When paying someone for work a value-exchange is needed. Challenging decisions must be properly rewarded but coupled with appropriate accountability.
So the reference to “occupational levels” in schedule EEA9 to the Employment Equity Act (EEA) can be misleading. It suggests that employees are rewarded for simply occupying a position irrespective of whether or not they add any real value to the enterprise. It is outputs not inputs that are essential in determining the value that is added and rewarded. Generally speaking there are three factors that determine the nature and extent of the value generated by employees:
- Employees performing routine functions generate the least amount of value, despite being important. But those functions can be replaced by machines so there is a limit to what will be paid for that type of work. In addition those services can also be outsourced, usually at lower cost.
- Employees who influence others either through instructions or knowledge and experience (sapiential authority) provide value that deserves a greater reward. It is also more difficult to replace them with machines or to outsource them.
- The most challenging decisions involve creativity. Decision-makers are in the top level or band and are paid to be extremely creative and also able to influence large numbers of people. Their jobs are virtually impossible to outsource. Nor can machines be expected take those kind of decisions.
In 1981 the late Tom Paterson wrote a book “Pay: For Making Decisions” in which he stressed all these points. The time has come to study what he explained in his book. Paterson Plans are referred to in schedule EEA9 but it is a far cry from what Tom Paterson referred to in his book.
- Challenge is all too easily ducked by the modern worker: Tim Harford Financial Times 21 July 2017