I talked to a pay negotiation coaching client recently. It is obvious that his employer is focused on short-term compensation decisions and not long-term compensation strategy and impact.

The employer has more than 2,000 employees but no compensation expert on staff. There are HRBPs, HRGs, HR Directors/VPs, a HRIS person, and a Benefits person but no one with a Compensation title. (I looked up all the employer’s employees on LinkedIn that had HR related job titles.)

My coaching client knows he is paid less than other recent hires with less relevant work experience, less education, and that wage compression is happening. He and other employees share what they are earning with each other.

When other employees with similar concerns brought this to HR’s attention, they didn’t succeed in getting a response from HR that was positive.

Instead, they were told by HR that their pay couldn’t be changed right now.

(a) “We can review your pay during the next merit program.” (Yep. That means Q1 2024!)

(b) “There isn’t room in the budget to give you a base salary increase right now.” (My client is a high performer, on a high potential list, got a promotion in the last year, has performed the work of 2 people for more than a year, and has been given additional work responsibilities that are aligned to the largest revenue generating product of the company.)

(c) “Your pay is aligned to what we paid others at the time we hired you 2 years ago.” (Really, his exceptional performance, impact, and ability to perform the work of 2 people instead of 1 doesn’t make for an exceptional business case that supports an off cycle pay increase??)

Recommendation to the CHRO and CEO – A Long-Term Compensation Focused Solution:

(1) Hire a compensation expert – an employee or consultant. (Yes, I’m raising my hand as a consultant who can help you solve your pay related problems.)

(2) Buy them the salary survey data and a software tool (not Excel) to record their market pricing decisions.

(3) Have them design a competitive pay grade structure and incentives. Have them do an employee pay analysis focused on equity and competitive pay.

(4) Give them the budget to fix the pay inequities and pay that is not competitive.

(5) Allocate budget annually to deliver competitive merit increases and out of cycle increases (external market and internal equity based).

(6) Oh, and don’t forget to ensure that the communications you deliver to employees about pay decisions consider their interests and needs.

Goal: Develop a consistent reciprocal relationship where the employer gets the employees’ time, talent, efforts and results AND the employee gets the rewards they value from the employer.

#rewards #compensation #hr #humanresources #payequity #paytransparency #wagecompression