3 Common Fallacies of Employee Salary

Too often, managers and recruiters misunderstand the role of salary in hiring and retaining employees. Many believe that compensation is the universal factor determining motivation and value among employees and job candidates. However, we all know this isn't really true, yet somehow we doubt ourselves and resort back to this misconception, treating all employees and candidates like mercenaries.

As a result, both labor and management start operating in mercenary mode, where applicants act like mercenaries, caring only about the money, and managers seek out and hire mercenaries because they don't know how else to attract and retain personnel.

Let's talk about three fallacies that perpetuate our flawed thinking about mercenary culture.

Fallacy 1: Everyone has their price.

Most people will confess that if someone offered them a million dollars to do something, they could not turn it down. But in my experience, while many may accept an inflated offer at least once, most regret doing so when faced with the inevitable unhappy consequences. Even those that remain in a job that pays too much often feel trapped because it would be too hard to pare down their financial commitments to allow them to take another position at a more reasonable rate.

SOLUTION: Everyone has a minimal compensation threshold needed to do their job. It's based on perceived rates of pay for their skill level in that field, combined with employer quality, growth opportunities, and fairness relative to their peers.

Fallacy 2: Money is motivating.

I prefer to say that money is "attractive." To me, true motivation needs staying power — it needs to inspire someone to perform and to do it consistently, coming back to work day by day to do a good job and be happy doing so. Anything else is either a threat or just motivational candy. You can give someone money to do something, but before long they won't really want to do the job; they'll just want more money.

SOLUTION: The best motives are intrinsic, meaning they come from within the individual. Intrinsic motivations, such as love, belonging, curiosity, challenge, and service to others, are far more effective than extrinsic motives like money, promotion, fear, or fame.

Fallacy 3: The best talent costs the most.

Peak performance results from a combination of many contributing factors, including aptitude, motivation, opportunity, peer group, good coaching, etc. It is never the solely result of a high salary. If you change or remove any one or more of these factors, a peak performer may cease performing at the same level. Again, a raise in salary alone cannot sustain, much less increase, the level of performance.

SOLUTION: Prioritize performance, rather than reputation, regardless of an individual's past performance or perceived talent. The best performances must be cultivated, and cannot be purchased. You can hire a past top performer, but you'll need to recreate ideal conditions for them to continue to produce their heroic deeds. Maintain salary thresholds, and don't be afraid to shy away from unrealistic salary expectations. Find intrinsic motivations and build on them.

~ Tom/*