Jeffrey Pfeffer

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 <h4 class="ideainbrief-title">The Idea in Brief</h4>
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  <p>Southwest Airlines’ employees are the most loyal and productive in the industry—yet they earn <em>less</em> than other airlines’ staff.</p>
  <p>How does Southwest keep them? It knows that compensation is <em>not</em> the key to employee or corporate success. Rather, productivity and competitive advantage are.</p>
  <p>Many companies view pay as a powerful strategic lever—in particular, they believe that cutting or freezing wages boosts profitability. But this is a myth. In fact, firms can fall victim to as many as six myths about compensation. All of them spell danger in the form of lost productivity and ballooning costs, eroded team and individual performance, and dulling competitive edge.</p>
  <p>The Idea in Practice</p>
  <h2>Six Myths About Pay</h2>
  <p>Confused by pay myths? This table clarifies why pay doesn’t necessarily work the way we think it does.</p>
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</article-ideainbrief><p>Consider two groups <em>of steel minimills. One group pays an average hourly wage of <span class="bodysmallcaps">$</span>18.07. The second pays an average of <span class="bodysmallcaps">$</span>21.52 an hour. Assuming that other direct-employment costs, such as benefits, are the same for the two groups, which group has the higher labor costs?</em><span class="contextbreak">• • • • </span></p>

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Six Dangerous Myths About Pay

Many managers have bought into expensive fictions about compensation. Have you?

Six Dangerous Myths About Pay

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