better than that stick-in-the-mud who’s been here for a hundred years.

So what do you do? Give Bill a smaller pay rise than everyone else? It’s a really tough decision, and one that you need to get right because there are two irrefutable rules about pay. First, nothing de-motivates someone faster than feeling that they’re not being paid fairly – and secondly, however much you try to keep it quiet details of pay packets always seem to leak out.

It’s a thorny issue, and one that’s going to get thornier as – touch wood – the economy improves and pay rises (maybe even bonuses!) move back up the agenda. If you’ve any thoughts, ideas or tips on how you tackled the problem then as always I’d be delighted to hear them…

…Because it would appear I have some ‘pay’ negotiations of my own to conduct. Dan and Rory have held a union meeting. The word ‘allowance’ has been mentioned. Several times…

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