2009 and 2010: Years of Base (Guaranteed) Pay

The crux of the employment relationship is that one party, the employee places their labour at the disposal of another, the employer, in exchange for remuneration.  The employment relationship starts and dare I say, ends with base (guaranteed) pay.

While an organisation may use a half a dozen incentive plans, provide triple stacked recognition schemes, offer a myriad of training & development opportunities and shower employee wellness programmes, all of these components, come after base pay, not before. 

Expressed differently, when you accept employment with an organisation, you are accepting their base (guaranteed) pay and thereafter negotiating your way through the other components.

2009 was the year of base pay – the recession has led to many organisations looking for cost cutting opportunities and headcount/base pay is at the top of the list. There has been a strike-a-week, with doctors, municipal workers, bus drivers and miners rebelling against the guaranteed pay offers of their employers.

Base (guaranteed) pay is financially charged and emotionally driven for employers and employees alike. When staff express dissatisfaction over their pay, it is likely they are talking about base (guaranteed) pay and not the sales compensation plan or share options. Remuneration structures, internal equity and external competitiveness revolve around base (guaranteed) pay – how to configure it, how to compare it and how to manage it.

This year, I expect that Base Pay will continue to be a source of friction between employers, unions & employees.

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