What to Do When New
Workers Out- Earn Current Staff
In the current job market companies have to pay a premium in
order to get their top candidates because competing companies will offer higher
salaries. Top candidates will most likely have multiple offers, so they will
demand higher salaries. But what happens when new employees’ salary exceed the
salary of an employee who has been working there longer? If employees know about this, and the topic is
left unaddressed, it can lead to a disharmony within an organization.
Identify the Problem
When offering higher wages to newly hired employees compared
to long-term employees in the same position is a form of pay compression. The
pay gap between starting salaries for newly hired talents’ and senior employees
has been shrinking. Before addressing this situation of pay compression, you
must understand what problem you are aiming to solve.
Stacey Carrol, a managing director of compensation and benefits
for Hawaiian Airlines in Honolulu gave some examples of possible issues.
– If a new employee is making more than his or her
manager that is not necessarily a problem. The boss may earn less because the
market value for a manager could be lower than is it for someone with a highly
specialized skill set.
– For new
hires with much-needed skills but less work experience, it may be appropriate
to start them higher in the position’s pay range rather than paying them at the
– If a situation with an employee or new hire is
unique, that person may require a compensation package that does not fit into
the existing job categories.
Make Adjustments as
When top talents are of high demand it leads to extremely
competitive labor market, which can expose stresses on the compensation
structure that needs to be addressed. If newly hired top talents are
consistently being paid higher salaries, the company may have to evaluate
whether the organization is using the right market data to evaluate pay levels,
or whether existing pay ranges are still appropriate given the organization’s
talent requirements. If certain issues are not addressed it can lead to
resentment from long-tenured employees which can reduce morale.
Draw on Managers
Issue regarding pay compression can be mitigated by
involving managers to help set pay levels for open positions, especially
because they have a better understanding of what skills are needed for the job.
Employers can be more confident that they are setting the correct pay levels
when applying a manager insight.
Meeting the Challenge
If a company needs a certain talent then they may have to
pay whatever price in order to recruit them, and if they don’t someone else
Dealing with pay compression’s can be difficult
to manage, and hiring top talent employees must be within reason. Converge HR
Solutions has trained HR professionals that can help your company determine the
compensation and pay structure for your employees. You can call us at 610-296-8550
or email us at firstname.lastname@example.org assistance.
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