Pay transparency demands creating challenges for recruiters

With the advent of wage pressures after the pandemic, reports have suggested tenured employees in high-paying job groups may be making less money compared to fresh hires, — and this wage compression threatens retention and employee engagement for organizations.

Amongst most high-paying jobs, with average salaries of $125,000 or over, research has indicated tenured employees nearly make the same as newly hired employees. 30% of the time tenured employees make less than new workers, according to the report. Additionally, 94% of problems in the workplace are systemic compared to the 6% attributable to an individual level.

Pay compressions varied by role in lower-paying job groups (salary brackets of $75,000 or less). Retail, manufacturing, and other front-line job sectors tend to pay more to tenured workers. On the other hand, pay for corporate support positions like HR, marketing, IT, and analytics, generally did not vary by tenure.

The updates comes as employers have started tightening budgets leading to freezing hiring amid inflation and recession concerns. Simultaneously, employees expect salary transparency in job advertisements, proving disastrous for recruiters.

Organizational preference for homegrown talent is because of the value of the fresh perspective that external hires bring. For an organization to be at par with the current market, there must be a mix of both in the team. All of these approaches are valid. But the reality is that this is a pay transparency era with salary ranges out in the open. Researchers suggest organizations need to be ready with reasonable public statements explaining the reasoning behind the pay gaps between tenured and new employees.

Poor communication or vagueness around pay can tank engagement. Studies have pointed many employers have a ready compensation plan in line, but they tend not to share it with workers, and organizations hardly train managers in having compensation conversations.

A pay structure that is well-communicated to the employees can be helpful with the dichotomy between tenured and recent hire’s pay.

It is essential to keep in mind work concerning pay, the perception of the employees is the reality: how employees feel regarding their compensation directly impacts their satisfaction with their employer and their desire to stay.




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