Paying the Price

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When is the last time you had to ask for a pay increase? For many Canadian workers, approaching their employer to ask for more money is not high on the list of job-related things they enjoy doing. While there are many valid reasons that an employee might have for requesting a pay increase, there is no guarantee that the response from the employer will be one that meets the needs of that request.

A recent study by the American-based PayScale compensation software firm, offers an uncomfortable set of findings based on a wide-reading survey exploring issues around pay raise requests.

Click here to access the summary of PayScale’s survey.

The results of this survey are analyzed in a corresponding article posted recently by Harvard Business Review.

Click here to read the article.

From a compensation management perspective, some key messages emerge about the connections between constructive/pro-active compensation strategies versus negative/negligent compensation approaches and their direct links to employee retention. Unsurprisingly, the survey provides statistical evidence showing that when an employee is denied a wage increase, there is a high probability that the employee will be on the path to exit from that employer.

While the survey and the results are based on American companies, they show an alarming connection between race, gender, and the denial of pay increases—this contrasts with much lower rates of pay-increase denial for white males. As Canadians and as pro-active Human Resources practitioners, we must take these statistical results seriously and consider them in relation to our own workplaces to ensure that our compensation practices, especially as they relate to race and gender, do not follow the same statistical paths.

Good compensation planning must be neutral, pro-active, and fair so that Canadian workers can focus on the things they do enjoy doing.

 

Discussion Questions:

  1. Based on your own experience as an employee, what would you do if your request for a pay increase was rejected by your employer?
  2. From the perspective of an HR professional, develop a script for supervisors/managers to use when telling employees why they will not be receiving the wage increase they have asked for.
  3. Identify three positive and three negative aspects of a differentiated compensation system (wage increases granted or denied based on individual requests).
  4. Identify and explain three key compensation methodologies that can be used to ensure an objective, fair, and pro-active approach to individual wage requests.

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