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January 29, 2010
Openness with Employees About Compensation Has Risks

In a BLR webinar entitled "Where's My Raise? How to Handle Tough Pay Conversations With Employees," Theresa Murphy of HR Partner Advantage and David Wudkyka of Westminster Associates addressed the risks faced when being open with employees about pay policies.

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Even after identifying the organization's pay philosophies, structure, and practices, many top-management teams will resist communicating them. They won't want employees to know what the pay grades and ranges are, lest they question the wisdom of the structure. More important, shining a strong light on structure and practices is very likely to reveal at least one, if not several, instances of true inequity -- cases where the guidelines have been bent or ignored to allow someone to be paid substantially more than his or her pay grade would allow.

The answer? Address such situations and rectify them. Continuing to coddle the individuals who've benefited from the inequities is less important than a comprehensive communications program regarding the company's pay practices that will pay off quickly in greater overall satisfaction and better retention and productivity. (Meanwhile, those who were being paid "too much" don't have to get pay cuts, just endure a suspension of raises until their pay rates are sufficiently in line with those in the same grade.)

Theresa Murphy is the principal consultant for HR Partner Advantage, an independent human resources advisory firm based in Raleigh, N.C. She may be contacted at tmurphy@hrpartneradvantage.com. David Wudyka is the founder and managing principal of Westminster Associates, a Massachusetts-based human resource and compensation firm that specializes in pay, performance and productivity issues. He may be contacted at dwudyka@westminsterassociates.com .

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