A Just Wage

Hi all,

Thanks for your posts in today's online class. Michael Naughton's A Theology of Fair Pay article provides a nice wrap for our compensation and benefits discussion. In this article Naughton acknowledges the importance of the market (contribution) in pay philosophy, consistent with our study earlier this week of market-based pay systems. The market imperative carries with it the implication that a company can afford to pay the market rate (economic order). Obviously, if a company cannot afford to pay the market rate it will soon go out of business for lack of qualified employees. Then he introduces a new wrinkle: need. Need is essentially what is often referred to as a "living wage". Where all three imperatives intersect -- contribution, economic order and need -- we find a just wage.

While the idea of a living wage might sound extravagant to some, John brings us back to reality in his post as he considers his own living circumstances compared to a living wage in different regions of Pennsylvania. The living wage is just that: what does it take to have a roof over one's head (a studio apartment for single people), food on the table, access to basic medical care, transportation (which doesn't always mean owning a car), and the like. See the components of a basic needs budget in Dr. Glasmeier's original poverty in America work here. A living wage provides the necessities, and that's about it.

Naughton's story about Reell Precision Manufacturing paints a picture of a real company dealing with real issues (no pun intended), doing their best to honor and place equal importance on each component of the just wage. As Brent pointed out, Reell moved the conversation from "ought" to "can", then demonstrated how. Matthew's post and Ricky's question to Paul highlight the challenge this places before business people... is it really possible to pay everybody a living wage in all companies and all industries in the United States. Julie and James discuss this question, comparing living wage to minimum wage, with Rob taking the question further asking about the application of a living wage on a global scale.

Naughton might argue that it is indeed possible to pay all workers a living and just wage if his three-part formula is properly applied. The need component will vary from region to region (as we see in the MIT Living Wage calculator), as will the market component. The challenge is for business owners and managers to design their organizations and work in ways that increase the value added to the company's products/services by each position thorough creative job design. As we saw in the Reell case, this also happens to make the job more meaningful, which takes us back to Van Duzer's second intrinsic purpose of business, creating meaningful work that allows people to use their God-given creativity.

Most of you agreed with the decisions and actions of the Reell Precision Manufacturing leadership team. As Paul and Brent point out in their posts, this was a complex business decisions that involved not simply raising everybody's pay over night, but a complete redesign of the production jobs and organization design to be more productive and efficient, increasing the value of the work performed, and thus enabling Reell to increase pay over a period of years to finally meet the local living wage.

Several of you also noted the challenge in selecting the appropriate target living wage. The MIT calculator provides a number of benchmarks based on family size. So which one does a manger choose? Karson, Eric, Scott and Rob all wrestled with this question. While there is no one right answer, perhaps demographic knowledge of your target market for employees can be helpful in determining your benchmark. It's also important to note that U.S. labor law requires equal pay for equal work; pay may not take into account variations between employee commitments outside the workplace. So paying one employee more because they have a family to support would put managers out of compliance with labor law, not to mention be inconsistent with the contribution component of Naughton's just wage model.

So, no easy answers here, but Naughton's model does help us to explore the implications of our faith on a central aspect of human resources management: what will we pay our employees. Clearly this is an issue that requires careful consideration when building a business plan. We started our compensation and benefits module noting that compensation philosophy flows from our business vision, mission and strategy, which includes Van Duzer's purposes. Baking just wages into a business plan from the beginning will help ensure we're building a a sustainable business model for both owners and employees.

Benefits Philosophy

Hi all,

Thanks for your thoughts on benefits and reconciling the perspectives of Herzberg, Sartain, Chewning and Van Duzer.

Today's posts were essentially about benefits philosophy. This is an important question for any business to decide before they begin to offer benefits to employees. As Scatt, Lauren, Matthew and John note in their discussions, benefits are expensive. Herzberg cites the cost as 25% of a person's base pay. The cost today is up to 30%. Yet, as businesses have recognized from the early days of "welfare work" (remember that conversation & reading from the first week of the semester?), offering benefits beyond pay to employees has distinct advantages.

Libby Sartain offers a classic argument for the advantages of fringe benefits. They are a tangible demonstration of the company's care and interest in each individual employee. And at their best, benefits are a differentiator in a company's employment value proposition.

Chewning offers his benefits philosophy from Christian worldview; many of you appreciated his perspective. His argument would be consistent with that of many of the early welfare work proponents, including the Cadbury brothers in England, and Milton Hershey (at least based on his family background). Employers have a moral responsibility to help care for the whole person, not just the body that shows-up for work every morning. Of course, this was one of Henry Ford's frustration. He is famously quoted as saying, "All I need are a pair of hands, but I keep getting the whole person!" (my paraphrase).

Herzberg presents us with a view of pay and benefits through the lens of his motivator-hygiene theory. Those of you who are in or have taken BUSA 390 will recognize this theory.

