Blog powered by Typepad

« Equity Compensation Probably Doesn’t Save You Much | Main | Cafe Classic: What Do CEOs Really Want from Compensation Professionals? »

11/09/2018

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Love this! I’ve been fascinated with this topic and I appreciate your perspective!

Thanks Joe - great to hear from you!

I believe some salary compression is warranted. I've never understood why we base all compensation on percentages. . . this leads to the opposite of compression and happens in periods of diminished labor demands. The compression is a correction. Additionally, many college grad hires have skills needed for technology advancement in many industries, skills the experienced hire may or may not have. This warrants the premium salaries being paid to graduates, but does not warrant adjustments to all.

Thanks for the great comments and observations, Deb. Agree that sometimes the salary squeeze between new hires and tenured employees that raises the compression alert can be entirely appropriate - especially in situations where the premium salaries reflect new skills and tech acumen which the company now needs and experienced employees may not have. HR and compensation pros need to ensure they understand the circumstances around compression "issues" before suggesting/approving pay adjustments - as the differentials may indeed be entirely appropriate. And then, there is the thoughtful and honest communication to those involved/impacted which must happen.

Appreciate your reading and commenting!

At my organization we use the term salary compression to refer to a low/diminishing wage gap between an employee and their supervisor, possibly due to union increases being higher than increases for exempt employees, or job reclassifications. Does anyone else refer to salary compression this way?

Hi Amber,
I have also heard the term salary compression used in that way. It used to be - particularly in the manufacturing sector - a frequent issue/consideration, as it was important to assume that there was a sufficient premium offered for the additional duties associated with being a supervisor. It may be that we simply appropriated the term as labor market cycles (ups and downs) became more dynamic and the new hire/experienced employee pay squeeze became a thing.

Thanks for raising the question and calling attention to this. I'll be interested to hear if others also use the phrase in this way.

The comments to this entry are closed.