Is it Possible to Agree on What Fair Pay Is? Science-Based Felt Fair Compensation ? A 60 Year History

By Michelle Malay Carter on June 17, 2009 

Create a Felt Fair Compensation SystemThe following is part two of a three-part post on Felt Fair Compensation.??See Part 1 here.

This Felt Fair Pay series was authored by my colleague, Barry Deane of PeopleFit Australasia. My hat is off to him for addressing the topic so thoroughly and for backing it with historical data and research citations.

Over 60 Years of Research
Lord Wilfred Brown and Dr. Elliott Jaques investigated this matter (among other organisational and leadership matters) as part of an extensive piece of workplace-based research known as the Glacier Project (UK 1948 to circa 1976). The following quotation is instructive, especially since it was written over 30 years ago:

?If the problem of differential payment is as critical an issue as experience would suggest, what then is to be done? A possible lead has been provided by the curious finding which first suggested that level of work might be measurable in terms of time-span of discretion; namely, that for each time-span level there is a corresponding level of pay felt by employed persons to be fair.

In work over a period of some twenty years in the Glacier Metal Company a correlation of about 0.90 has been found between time-span and felt-fair pay, for all types of work ? manual, technical, managerial, research, sales, finance, etc. In a study at the headquarters of Honeywell Corporation in Minneapolis, U.S.A., Richardson found a correlation of 0.86 for managerial and staff personnel in manufacturing, sales and research. He further found by means of regression analysis that time-span explained some 75% of the variation in felt-fair pay, as compared with actual pay (10%), and 28 other variables, none of which accounted for more than 1.5% of the variation. There is further support for the validity and reliability of these studies in work in Holland and in Canada, and in less systemic and unpublished testing in a number of other countries besides.?

-Elliott Jaques (1976, ?77, ?81, ?83) A General Theory of Bureaucracy, Heinemann UK

The ?time-span levels? referred to above concerns the recognition/discovery of levels of complexity of work, a necessary construct informing the layering of organisations i.e. what is the nature of the work to be done by the organisation and how many levels of management should there be to achieve the work.

The Glacier project is well documented.? Felt-fair pay is also well documented.

Requisite Organization – The Meta Model
The whole body of work of which felt-fair pay is a component is now known as Requisite Organization (RO). This body of work was introduced into Australia late in the 1970s by Sir Roderick Carnegie, then CEO of CRA Ltd (now Rio Tinto).

Requisite Organization Library
There is a large amount of academic and other professional documentation of the CRA experience (and others) and RO, much of which is listed in an extensive bibliography published by the Global Organization Design Society, a not-for-profit organisation based in Toronto Canada. You can download this bibliography free from GO?s website.

More tomorrow…

Stop by tomorrow for the third post in this guest series on Requisite Felt Fair Compensation by Barry Deane.

Filed Under Corporate Values, Executive Leadership, Felt Fair Compensation, Requisite Organization, Strategy, Talent Management, Work Levels

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