No pay structure may cause real pain

I was recently at a client and we discussed the importance of having a proper pay structure in place. The director explained that in today’s job market, they do not necessitate having one in place as they are constantly scrambling to pay more to entice prospective employees and/or retain their people.

In today’s current situation, the company has no negotiating space, it either accepts to pay what is being asked for by the candidate or the employer risks losing prospective employees to competition. And finding a replacement is too time-consuming.

Companies have also come to a point where job titles are being inflated to appease the needs of the candidate. No real thought is given when deciding on job titles – the impact this can have on the overall organisation structure and the rest of the employees.  If a candidate requests a ‘Manager’ or ‘Head’ or ‘Director’ job title, then so be it!

Many companies are facing these challenges and, the way I see it, we are not thinking of the impact this is having on the business (let alone the economy). We are not anticipating the medium to long term impact. Growing businesses need to take into consideration long-term budgeting, reputation, retention, competition, performance and equally important, equity in pay.

All of this is going to ache in the future.

Have we considered…

  • …what will happen when the business reaches a mature stage and it can no longer afford this “laissez-faire” approach;
  • …how the employee who has a sassy job title will react when told he needs to take a step back;
  • …what reactions the company could possibly face when the justly paid employees realises that their co-workers are being paid more for the same duties or responsibilities;
  • …how the budget will be affected when under-paid employess will request upward adjustments to their salaries to bring about a level playing-field;
  • …how the company will be impacted when you cannot accede to the pay rise requests of your over-paid employees?

Don’t take the easy route and don’t let it get too late before you start to look at pay issues. Paying whatever employees want is not going to resolve their other needs. Pay will not be at the top of their list forever; work/life balance, job meaning and appreciation are bound to take over.

A comprehensive pay structure provides the framework for fair, equal, consistent and transparent salaries. It provides a medium through which a company can communicate the pay opportunities available within the company. It, above all, also helps in controlling the growth of payroll expenses.

Dealing with pay issues should not be considered as any other HR project. It is a cardinal function within HR, through which, the total reward package, is constantly seen to and addressed so as to keep the best people and to attract the right candidates. All this without creating animosities or tensions within the company.  It is a continuous responsibility of HR to pay people appropriately for their responsibilities whilst also giving them meaning to their job.

About the author

Maria Bartolo Zahra is Managing Director and HR Advisor at SurgeAdvisory. She has over fifteen years of human resources and business advisory experience, with a specialisation in reward and compensation.