Advice

Fixer: Our pay strategy is non-existent

11 Jul 2019 By PM Editorial

How can we start to fix disparities in pay without causing upset?

I work for a production company and have recently taken charge of recruiting for a couple of new roles. There’s a feeling that we’re underpaying in certain positions, but when I did a proper audit of salaries, there was a massive range of different rates being paid for similar roles depending on the hiring manager and department. Two people doing essentially the same job were as much as £15,000 apart, despite having similar experience. How can I begin to sort this out? And is it even possible to reduce people’s salaries? The business certainly won’t give everyone rises.

Yes, this problem is manageable – but it could be tricky. Pay can vary between people in the same job category for legitimate reasons. Perhaps there is a pay scale that rewards people for performance or length of service? Market rates may have differed when individuals were recruited, so some may have negotiated better starting deals. 

At the same time, there are reasons companies get pay wrong – prejudice being an unacceptable example, as well as inconsistent line management. Start by examining the data  – by grade, gross pay, gender, age, ethnicity, length of service, performance, hours or recruiter. If there is an anomaly, you’ll find it there.

Your suggestion that hiring managers have determined salary is interesting. The pay policy and core controls may need to be reviewed if the current practice is creating a legal risk.

If you find a legitimate problem, you broadly have three options. First, you can live with it but put in new controls and line manager training so every decision made from this point on is a good one. This is a good option if turnover is high, and if you have an annual pay award you may be able to close the gap by varying pay rises.

Alternatively, you can ‘out’ the problem in the company and look at individual negotiations in which those at the top end take pay cuts to fund rises for those at the bottom end. Contracts will have to be renegotiated and redundancies could become a possibility. But unfortunately, even when everyone agrees the current system is unfair, nobody really recovers from losing salary and it could impact performance.

Finally, you could find the cash to even the gap by making changes to OD strategies, staff reductions or other cost-cutting measures such as delaying non-essential projects. For me, that would be the best route – but it will be easier in a larger business.

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