What do you do when an employee informs you that they have just achieved an academic milestone: a college degree, an advanced degree, or a certification from a professional association? After offering congratulations, do you take them to lunch, perhaps tell them to take the next day off, or do you do more?
Do you somehow reward them for that accomplishment? Perhaps with a salary increase, or a promotion?
Many employees seem to expect that, when they achieve some academic credentials that come with a piece of paper suitable for framing, they should receive an increase in pay, a bump in title, if not an outright promotion. "I am more valuable to you now," they seem to imply.
However, if you don't need another MBA graduate, or a senior engineer, legal counsel or whatever, should you pay extra for one?
Some managers feel compelled to react with salary / title increases; they want to acknowledge the employee's personal achievement and avoid the risk of de-motivating good people. They especially don't want to lose someone who is ambitious and career-oriented. Such a loss might be perceived as a mark against their management capabilities.
But is raising the cost structure a good business decision, or a feel-good, I-want-you-to-like-me emotional knee-jerk reaction? Do managers have the right answer to the "why?" question?
If you already pay for educating your employees - through tuition reimbursement - should you be expected to follow up with more once the company-paid courses run through to completion? Chances are you don't require employees to remain with you for a defined period afterward, right? So technically they could use your money to prepare themselves to work somewhere else. Where is the fairness in that?
Have you asked yourself, what's the market value of an employee with a higher education or certification level? Compensation surveys don't differentiate on the basis of whether employees have a particular degree or other credentials. In some cases educational requirements are mandated before one can assume certain roles (Engineer, Attorney, Nurse, etc.). At the end of the day what the market highlights is the common pay rate for experience, knowing the job and being competent at performing it.
Does the market say a premium should be paid? No.
Perhaps a promotion then? But job grades are not typically influenced by formal education levels either, and no credible job evaluation system scores on that basis - only equivalencies. Job evaluators recognize that, while what the employee knows how to do (job knowledge) is critical, how that knowledge was attained is less important. Life experiences do count, trumping the piece of paper. Book learning is not an evaluation factor.
If ultimately the newly certified or graduated employee returns to the same job function, then what does the company receive for granting extra money? If the job role remains the same, where's the ROI?
If you use any sort of position control process, you should know how many heads of each job the organization needs to fulfill its mission. When you create more heads your costs will increase, but likely not your effectiveness. So why would you pay for an extra MBA, senior engineer or legal counsel - when you don't need them?
You can acknowledge an employee's personal achievement without increasing your fixed costs and possibly creating disruptive internal equity concerns among other employees. Remember that fair and balanced treatment is a perceived state-of-play, and the employees are always watching.
So offer your congratulations, take the newly minted certificate holder out to lunch, and give them a day off. Tell them that they're now eligible for advancement when a higher position come available - but have a care before raising your fixed labor costs without a corresponding increase in ROI.
They may be more valuable to you - but that is for tomorrow.
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats.
Image: Creative Commons photo by Rich Moffitt