Figure 1: Herzberg's Motivator-Hygiene Theory

The point Herzberg is trying to make in his article is that benefits keep getting more and more expensive because employers are using benefits to achieve the wrong purpose. Benefits in Herzberg's model are hygiene factors. Recall that hygiene factors can result in dissatisfaction if not present, but not satisfaction. Only motivators can bring people satisfaction on the job and result in intrinsic motivation (see Julie, Janine & Rob's posts for good discussions of Herzberg's model). As noted in figure 1 above, motivators include recognition, opportunity for advancement, challenging work, etc. These factors on the job result in intrinsic motivation. Extrinsic motivators such as benefits can never do this, though they can cause dissatisfaction if not present.

So what does all of this have to do with Van Duzer and creating meaningful work where people can use their God-given creativity? Rob offers that one approach to providing meaningful work might include designing work with Herzberg's motivators in mind. These characteristics of work do not fully define "meaningfulness" in one's work, but they might give us a good start. Second, leaning on Chewning's argument -- designing benefits to address family needs, or the needs of the "whole" employee -- certainly frees our coworkers from the some of the concerns of this life, enabling them to more completely dedicate themselves to their work and the organization, including using their God-given creativity.

And the end of the day, all of this still costs money, which means our benefits philosophy needs to be clear and then baked into our business strategy and plans.

We'll continue our pay & benefits conversation on Monday with some practical work on constructing a pay range. We'll come back to this complicated issue of balancing our moral commitments with market forces and the needs of the business next Friday in our online discussion of just wages.

Enjoy the weekend, and see you on Monday!

Designing & Measuring Training

Hi all,

Thanks for today's posts on the basics of training measurement and design, and your personal stories of training successes and mistakes.

Muller's (2013) three steps for developing a training program are a good place to start a training design effort:

1. Set program goals.
2. Determine instructional design/medium(media)
3. Establish success measures.

Meister and Willyerd's (2010) social learning ecosystem can be helpful in step 2, as can the 70/20/10 model. Step three is where Kirkpatrick (1998) comes in -- see Eric's post for a great discussion linking Kirkpatrick to Muller.

Your posts included a variety of interpretations on Kirkpatrick's levels, so let's try to focus on a common understanding here.

Level 1 - Reaction

This level measures how participants feel about the program. Did they enjoy it? Do they feel they learned anything? How did they like the training room or the instructor? All personal reactions to the program. Check out Paul and Derek's posts for a couple of guys who were having a less-than-positive reaction to their training; Derek with a computer-based module, and Paul with reading. How would their companies have benefited from a collecting data about their reactions? How could that data then be used to improve the experience of future new hires?

Level 2 - Learning

This level measures the learning -- in this case knowledge -- gained. Brian, Janine, and others talked about testing related to the training they went through. This testing checks on learner retention of facts, polices, etc., from the training session. This is an example of Kirkpatrick's second level of measurement.

Level 3 - Transfer of Behavior

Level three is all about how the new behaviors learned in training are transferred to the job. Again, Janine's post provides a helpful illustration here. She went through the training (in this case, sexual harassment prevention), took the exams (level 2), and then went back to the job. There she experienced no support or acknowledgement of the training she had received, nor was there any measurement of her behavior in regards to the training (at least that was visible to her), leaving her wondering about the importance of the training to the organization. This is a classic training problem. People go to training programs, but the learning in those programs is not acknowledged or supported by their managers when they return to the job. This limits the likelihood that the new learned behaviors will be retained and transferred to the job. And not measuring employees' new behaviors limits the organization's ability to measure the effectiveness of the training program.

Level 4 - Results

This level measures impact of the training on the business. This could be in terms of revenue generation, costs savings or avoidance, or more intangible aspects of organizational life (e.g., inclusive organizational culture, etc.). The more hard numbers that be applied at this level, the better. Rob provides us with an interesting example in his post. His training consisted of a lot of safety training (a good thing), but then the measures applied after training were all related to productivity. Rob's effectiveness in terms of workplace safety was not referred to again. This is problematic in two respects. First, the company doesn't know if their safety training programs have been effective at the worker-level (though they may have some store-level measures in use). Second -- and this is particularly important related to safety training, as well see in a another case in a few weeks -- the message to Rob and his co-workers is that production is of primary importance to the company. Safety is practiced in the training room, not on the retail floor.

Conclusion

The main thing here is to (1) measure training effectiveness, and (2) to link training measures to the impact it has on the business -- Kirkpatrick's level 4. Not measuring the effectiveness of our training programs means that we may be wasting people's time, the company's money, and hampering the organization's ability to meet it's objectives. We're also not taking our responsibility as "stewards of human creativity" (Chewning, et al., 1990) seriously.

The State of Social @ Work

Hi all,

A timely SlideShare on our topic of social media inside the organization. Check it out.

Appirio State of Social eBook from Appirio