Managing People - Compensation
Ask Bob

Ask Bob About Compensation

?How do you weigh experience versus ability?

Take into consideration a person’s current ability to do a job, your confidence in that person and his or her abilities, and how much, if any, additional experience will increase the person’s ability to perform well. For example, if one person has one week of experience collecting change at a toll booth and another person has ten years of experience in the same position, it is doubtful that these different experience levels will significantly decrease or increase either individual’s ability to perform satisfactorily. How-ever, if one person has one week’s worth of experience as a credit manager and another has ten year’s experience, there will be a major difference in their ability to easily handle their jobs.

?How do you weigh seniority versus ability?

This is a hot-potato issue. Some freshly minted MBAs may feel that raw ability is the only criteria that matters in determining wages. Many employees, however, feel that seniority should be rewarded.

Bloated labor costs can become a problem if you give wage increases based on an employee’s increasing seniority. And some companies have gotten hit with discrimination suits when they have sought to cut labor costs by firing older employees with very high seniority-based wages.

But many employers underestimate how much seniority can affect ability. For example, new hires from the outside may have good “book”understanding of the sales techniques used in your industry but haven’t developed a good sales style or learned the nuances of selling your particular product. They may have established customers, but those customers don’t associate him or her with your product.

In a nutshell, pay on ability, not seniority. But do keep in mind that seniority can, in ways both subtle and not so subtle, positively affect ability.