Pay and Performance, or What Withholding an Increase Can Do

123RF Stock Photo

More pay might not change behavior, but withholding an increase sometimes will.

“That’s the last straw! I’m going to fire him,” said the irate mayor as he hung up the phone after mollifying a furious resident.

His city’s veteran long-service street superintendent had once again rudely blown off another citizen with a legitimate gripe. The mayor was tired of cleaning up such messes and being forced to calm down upset voters antagonized by the impolite official.

Withholding a raise for employee misbehavior

“Let’s try an experiment, first,” I responded.

And I added:

Deny him all the general competitive adjustments we have agreed should go to other city employees. Naturally, his performance rating remains below the level that deserves any merit increase, but you should inform him that his pay is actually being frozen due to his misbehavior. With the increased tax income from the new Sam’s Club, virtually every other city employee is about to receive a series of pay adjustments and increases that could reach 30 percent. But not him. Being polite and helpful to citizens is part of his job and you need to remind him of that.”

As the compensation consultant to the city, it was my job to advise the mayor and city council of useful implementation methods. This was one such opportunity, where denying an offender a benefit being extended to others might have more impact than any amount of counseling, disciplinary measures or remedial training.

The mayor was highly skeptical, because no amount of talk over the years had changed the stubborn insolence and truculent chip-on-the-shoulder attitude of the tough street superintendent. But the city was paying me good money for expert advice, so the mayor reluctantly accepted my recommendation and delivered the message as I suggested.

A few months later, the mayor bought me a nice dinner where he explained, with a dazed expression, that the offender had dramatically changed his stripes.

Finally, some meaningful consequences

All of a sudden, the obnoxious street superintendent was being meek as a lamb to people with troublesome complaints. His new friendly and cooperative attitude was winning over angry citizens to the point that they were actually contacting the mayor and council members with praise for his helpfulness.

Note that the manager was not changing any operational methods but was merely drastically altering his personal communications style with the public.

Article Continues Below

“What did he say was behind his change?” I asked. The mayor blinked rapidly in embarrassment. “He said this was the first time there was a real meaningful consequence for his misbehavior,” he replied.

In the past, no reprimand or rebuke from his superiors really had any effect on him. Verbal and written warnings just rolled off his thick skin. But losing the big income boost everyone else was getting really hurt.

It affected his family. That struck home. It suddenly became important to him to remedy his well-understood deficiency. Now it was finally worth the trouble to make nice.

What is the lesson here?

No incentive was applied. One was denied. The key compensation intervention here was a negative rather than a positive one.

There is a lesson here for all of us. What is your take from this tale?

This was originally published at the Compensation Café blog, where you can find a daily dose of caffeinated conversation on everything compensation.

E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), and will express his opinion on almost anything. Contact him at ej.brennan@erieri.com.

Topics