As inflation continues (over 7% in the US, higher in Europe) and wages continue to lag (approximately 5.1% last quarter), we all wind up with pay equity issues in our company. New research from the Fed shows that employees who change jobs can expect as much as 3% higher pay than those who stay in one place. And this, as you may imagine, creates pay inequities everywhere.
How do we handle this problem? Well next month we will be introducing new research on Pay Equity for JBA members, so let us give you some insights.
First, our research now shows that Pay Equity is more important to employees than Level of Pay. In other words, if you're considering a "pay increase" to reduce attrition or improve employee experience, think first about a big "pay equity" adjustment.
Not only will this make many employees feel rewarded and appreciated by your leadership, it also helps with your Diversity and Inclusion mission, your focus on belonging, and your company's focus on ethics and internal citizenship.
Second, pay equity is not as simple as you think. Of course you can look at Male vs. Female workers and try to equalize pay by role, level, and tenure. But this kind of program forces other good decisions as well. How much will we adjust pay for seniority, span of control, or cost of living? Will we pay more for high performers on an annual basis, and if so how do we prevent runaway pay differentials over time? What value will we place on collaboration and teamwork vs. individual performance? And how will we reward people with deep, hard-to-find skills vs. others who are more easy to replace?
These conversations are essential in an economy like the one we have today. Employee Engagement is at a ten year low and many studies now show that pay, once a hygiene factor, has risen to one of the biggest issues on workers's minds.
Put this topic on your agenda for the year ahead, and stay tuned for much more in the Academy as we introduce this new research soon.
PS. To learn more and attend upcoming members-only events, join the Josh Bersin Academy today.