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Human Resources Internal Equity Might Be Killing Your Business

Internal Equity Might Be Killing Your Business

December 1, 2016 by Lisa Bruemmer

My family and I recently vacationed in Breckenridge, CO where I was reminded of my skiing (mis)adventures. If you’ve ever been skiing, you’re familiar with the term “mogul” and, if you’re like me, you’re also familiar with the effect they can have on an otherwise enjoyable trip down the mountain.

Sometimes as we’re successfully maneuvering through a search engagement…research, qualified candidates identified, and then, BOOM! We hit a mogul – marketplace intelligence and activity tells us the compensation offered by the client is below market. 

So we share this information with the client and they respond back with:

“That’s all we can pay due to internal equity.”

Ugghh.

Many times internal equity issues arise because a company enjoys the stability of long-tenured employees who are loyal, work hard, contribute and are committed to the company’s goals. Unfortunately, long tenure many times leads to under-paid, under-market or, even worse, under-appreciated employees.

And guess what? These are the exact people that are “picked off” by recruiters every single day. Once they’re contacted by a recruiter (or your competitors) and discover their value in the market, they’re poised to leave because they aren’t receiving that same value by their current employer (and, in many cases, haven’t been for years).

In talent acquisition, development and retention, VALUE reigns supreme. Don’t fall into the trap of only throwing money at the problem.

There are many ways to reward employees and acknowledge value: professional development opportunities, coaching, listening to input, praise, and more. A recent survey by Robert Half indicates 25% of CFOs acknowledge loss of an employee in the last year for this exact reason.

Reviewing employee compensation periodically helps ensure you have happy, secure, committed people working with you. Don’t let a mogul ruin a beautiful downhill run. Review the landscape, adjust and prepare for the bumps ahead.

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Filed Under: Human Resources

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