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How do you correct salary compression?
Communicate: Perception is reality. Be transparent: Don't try to hide what employees make. Make a comparative within each salary grade by the employee's tenure in the position. Compare supervisors' salaries to their direct reports' salaries.
How does pay compression develop Why is it a problem?
Pay compression can cause problems for employers. For example, it can lead to turnover if employees feel they're being undervalued by not getting paid much more than new hires. Pay compression can also cause employees to lose motivation, even if they're not actively looking for a new job.
What does pay compression mean?
Pay compression is the situation that occurs when there is only a small difference in pay between employees regardless of their skills or experience. Pay compression is the result of the market-rate for a given job outpacing the increases historically given by the organization to high tenure employees.
How do you fix wage compression?
Communicate: Perception is reality. Be transparent: Don't try to hide what employees make. Make a comparative within each salary grade by the employee's tenure in the position. Compare supervisors' salaries to their direct reports' salaries.
Is salary compression legal?
There is another form of salary compression: when employees in lower-level jobs are paid almost as much as their colleagues in higher-level jobs, including managerial positions. Moreover, while salary compression is not illegal, it is often accompanied by pay inequities that could violate equal pay laws.
What is compression in the workplace?
Address Pay Compression or Risk Employee Flight. Pay compression occurs when new hires are paid the same as or more than current workers in the same position, or when the pay difference between employee levels shrinks so that higher-level workers feel that their pay advantage is no longer significant.
What is a salary compression adjustment?
Pay compression, also known as wage compression or salary compression, occurs when employees with the same skills and experience are paid differently. In highly skilled job families and departments with deep employee tenure, this can sometimes occur when employee salaries rise above those of low-level managers.
What does salary compression mean?
Pay compression is the situation that occurs when there is only a small difference in pay between employees regardless of their skills or experience. Pay compression is the result of the market-rate for a given job outpacing the increases historically given by the organization to high tenure employees.
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