Compensation Dissatisfaction

A manufacturer that does not attempt to provide the highest wages in its industry or region. The company benchmarks their compensation at the 50th percentile for its region and industry. And seeks to  provide value to its employees in a number of other ways which they believe hold equal or greater value to the gap between their compensation levels and top paying companies. However, there are aspects of the compensation practices that cause frustration and negative feelings across the organization.

Assessment Insights

Employee concerns generally did not focus on simply increasing the compensation in line with other employers. Most employee frustrations revolved around the internal equity of pay on a number of other fronts, including: new hires compared to more experienced and knowledgeable employees; perceived level of effort; role expectations; differences in responsibility levels; and offsetting inflation. These perceived inconsistencies were damaging the morale of the experienced employees and causing new hires to walk into an unfriendly environment. Both of which had begun to drive turnover.

Applied methods

To address the complexities highlighted by these widespread employee concerns on compensation disparities, our approach focused on a comprehensive analysis across multiple dimensions affecting internal equity. We engaged experienced front-line employee representatives from diverse areas, leveraging their seasoned insights into role differentiations. A pivotal outcome was the development of a structured framework delineating “common sense” role tiers, but allowing for growth within those tiers based on the diverse individual experience levels and cross training. This new strata was contrasted with current compensation structures, and necessary adjustments were made for existing employees based on their placement within the newly defined framework.

Crucially, we established a deliberate compensation gap between new hires and our most experienced staff, aligning with the organization’s objectives and acknowledging the value attributed to varied levels of expertise and contribution. This approach served not merely to rectify perceived inconsistencies, but to act as a long-term retention tool, thereby enhancing employee morale and fostering a more welcoming environment for new team members while mitigating turnover concerns in highly knowledgeable and cross-trained employees.