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is the second in a series of five short articles addressing some of the
more common compensation issues facing HR professionals today. Not really
a lot of new issues or resolutions, but maybe the timing is just
right for solving one of your headaches.
The second of the Five Biggest Mistakes is
Wage Compression - the beast within.
Wage compression usually occurs when an organization brings in a new
hire at a rate higher than one or more current employees in that job.
This action has the potential to create mistrust, poor morale, turnover,
How to Avoid It
Here's a simple way to avoid this type of wage compression. When a
vacancy occurs, establish a hiring range: not less than the minimum of
the range and not more than the lowest paid competent performer in that
job. If you cannot fill the job without going outside the range, make
plans to increase the pay of the current employee(s) in the job.
How to Fix It
There is only one way to fix current compression issues: put money on
the table. No amount of explanation, policies, or meetings will fix it.
Depending on the amount of money required, you may have to fix the
issues over a period of time - just don't take too long.
There are no secrets in compensation! Fix the problem and avoid repeats
in the future.
Next month, we'll focus on mistake #3
- merit budgeting
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