The real reason big organizations pay better

In general, big multinational organizations pay better than medium or small(er) size organizations. They often pay a high base salary compared to the market. They certainly rank on top when all the secondary (and even tertiary) benefits are taken into account: bonuses, company cars, pension contributions and pension plan, healthcare contributions, employer discounts, gym subscriptions or gym onsite, incentives, end-of-year gifts and so on.

I used to think it had to do with the following reasons:

  • Big organizations have big, stable profits and can therefore simply afford more.
  • Big organizations want to have the most promising talent or the best specialists out there, so they make sure they have an attractive offer for the people they consider the best.
  • By paying slightly (or a lot) above market pay, organizations ensure stability through low attrition. The so-called golden cage, or golden handcuffs. Once you have a high salary with lots of perks, you won’t easily change jobs once you discover no one can offer you a similar package.

But after twenty years in HR, after having experience both in big multinationals (profit and non-profit) as in mid-size to small companies, I began to wonder. Although all of the above may be true, I consider the big pay of big organizations to be hardship pay.

Think about it: in bigger organizations you have to deal with more bureaucracy and standardization. Because of that:

  1. employees have to spent more time on unnecessary administrative tasks, which means they have to do more work they don’t like or that underutilizes their skills;
  2. employees spent a big amount of their time on coordination: in many management and staff roles an extraordinarily amount of energy has to be spent on appeasing other departments, staff, corporate, peers in other countries, and so on – leaving less time to execute their actual task. This leads to several well-known factors of stress: feeling unable to adequately cope with the demand of the job, having less autonomy, and not exactly knowing what their own role and responsibilities are;
  3. employees have to adjust more to the standard, have less opportunity to give input, and have less degrees of freedom in executing their work. There have been many experiments in the field of psychology proving that not having control over a situation leads to learned helplessness, which causes depression and deteriorating health;
  4. employees spent an extraordinary amount of time to navigate mixed messages, caused by an organization that lost part of its transparency with every growth spurt, has multiple organizational cultures coexisting and has many political power fights going on at the same time. This again causes confusion about role and responsibilities and frustrations in general.

Doing work you don’t like, underutilization of your skills, feeling you can’t cope with the demands of your job, learned helplessness, confusion about your role and responsibilities: all scientifically proven factors that increase work stress. And as stress is the number one work related health risk, people (often unconsciously) feel the need to be compensated for enduring it. Deep down they know they are sacrificing a lot, and want compensation (often in the form of money) for endangering their physical and mental health.

But I’m curious about you. How do you feel about your pay? And if you’re unhappy about it, what is the reason? Would you rather have a lower benefits package and be happy with your job, or do you feel a higher package is worth the health risks?