The State of Employee Pay: Is It Really a Fact Employees Are Underpaid?

Forbes.com calls itself, “Information for the World’s Business Leaders.” A must-read for most serious business people, it has never been known as an advocate for social change.

Yet what was its most popular blog post this week? An article in the “Entrepreneurs” section titled, “Employees Who Stay in Companies Longer Than Two Years Get Paid 50% Less.

Cameron Keng makes a well-reasoned case for this claim. His analysis of compensation practices is insightful. His conclusion? “It’s a fact that employees are underpaid.”

Yes, the pay debate is growing louder

His suggestion to his fellow employees?

Instead of focusing on things we can’t control … focus on the things we can … I don’t fault employers and businesses for the market because it’s their right and duty to maximize their profits. But, as an individual, you’re a CEO of one, and you have to maximize your profits.”

During 2014, we’ve heard more and more open expression of the belief that employers are holding out on employees. I have encouraged our readers to recognize that this message is trending and may have a long tail.

But, the debate is growing louder and more publicly prominent. That why I can envision it ultimately rising to the volume of the current hubbub on executive pay.

I’m sure you all have opinions about what’s working or broken in employee pay. And I’m not saying that Mr. Keng is one of the new prophets.

During my career, it’s always been a reliable practice to increase your salary by jumping jobs. It’s more about that Mr. Keng was given a prominent place to make a very good (and public) case for his opinion. And employee pay is a topic we rarely, if ever, have had public discussions about.

3 ways to lead on the employee pay debate

We could talk more (in a very heated way, I’m sure) about the current state of employee pay, but the purpose of my article is practical.

1. Prepare your managers to talk with employees about their current pay. There is nothing harder to counter than a point of view that is fundamentally valid. Managers have to talk with employees whose salaries have been smothered over the last seven years. Your managers need your help. If you don’t give it, be prepared for the fallout. Eventually, they will not want to help you.

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2. Be a leader when it comes to merit budget discussions this year. Don’t just follow the execs because it’s safe thing to do. They actually may be looking for someone to break the ice. Say what needs to be said and invite a discussion.

When it comes to increases this year, why stick with “It’s what our competitors are doing?” There’s a weaker case for sole reliance on competitive practice this year than there ever has been in my (long) career. For 2015, the most powerful decision drivers should be how your company is doing and whether it is willing to look to the future when it pays employees.

Remember the “7 Things That Great Employers Do?” (If not, check out my June 11 article.) No. 4 on that list is that, “They never use a downturn as an excuse.” Well, that boat may have sailed, but No. 1 is that, “They have involved and curious leaders who want to improve.

Give your leaders the benefit of the doubt. Invite them to the table and hash this out together. You may not be able to afford the merit budget you wish you could have, but at least your options would have been discussed openly.

3. If this all sounds too sketchy for you, check out my April 15 article,Will a Word to the Wise Be Sufficient?” It’s a more detailed discussion of these communication issues. I think it’s time you took them seriously.

This was originally published at the Compensation Café blog, where you can find a daily dose of caffeinated conversation on everything compensation.

Margaret O'Hanlon is founder and principal of re:Think Consulting. She has decades of experience teaming up with clients to ensure great HR ideas deliver valuable business results. She has worked with early-phase and Fortune 500 companies, as well as universities, non-profits and local firms. Before she founded re:Think Consulting, Margaret was an Principal in Total Rewards Communications with Towers Perrin. Contact her at mohanlon@rethinkconsulting.com.

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