Why Do You Pay What You Pay?

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Why Do You Pay What You Pay?

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The new pay transparency laws were designed to help job applicants and narrow pay disparities. But they've also had an unintended consequence: Employees now have far more information about what other people are making—and that can raise some uncomfortable questions for business owners. How do you decide what a job is worth? How much should you pay compared to the market? How much should employees know about what their co-workers earn? This week, Jay Goltz, Jennifer Kerhin, and Ted Wolf compare notes on compensation.

Jennifer explains how her philosophy has evolved from offering below-market pay and maximum flexibility to providing competitive salaries, benefits, and career paths. Jay discusses the challenges of determining what employees are truly worth—and why a bad bonus plan can be worse than no bonus plan at all. Ted makes the case for paying above market—not because he wants superstars, but because he believes well-paid employees become more committed, more flexible, and ultimately, more productive.

Along the way, they discuss paying for health insurance, contractors versus employees, hiring mistakes, and the sometimes overlooked reality that while employees crave stability, business owners are the ones taking the financial risks. The result is a candid conversation about one of the hardest questions business owners face: What is the right way to compensate the people who help build your company? Plus: How concerned would you be if your employees found out how much money you, as the owner, are taking out of the business?

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