Why It Isn’t Easy to Change Pay Policies

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A plant without roots is easily re-potted; any labor negotiator would likely agree. Recently, we saw IBM quickly reverse their Uber reimbursement policy, which should come as no surprise. It was frivolous—not rooted to any cause or reason—so it was easily plucked from its plot. A slightly embarrassing moment for IBM perhaps, but the blush will soon fade. This is not the case for more intrinsic corporate policies.

Changing Pay and Compensation Policies

In reality, getting rid of policies that no longer apply or fail to deliver their intended outcomes is a far messier business. Workforce asset management professionals know this to be especially true of policies related to pay and compensation. Try adjusting or retracting such policies and you will quickly strike an intricate root system not easily removed or maneuvered.

Reversing and changing these types of policy is not common, and when it must happen, it can be torturous. We care about how we are paid. Effects are felt viscerally and immediately, turning employees into victims and employers/leaders into villains. However, both sides of the story often go untold.

Reducing or eliminating shift premiums could be an effort to avoid reducing headcount overall. Eliminating weekend bonuses could be a reaction to a poor incentive policy that didn’t produce the right productivity gains to make such bonuses financially feasible. Placing limits on daily absences may be a step toward balance and limiting abuse.

Changing Pay Rules and Calculations  

Even changing calculation policies can be difficult. For example, if employees discover that your time and labor systems can compound several different premiums, they may start to abuse or game the system to inflate their wages. When the employer finds out about this manipulation, she corrects the calculation because that wasn’t the original intent. Instead of praising her for fairness, employees condemn the change and may even bully her into keeping the old method. Protecting an advantage may be human nature, but it fails to recognize real financial consequences.

So while the IBM/Uber story gets coverage and press for being “popular”, it glosses over the reality that most policies are nearly impossible to retract or change. As always, if you want to find the real pain, follow the money to the pocketbook.

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