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If We Really Understood Work, Compensation Would Be a No Brainer

By Michelle Malay Carter on February 4, 2008 

Excavating A 50-Year Old Groundbreaking Compensation Study
A major compensation study was conducted at Honeywell in the 1960’s.? The results of that study, which was the PhD dissertation of Roy Richardson, were published in the book, Fair Pay and Work.? Click here for a book review excerpt?with summary results?displayed along with corroborative study information.

The Results
The study looked at 30 potential variables that could influence employees’ perception of fair pay for their roles.? The study found that time span of discretion was correlated to an employee’s perception of fairness at the +0.862 level.? These results have been reproduced in approximately 20 PhD dissertations since that time.

How Time Span of Discretion is Related to Work Levels
Time span of discretion is the way to scientifically measure the work levels I love to chat about on this blog.? I usually talk about work levels in a descriptive manner so that my readers can get a feel for what I am saying; however, work levels can be measured as well as described, and measurement is done using time span of discretion.?

A Universal Measure for Work Complexity
Time span of discretion is a universal measure, and as such, it can be applied to all roles – similarly to the way we can measure the temperature of all matter, regardless of how disparate the matter appears in form.? We can measure the temperature of a rock, a bowl of chicken broth, or steam emanating from a manhole.?

We can also measure and compare the relative complexity of the roles of beekeeper, research scientist, and construction worker.? The longer the time span of a role, the more complex the work.? Two roles with equal time span are equally complex – regardless of industry or type of job.

How This is Related to Compensation
The research found that the differential pay ratios between levels of work remain constant in terms of what employees felt was fair.? In other words,?if I have a role at level three (as measured by time?span)?and my manager’s role is at level four (as measured by time span), I will perceive that it is fair that my manager be paid two times my salary.? I will feel it is fair for my direct reports at level two (as measured by time span) to be paid?55% of my salary.? The actual pay numbers will vary by market or industry but the differential will stay the same.? See the table below taken from Requisite Organization by Elliott Jaques, 1998.

Equitable Differential Pay

Work Level	Time Span Begins At	Differential	Sample Salary
7	20 years	16X	$960K
6	10 years	8X	$480K
5	5 years	4X	$240K
4	2 years	2X	$120K
3	1 year	X	$60K
2	3 months	55%	$33K
1	1 day	31%	$18.6K

The No Brainer Part
What that means is that if I can measure roles within an organization by time span, which is a relatively straightforward, 20-minute process per role, and I can find the benchmark salary within my market and industry for level three work ($60K in the table above), I can use the differentials to create fair and equitable salaries throughout the organization.?You need no longer have a full-time compensation analyst, nor do you need to?pay a compensation?consultant hundreds of thousands of dollars?to do time-consuming, extensive job evaluations on each role in your organization.

Choice Point – What are You Going to Do with This Information?
Now that I have put into question what you may have known as truth, what are you going to do?? You can choose curiosity or default to defensiveness.

Move Over Woodward and Bernstein
Stay tuned for my next post where I expose the successful plot of a major professional society to bury this information which I just excavated.

Questions?
The subject of time span of discretion usually stirs up controversy.? What did it stir up in you?

Filed Under Executive Leadership, Felt Fair Compensation, Organization Design, Requisite Organization, Strategy, Talent Management, Work Levels

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