By Jean Roque, President at Trüpp
Employee pay can be an extremely challenging topic for business leaders, especially for small to mid-sized organizations where compensation decisions may be more ad hoc. In today’s market, leaders often find themselves making hasty salary decisions to attract or retain top employees while struggling to keep pay within budget and fair across the employee population. So what’s a savvy employer to do when employees raise questions about their pay? Let’s take some of these questions head-on!
What to say when Mary googles her job title and discovers she is underpaid by $20k.
“Let’s talk.” Employees need to realize, for example, that a “manager” at one company may be a “director” at another. All too often, companies hand out impressive job titles that may exceed the scope of job duties compared to the overall market. Employees should also be educated as to how pay decisions are influenced by internal equity as well as the organization’s compensation philosophy, size, location, and industry.
What to say when Joe says he has been offered a job elsewhere for higher pay.
“Congratulations!” Assuming you have been making sound pay decisions based on a fair and equitable compensation plan or salary structure, now is not the time to upset the apple cart. Raising someone’s pay in response to a job offer often turns out to be a disappointment. The risks? Joe already has one foot out the door and keeps looking despite the raise. Joe’s peers are crafty and take a page out of Joe’s book.
What to say when Mary realizes she is making less than her peers.
“Let me look into that.” Internal equity (making sure employees are paid fairly in comparison to other employees performing similar work) is even more important to employees than knowing they are paid fairly compared to employees at other organizations. To determine if Mary is paid fairly, first assess where her pay is placed within her job’s salary range—especially concerning compensable factors such as her qualifications, tenure, and job performance. Then, look at other employees performing similar work to ensure any pay differences between employees can be justified based on those compensable factors. Lastly, educate Mary on how pay for her position is determined and what she can do to influence her rate of pay.
What to say when your new hire demands a higher pay than Joe.
“Have you met our office dog?” When an applicant relates to your employer brand and company culture, they will usually be less concerned about salary. Promoting the non-monetary aspects of your organization that make it attractive to new applicants will increase your organization’s ability to attract and retain employees who align with and are motivated to contribute to the success of your organization.
The bottom line.
These conversations are challenging at best if you don’t have a well thought out compensation strategy in place. Backed by a robust compensation strategy, you will know exactly where your employees falls within your company’s pay structure and where they are headed and will be able to address these concerns confidently. This level of objectivity enables you to be transparent with your employees—defusing emotionally-charged conversations while contributing to a more engaged and thriving workforce.