Over the forty or so years that I have been a “people specialist” I have read many books covering the subject matter of the discipline. But I can truly say that no other book has made a lasting impression on me as I have traversed the vagaries of this so called “profession”, as Stan Herman’s book – “The People Specialists”. Stan wrote this book in 1968 just when I was starting off in this business. The book is sadly out of print. Its a contrarian book. But it got me thinking and I have never stopped. I have referred to this book quite often over the years.
In this oped piece, I want to introduce the readers to what Stan talked about with respect to pay management. It is not a conformist viewpoint but does encourage thought, which I like.
Stan aptly titles the chapter “Dollars”. But in a globalized world it is Pounds, Rupees, Dinars, Liras and on and on.
He says, “MONEY IS FUNNY. Most people like it a lot. Wise men who speak with the voice of enterprise, say that money provides The Incentive, and that men’s hands and brains work best only when they see clear and immediate relationship between how hard they strive and how much they get paid.”
Well, I do not think this thinking has changed since Stan wrote these lines. As a matter of fact, this is main justification still given by Corporate Boards for the exorbitant pay packages that they dole out to the big wigs of corporate giants. The bailed out bank executives are hiding behind this principle as they rake in the big bucks while we all pine away in misery and anger.
Stan continues, “Other people say that money is not really much in itself, but rather, that its real importance comes from the fact that it is a symbol of grander or deeper things, like power, prestige, and security. The truly wondrous aspect of money, they believe, is that it can be made to represent almost anything people want it to represent”.
This is a profound a statement and still quite relevant.
The question then Stan discusses is how does this “money” we all are paid get distributed to all of us who work in various organizations. What is the rationality in the methods and processes of the great “giveaway”?
Stan muses then that some in the Human Resource field postulate that people are paid “according to their contribution”. Stan then says that, “from this pronouncement and its amplified echoes have grown the majority of the dilemmas, incongruities, and overstretched rationalizations of the salary administration specialty”. “The trouble begins when you try to decide what “contribution” means, and it gets worse after you make the decision.”
Here is the main challenge in Stan’s words, “How, for instance, do you compare the contribution of the teacher versus the television announcer, (as an update let us now identify the television “talking heads” – I am told Bill O’Reilly at Fox earns in the hundreds of millions of dollars – wow! – what is is his contribution can someone enlighten me, please?) the fireman versus the fashion model, or the President of United States versus the Chairman of the Board of (updated – the Chairman of the Board of AIG Insurance) General Motors? And then, how do you explain the differences in their pay?”
Then Stan goes on to provide us with a litany of discrepancies in dollars paid against a general rational consensus of occupational contribution. He then concludes “The Contribution hypothesis just does not hold up very well”.
I do not think that during the last forty one years that has gone by since Stan Herman first discussed this issue we have progressed an iota in rationalizing the contribution myth. It still glares at us with all its confusing obfuscations.
I now see with President Obama as our respected leader a new mantra being spread around by the neo-conservatives. I have heard this theme in some Town Hall meetings. The outcry now is that the leaders of governmental bodies (the bureaucrats) are raking in the dough while we the masses are existing with our puny little. True maybe, but let me tell my neo-conservative friends, at least since Stan wrote his book, this irrationality in the distribution equation has not been solved. You, my friends keep listening to rabble rousers on Fox. Please go and discover how much they get paid. Do you really think their contributions justify that kind of dollars? Would you not want some of that dough also? What is different from the leaders of government and leaders of large business, or television and radio talking heads for that matter, as far as how much money they make. It is all greed my friends not contribution.
Stan sums it all up for us quite well, “The quest for a neat correlation between worth and reward is a natural one which fits nicely with most people’s idea of the way things ought to be. But the fact that they ought to be does not mean they are. Money value determinations are not products of fine, dispassionate measurements made in the dust-free, dehumidified atmosphere of a laboratory. Rather, they are continually buffeted and rebuffeted in the turbulent environment of the messy outside world, and not merely on a supply and demand basis, either.”
He also goes on to say, “The answers do not just tumble off those rugged but accurate free-competition scales, either. In itself, the market theory of labor pricing is no more adequate than the contribution theory. A great many factors – supply and demand, subjective and sometimes arbitrary judgements, agreements negotiated from positions of strength (or weakness), Government legislation, and even the ephemeral whims of social conscience – all influence the amounts of money people get paid”.
Thus I conclude by saying we as Human Resource professionals have not progressed in clearing up these murky waters much over the forty plus years since Stan wrote these words. But I do not regret the failure a bit. Because I know “beauty is always in the eyes of the beholder” and not the administrator. We have worked hard to maintain a “limited and transient orderliness”. Thats all we could have done.