A wise individual once pointed out to me that when I buy a candy bar, I am willing to pay the store clerk a dollar (assuming that is the cost), not because it is worth a dollar to me, but because I feel that the candy bar is MORE valuable than my dollar. Similarly, the store clerk is willing to give me the candy bar because they feel that dollar is worth MORE than the candy bar. Otherwise, why make the transaction if the worth is exactly the same? This principle is true of most dealings. While there are certainly times where either party feels cheated or ripped off, this is not true in most cases. Otherwise, the longevity of the concept of transactions could not reasonably be sustained because one of or perhaps both of the parties would consistently not be satisfied.
The same principle applies to employee compensation. Both the employer and the employee must feel that they gain more overall from the transaction than they lose. If the employer feels that they are paying their employees more than they are receiving in return, than it is likely that the they will not want to continue paying their employees and will search for alternative options. Similarly, if the employee feels they are being underpaid, they will constantly be looking for other jobs. There will certainly be times in all employee/employer relationships where the employer feels they are over compensating their employee or when the employee feels overworked. However, this should not be the overall feeling because the relationship will not last.
In my business, as you know, I separate the work levels and employee levels out into tiers. Tier 1 consists of things like data entry, note taking, and basic research. Tier 2 consists of things like research interpretation, building reports, and customer service. And Tier 3 largely consists of analysis. As a business owner, I will do a bit of research in my area to find out what employees are making on average in similar levels of work. I then pay my employees a little bit more.
While pay is certainly important, it is also important to create a work environment that is pleasant and flexible. These other factors are additional perks that will help your employees feel valued. It is important for you to have a win-win relationship with your employees. Otherwise the relationship will not last.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 302 – What to Pay Your Employees