Rental sector pay: valuing the less valued
19 February 2021
Kevin Appleton shines a light on the occasionally uneven relationship between talent and remuneration and suggests possible remedies that could be pertinent to the construction equipment rental sector.
The start of a new year, as I write this, always feels like the time for evaluation or re-evaluation. This year, more than most I can remember, feels like a particularly appropriate time for a rethink.
If you had to name one thing that the pandemic has caused you to think about differently, I wonder what it would be? For me, somewhat to my surprise, it’s been about people, particularly how we reward and recognise them.
Valuing skills accurately
The news across the world has been full of stories of ordinary people doing extraordinary things.
Most obviously we think of those people in our health services who keep going back to work, day by day and giving the best quality of care that they can, even when they know, because of circumstances, that it is less than they would really want to give.
In less obviously heroic ways we can think of those in our own industries who have just kept going to work and doing their level best to ensure that equipment is available to keep our economies turning over.
Because the truth is that without an economy we would not have a health service.
Hospital doctors, nurses, paramedics technicians and support staff have clearly performed heroically in many cases but, societally, they are able to do so because much of the rest of society has kept functioning. We are part of a huge partnership for the common good.
The thing that has struck me is that those who have kept on going, physically, to work are those that we often overlook, or contribute a skill we think of as less valuable; cleaners, fitters, drivers, service engineers, warehouse staff, and where, from a rewards point of view, many businesses pay what they think they can get away with.
Increasingly, the criticality of what the best people in these roles do seems at odds with how many of them get rewarded.
How wages can distort the talent pool
I’m not making some extreme left case for equality of income here. The huge national experiments in suppression of market influences on pay and reward undertaken in the communist states of the twentieth century all ended in failure.
The inevitable issue is that all businesses need a relatively small number of highly skilled individuals to lead them to relative success versus their competitors and you need to pay enough to those top individuals to successfully attract and retain them.
If you try to flatten salaries out too much, then you tend to end up with organisations that have equitable, if not equal, rewards, but which fail due to poor leadership.
No, the thing that I am increasingly persuaded of, is the case for much wider salary banding for junior and middle-ranking staff.
Historic approaches to salaries have been generally about compressing band width and ensuring that all salaries move, broadly, together, so you might see a range of $5-$10,000 dollars between your lowest and best paid driver or technician.
My question (to myself as much as anyone) is “Why?”
A question of trust
I think the answer is that we do not trust our supervisors and middle managers to act with complete integrity and objectivity.
They might wrongly favour someone with a much higher salary, and this will result in rampant wage inflation as inequalities are corrected. This might well be the case.
But then the question comes, “How much are you paying those managers and supervisors that you don’t trust to make objective judgements on their team’s performance?”
Maybe the reason that many of them ended up in their roles is because they were a great technician or driver, but just couldn’t make enough money to support their family!
How often do we end up promoting someone to give them a financial advantage but, in so doing, gain a mediocre and unhappy supervisor in place of a fantastic driver, who loved their job?
So, I wonder, if the statistics showed that (say) 10% of any given population were likely to be outstanding at their chosen role, whether we couldn’t say that 10% of our driver, technician, cleaner or warehouse staff can be paid at up to 50% more than the agreed salary range for their role.
That might ensure that we set up some role models for making a worthwhile career of just being brilliant at something we do not value nearly as highly as we should.
About the author
He is a former CEO of Lavendon Group and a chairman and/or non-executive director of a number of companies in the rental and logistics sectors. To comment on these articles, e-mail: IRNfeedback@khl.com