An Admirable Goal: The Wrong Method

Consider this: In the San Francisco area, a nurse with a bachelor’s degree can hope to start out with a salary of $104,000. The salary for a nursing professor with a Ph.D. at University of California San Francisco starts at about $60,000.

This goes a long way toward explaining why nursing schools turned away 42,000 qualified applications in 2006-2007—even as U.S. hospitals scramble to find nurses.

We need more nurses. Let's raise the salary. Hey, we still don't have enough nurses! We're paying a great salary, why don't we have enough nurses?

This is the discussion going on in recruiting meetings at hospitals in San Francisco. (I have no knowledge of salaries in other places, as I am not a nurse and I do not work in this particular field.)

The solution, it appears, is to raise, not the salaries of the nurses, but the salaries of the instructors. And hire more of them. And train more nurses--42,000 people wanted to be nurses and were turned away. And we still don't have enough nurses.

This is a problem that faces many areas. We need more people to do X, but there is a limited supply of people available to do X. So, we pay more money, but without people to teach others, there is still a limited supply. Business's (or hospital's) hands are tied. Right?

I'm not quite sure how this can apply to nurses--haven't thought it completely through--but here's an interesting solution: The Saint John Fisher Wegmans School of Pharmacy

In January 2005, the College announced that Robert B. Wegman, Chairman of Wegmans Food Markets, Inc., donated $5 million to be used for the creation of the Wegmans School of Pharmacy. The School, which opened in the Fall of 2006 with an inaugural class of 55 students, is the first of its kind in Monroe County and the fifth in the State of New York.

For two years, Fisher explored the viability of establishing a School of Pharmacy to help alleviate the projected shortfall of qualified pharmacists for the communities and hospitals in Central and Western New York.

Oh, how nice, you say. Mr. Wegman was being noble and good in getting more pharmacists into the community. Right? Noble. Good. Not at all self interested. Right? Well, wrong.

Note he is chairman of Wegmans Food Markets, inc. (Or rather, he was. He died a while ago. His son, Danny, is now the head of the business.) What does this grocery store chain happen to have inside it? Drum roll please...Pharmacies! And where are the bulk of it's stores located? Central and Western New York!

Rather than fret about the lack of pharmacists, this company did something about it. Now, granted, it would have been cheaper to just continue to pay pharmacists more and more money and try to steal them from competitors. But, companies like to do charitable things, so Mr. Wegman directed his money in a way that helped the community and his business.

Talk about thinking outside of the box.

Plus, I'm sure he got a nice tax deduction.

(hat tip: Kevin, MD)

Your Salary is Not Arbitrary and Capricious

My previous post on salary history generated several comments, two of which are below (both by anonymous posters, by the way).

What planet do you live on?? In a perfect world, people's salaries increase with responsibility. In the REAL world, however, people's salaries can stay the same or increase only slightly because a company's revenues are down the overall budget is tight. Salary history is an inaccurate way to assess the job applicant, because it may reflects corporate situations that the applicant had absolutely no control over.

and

I'd love to see research that connects salary to anything meaningful. It seems to be a poor element to base anything on, despite how convenient it might be to the process.

To address the planet I live on, it's called earth and despite what happens when Ms. Frizzle and the gang go into outer space, it really is the only inhabitable planet in our solar system.

Glad we've cleared that little bit of information up. Now, let's talk about salary. Our second anonymous friend wanted to see salary connected to anything meaningful. I am now going to do that (albeit without putting on a lab coat to be more scientific).

Everyone listen up: Your salary/benefits package is how much your company values you.

That's it. That is what your salary reflects. If they value you more, they'll pay you more. If they value you less, they'll pay you less.

Now, please note that I did not say, "your salary is how much your boss values you." Your boss and your company may have very different value systems. Ultimately, your company wins. Now, granted that value also includes your benefits, such as health insurance, vacation, flex time, etc. But, for the sake of simplicity, we'll use the term salary to encompass all that good stuff.

McDonalds values their CEO more than they value their burger flippers. How do I know this? Their salaries differ by a little bit. As they should. Just about anyone is capable of making hamburgers, but very few people are capable of running a company. If a company loses a good CEO they are in big trouble, as they are hard to replace. But they expect turnover amongst restaurant cooks to be high.

If a company's revenues are down the pool of money for increases will go down as well. Then it becomes even more apparent who is valued and who is not. Trust me when I say there is always SOMETHING available for the super-valued employee. (Extra vacation, flexible schedule, telecommuting--something if financial conditions don't allow for more hard cash.)

Now, sometimes (and I bet our first anonymous poster would argue that the word should be frequently, but I don't think so) the value the company places on you is dead wrong. Slackers get big raises and someone who is actually bringing in money to the company gets nothing but a pat on the back.

This, I think, is a problem HR should help solve. Having strong performance rating criteria (Like the SMART method discussed below) helps to get what should be valued actually valued.

So, if you came to me and said, "I didn't get an increase for 3 years because the company was having a down turn," I would ask these follow up questions:

1. Why did you stay with a company that was doing so poorly you didn't even get raises?
2. What did your company do to show that it valued you?
3. How did you attempt to turn the company around? How successful were you?

Good answers? The company gave me additional stock. With the stock being so low, there was nowhere to go but up. I believed that the company would eventually pull itself out of the slump and my stock would be of great value.

Bad answers? Ummm, I don't know, I thought it would get better.

Now, if you truly believe you are underpaid, ask your boss to re-evaluate your position. You need to point out why the company should value you more than they do.

Now, the world is not fair. Some things are even wrong. Everyone argues that teachers should make more money than movie stars, but the reality is? As long as there are people willing to take the teaching jobs at the salaries being offered that is precisely what they are worth. (Ironically, the unions keep schools from being able to place appropriate values on teachers. Therefore, those that could do better elsewhere leave, and those who couldn't, stay. It's a perverse system that encourages bad performance.)

So, if you didn't get a raise? It means that the company you work for values something else more than they value you. It may be shareholders. It may be paying the electric bill. It may be your co-worker.

Be someone who brings values and (in a relatively free market economy) your value will be worth dollars. If not at your current company, leave. Hit the job market. You'll find out pretty quickly what you are worth.