Inflation seems to be the convenient explanation for all the price increases we’re seeing in every sector. But it’s more complicated than that. There are a lot of factors at work. Explanations include Covid recovery, resource shortages, rising taxes and interest rates, and greedy capitalists exploiting the opportunity to raise prices – “It’s not my fault, it’s inflation!”
And it appears that organised labour is leveraging their power for a change over the profiteering capitalists and reversing the
old Golden Rule, “He who has the gold makes the rules.” Labour unions can extract more gold for themselves in times of labour shortages and strong demand for their services. As the sign says at the Postal Workers picket line, “Cut executive bonuses, raise workers wages!!” Maybe it’s time for a leveling up of longstanding unjust inequities. An overdue reckoning and repair of discrepancies in fair and reasonable compensation for good work that has value.
Managing compensation plans requires a recognition of both internal equity and external equity – assessing what is fair for staff within the organisation and how compensation plans compare to similar organisations. That’s the rational that leads to bank CEOS earning millions while bank clerks make less than the average for high school graduates, and corporate executives with extravagant pay packages compete for bonuses while low level staff struggle to do better than minimum wage.
Merit and performance compensation plans may reduce some inequities – you get what you’re worth if you’re a talented and successful scientist, engineer or sales superstar – but internal inequities may be exacerbated and become problems for morale and teamwork with a few overpaid prima donnas on the team – “I’m special, look at me!”
Maybe we should be more democratic about it and pay everybody the same? Nope, that doesn’t work either.
If everybody’s paid the same, they assume their value to the organisation is the same, regardless of their qualifications; the janitor may insist that you listen to his advice on general management issues. Participative management requires you to listen to his input to make better decisions, but don’t be too democratic and ask for everyone’s opinion. Try the diplomatic response, “Thank you for your input, please don’t take it personally if I choose to ignore it.”
In the grand hierarchy of labour and management, where do you fit and what are you doing to make it more equitable and effective?
Be better. Do Better. Be an Enlightened Entrepreneur.
Del Chatterson, your Uncle Ralph
Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com
Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.
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