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What Is Fair? Supervisor vs. Employee Pay Grades

In my time in the workforce, I’ve always been curious to know more about what weighs on my supervisors from day to day. Such things as scope of supervisor responsibilities, every day demands, and supervisory skills required for them do their job. Sometimes I’ve wanted to know this information so that I can better support my supervisors. Other times, I’ve been in the mind frame that, “Heck, I could do their job.” And it comes down to, “Well, how much money do they make?”

Do Supervisors Really Earn Their Higher Salaries?

A common misconception is that the higher up you climb, the more you make and the less you do. Many ground level employees suspect this and it can hurt their productivity. It may even cause some skepticism about the supervisor themselves.

A common example of this situation is a construction site where the average worker has a specific skill that entails heavy labor, say riveting. These workers tend to look with skepticism on a recent college graduate who enters into the organization as a supervisor because of his education. The subordinate(s) may wonder why someone would immediately receive more compensation who has just entered the organization versus a skilled riveter that has been with the same company for years.

I’ve Been That Higher Paid Supervisor

This judgment was something I was “privileged” to experience entering the Army. After completing college and receiving my commission as a 2nd Lieutenant, I entered the Army and immediately outranked soldiers that had boot laces that had served more years than me. Because of the way pay grades in the military are set-up, upon entering, I (O-1) was making more per month then a Sergeant (E-5) with 12 years of experience. What made this more confusing was that the Sergeant obviously knew more about the military than me. However, all of that aside, I was the Sergeant’s superior officer. (Military Pay Chart)

How Can the Supervisor Pay Grade Be Determined?

Coming back to the question at hand, what elements control how much more a supervisor should get over a subordinate or group of subordinates? The simple answer is responsibility. A supervisor’s pay grade, in comparison to the team they lead, should be determined in accordance not only with the traditional compensation measurements, e.g. skills, education, experience, etc., but also for their contribution as someone who coordinates a team.

Most human resources professionals would agree that organizations, when possible, should establish a pay structure with carefully determined steps within the pay grade. Most organizations, including the military, have established pay grade structures that dictate pay increases and differentials based on time in position, and level of position. This is ideal in that these pay grade charts are usually designed to prevent overcompensation of employees and supervisors alike.

For those organizations that do not have a pre-established pay grade chart, there is a method for determining the compensation of the supervisors and their teams. The base pay of a supervisor should be based on their responsibility and how much impact they and their team have on the overall organization. For example, in a company such as Microsoft, a supervisor and his/her team of computer programmers should likely make more on an individual basis over the team that works for the company cafeteria. In addition, keeping this in mind, the supervisors’ compensation should be closely linked to their team.

Be Careful to Not Overpay Your Supervisors

Leaving the theory and getting to the answers, should a supervisor make more then anyone in their team? At face value, yes, excluding situations where a mid level manager may have operational control of a consultant’s or specialist’s, i.e. doctors, specialized engineers, etc.

Are supervisors sometimes overcompensated in comparison to their teams? Absolutely. If a team of 10 computer programmers each make $30k per year, it wouldn’t make sense for their supervisor to make $250k per year. Without even knowing the supervisors KSA’s and scope of responsibility, at face value, it doesn’t seem fluid to expect a supervisor to make that much.

Human resource professionals, when examining pay grades as they apply to supervisors, should absolutely take into consideration the pay that the subordinates receive. If the supervisor, based alone on their KSA, commands a heavy difference in compensation, the role itself should be reconsidered and possibly reassigned a new pay grade.

Additionally, non-monetary benefits, such as stock options and other perks, should be considered in the supervisors’ compensation plan. A supervisor may even make the same as his/her most highly compensated subordinate, but with the inclusion of additional benefits. This approach may be perceived by subordinates as being more fair than a flat increase in pay alone.

Supervisor Pay Must Be Reasonable and Suit Their Situation

Bottom line, there is no equation that can be used across organizations to decide what is the acceptable pay difference between subordinate and supervisor. Pay grades for organizations, ideally, should be built from the ground up. If workers know and do x, their supervisor should know and do x+1, with +1 being supervision and coordination of x.

Another important recommendation is that any employee’s annual compensation should not be shared with other employees. This control of information prevents feelings of discouragement should other employees find out what their peers are making. However, that being said, all compensation plans should be treated as though they will be made privy to public scrutiny. Supervisor compensation should be commensurate with KSA’s as well as their supervisory responsibility of those individuals below them, and should not grossly exceed this.

Regards,

Donald Nickels

Do you have any salary range topics you would like to see covered here on Compensation Today? Write us a comptoday@payscale.com.

Related Reading:

• Find out the basics of building a pay grade structure from a comp pro.
• Are underpaying? Here are some tips on how to address the situation.

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