Thursday, July 12, 2007

Rob posted the following comment which I wanted to address:

rcimperman: Hi Nicole. This posting reminded me of an interesting topic you may want to address. At a previous company (that you have had some dealings with), there was a trend among a subset of employees from a shared country of origin to share their salary information with each other. As a manager, it caused us difficulty to no end because anytime members of that group got different raises or salary levels, as justified as they may have been, management would hear about the perceived disparity in startling detail. Have you encountered this and what is your (or your readers') thoughts?

The inevitable reality for employers is that whether an employee is motivated by good ole' got to know gossip or wanting to know they are paid as much or more than the people they work with, employees are going to discuss salary. The sad reality is that while this is very troublesome for the employers it is typically more detrimental to the employees.

Lets examine compensation first, companies offer employees a wage that is based on a number of factors, but most commonly skills, years of experience, expertise, market demand for those skills and company compensation structure (whether formal or very informal). This is the HR definition for the most part.

The reality of compensation is that very few companies adhere to a formal linear structure where the employee's compensation is directly in correlation with experience and credentials. Most company’s structure compensation on the employees anticipated impact and VALUE to the organization. Everyone's value maybe measured on a subjective scale. And if a company is using a rigid methodology their top performers generally leave because they aren't rewarded for their stellar work but instead are chained by their skills.

So why are the discussions detrimental to employees? First, the reasons for discussing compensation are generally toxic. (i.e. using their compensation as a social status measure. I want to ensure I am better than you and being paid more than you validates this point. I am suspicious my employer doesn't value me and I want to find out by seeing what they pay someone else). Second, you can't build a good business case on your increased value to the organization based on "he is getting more than me so you should pay me the same." I can’t tell you how many candidates want me to find them a job with a certain compensation because of “what their friends are getting paid,” which inherently contains absolutely zero business sense. Finally, your friends, colleagues and family are not qualified to give much advice on your value to the company, your compensation and whether it is competitive in the market. When you take advice from these sources (as well intentioned as it is) you build a flawed perception that isn't based in business logic.

The bottom line is if you are good at what you do and add considerable value to your company it is fair to guess you are well rewarded (remember not all rewards are compensation based). If you feel like your employer has fallen behind in this area and is not rewarding you in an equitable way use your BUSINESS sense to fix the problem. Complaining, consulting or discussing your salary at the water cooler is something high school kids do not professionals. You have a relationship with your employer and it is a betrayal of that relationship to discuss your problem with your colleagues before you address it with them. Seek out a good recruiter or business mentor to work with you on a strategy of getting what you are worth where you are.

There are my two cents...okay maybe three! What do you guys think?

Views: 85

Comment by James Guske on July 24, 2007 at 6:42pm
Hello Nicole,
Please give us your honest reaction to the question: What purpose does the salary disparity serve in the business organization?
Comment by Nicole Hardin on July 26, 2007 at 12:16pm
Even if there are two people who have the same job description no two people contribute to the company in the same way. People are and should be rewarded by their value to the organization. This is typically why salary disparities exist. The purpose they serve is to create the reward to have a greater impact, to do more, to create more value. This is how the corporate world makes money and creates value for their customers. Why wouldn't each of us as a part of that business want to achieve and be rewarded in the same way.

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