Employers typically benchmark their jobs to determine if they are competitively paying their employees every year or every other year.
Most of the time my team and I find that 70% or more of the employees are paid within the market-based salary range.
But I really get to understand the leadership capabilities of HR and the executive team when it comes to their reaction to seeing the employees who are under or over paid.
Sometimes, there is an immediate agreement to provide increases for those who are underpaid. There is often concern expressed about how this happened and how they can prevent it from happening in the future.
And if the company is struggling to have the budget to provide immediate pay increases, a plan is developed to include it in the budget as soon as possible.
When the list of employees who are overpaid is shown, there are different reactions:
1) “Are you sure you chose the right match from the external market?” (Yes, we double checked and are comfortable with the match. Would you like to review it?)
2) “Are you recommending we reduce their salary?” (No.)
3) “This is going to be a difficult conversation. What do you suggest we say to these employees?” (See my post on 28 June 2024.)
And often, I find that the uncomfortable conversation doesn’t happen with the overpaid employees. Instead, HR advises senior leaders on how best to have the conversation but during the next merit planning cycle, the employees continue to receive the same standard 3% – 4 % base pay increase.
None of us like to have uncomfortable conversations, but they are the foundation of success in life and at work. You aren’t a great manager or leader until you can have uncomfortable conversations that lead to change.
If you prioritize compeititve, equitable, and fair pay, at some point uncomfortable conversations will need to happen.
#compensation #hr #humanresources #rewards #leadership #marketpricing #payequity #paytransparency #fairpay