The Highest Paid Employees Are Not Always The Best Performers

Ifeoma Obi / Posted On: 27 January 2020 / Updated On: 27 September 2022 / Compensation and Benefits / 766

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The Highest Paid Employees Are Not Always The Best Performers



People often get motivated by money. The salary a worker receives from their employer can have a big influence on their administration efficiency. A worker does not see their pay simply as a dollar amount, they see it as an interest that their employer puts on them as workers. They believe the degree of respect can have a direct effect on their overall performance.


If a worker is satisfied with the wage they are receiving, they are more likely to perform to their capacity. A high-wage person feels driven to do a good job because they want to please their boss to keep their position. Their salary offers them a sense of security, helps to feel accomplished and gives them a rating of high status that they love. An individual is far more inclined to put in extra at the office if they feel their financial rewards are a fair trade-off.

           

The employer is respected by a well-paid employee. They know that management does not just pay them for doing the job, they are also respected for their experience in the subject. The employee is more likely to be happy with their work and not feel they need to look for better pay for a similar position. An employee who does not feel like their company is paying them a wage that is high enough is much more likely to look for and accept a higher paying position of a comparable nature at another company. 

 

When a firm fails to pay its employees well, the morale of the general office is low. Some employees might need to get a second job to reach ends, leaving them exhausted, overworked and resentful. Generally, success rates are low, as workers feel little desire to go beyond expectations and the absentee rates continue to be high. The turnover of workers in these businesses is often very high because people do not want to work for a company paying below industry standards.

 

Using a performance-oriented pay plan can provide extra motivation for a worker to do their job to the best of their capacity. There can be an effective way to balance the opportunity for a worker to earn extra cash rewards with the company's goals. If they know they will receive extra money when they achieve a goal set by their supervisor, they will probably do their utmost to exceed expectations.

 

Expectancy theory (Vroom, 1964) has been the most thoroughly tested and there seems to be a general consensus that it offers a compelling psychological explanation for why paying for performance plans will improve employee commitment and an appreciation of the general conditions under which the plans work best.

Expectancy theory predicts that employee motivation will be enhanced, and the likelihood of desired performance increased, underpay for performance plans when the following conditions are met:

  1. Employees understand the performance goals of the program and consider them as "doable" despite their own capacities, expertise and the constraints presented by the task structure and other aspects of the organizational context;
  2. There is a clear link between success and pay raises that are regularly communicated and followed through;
  3. Employee value pay increases and considers the pay increases associated with a contract as substantive (that is, significant enough to support the effort needed to achieve the performance goals of the program).

 

Studies have shown that some employees may be paid highly despite them not being the best performers especially due to issues surrounding gender balance. Some might be paid highly simply because they are of a particular gender. These days an employer could choose to highly reward key performers, perhaps even if it means paying less instrumental workers less. This may seem disconcerting, as many organizations are aware of the rising drumbeat and media debate about pay equity, particularly women's fair pay. This drumbeat is not mistaken, because paying employees differently based on gender or age, for example, is absolutely wrong (and unlawful). It is obvious, however, that some of the more traditional and some not so conventional methods of paying people contribute to mediocre to non – performers receiving high pay.

 

Many businesses measure compensation based on seniority or overall work experience within the company. In the first example, a company owner may feel that maintaining quality employees is necessary, even if the employee fails to progress to more demanding or managerial positions. In many cases, the best way to do this is to include annual salary hikes. Employers can also opt to pay more for new employees if the employee already has considerable job experience. If the experience of the employee is in a similar role, an employer may feel that a higher pay rate is appropriate given that the employee will adapt to her new position more quickly.

 

Employees with the same job role may in some cases have very different qualifications, credentials or areas of expertise. In such situations, the decision to pay the more skilled employee at a higher level can be a matter of remaining competitive: An employee with in-demand qualifications, such as IT certifications, often has more job options than an employee who does not have such credentials. As a result, employers can opt to increase the better-qualified employee's pay in order to prevent her from moving to another company.

 

Many workers simply make more than their peers because they are more assertive when pressing for salary increases. When reality, because they received a higher level of compensation during the interview process, many employees start working for companies at higher salaries than their colleagues. It is also true that employee compensation in terms of take-home pay is not always fully measured. For instance, an employer can allow one employee to work fewer hours each week so the employee can take care of a sick member of the family or take college courses. The employer may also provide extra vacation days to an employee rather than a higher salary.

 

Some employers also make it a policy forbidding employees to share salary information among themselves. This policy can be included in employee handbooks with the explanation that sharing compensation information makes it harder for the employer to treat each employee as an individual and compensate them according to their performance, regardless of job title. However, employers should be aware of the importance of fairly remunerated employees. If the employees with the same job description and title have a significant disparity, the reason for this disparity should be investigated. The employee who receives less money may be in results, while the employee with a larger salary is ready for promotion and more responsibility.

 

Research has therefore shown that it is not always the case that highly paid employees are the best performers, but employers also consider other factors when giving employees high salaries. Factors like an employee’s experience in the job, their age, their qualifications and their gender amongst other things contribute to employees earning high amounts than others in some organisations. Therefore, organisations should look into ensuring that their reward systems are fair and equitable at the end of the day.

 

References

  1. Work.chron.com. (2020). How Can Salary Influence a Worker's Performance in an Administration?. [online] Available at: https://work.chron.com/can-salary-influence-workers-performance-administration-25950.html [Accessed 27 Jan. 2020].

 

Ifeoma is a Business Analytics and Research Consultant at Industrial Psychology Consultants (Pvt) Ltd, a business management and human resources consulting firm.


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