Balancing Merit and Fairness
In my previous blog, I talked about the current trend of employers offering candidates a more enticing and/or wider range of benefits and perks in order to attract and retain top talent. One of the potential pitfalls of that practice is that current, hard-working, loyal employees may feel the new kid on the block is getting special treatment before they have even proven themselves. They may even perceive it as a signal that if they want better compensation or a promotion they had best look elsewhere. That’s bad for morale and productivity.
You can’t get around the fact that in a tight labor market competition is going to drive up salaries and benefits. However, don’t overlook the contributions of that employee you have relied on day in and day out. If you had to hire that person in today’s market, what would you have to pay? Don’t assume you will make it up to them when their annual review comes around. They may be long gone before then. Acknowledge their value and make some adjustment to their compensation, even if you have to spread it out over a couple of quarters.
It’s also important to be as transparent as possible. Even though they may not like it, most employees get that higher performers and those in positions of higher authority and responsibility earn more. They don’t necessarily expect to be compensated equally, but they do want to be compensated fairly. If they see their compensation is more or less in line with that of their peers and that the compensation of higher ups is more or less in line with the current market, they will be more willing to accept rewarding those who merit it.
It’s getting close to annual review time for many firms. If yours is one, we at DMC can assist you in reviewing your current compensation package, ensuring it is competitive with market standards, and advising you on appropriate levels of increases for the coming year. Contact us for a discreet, no-risk consultation.