Pay Compression Causing Discontent in Young Employees
Research shows the shrinking wage difference between new recruits and experienced junior staff is putting young professionals from training new recruits.
A research by HR software provider Iris Software Group found 71% of young professionals struggled to motivate themselves to train new recruits who earned virtually the same wage. The pay disparity between these experienced junior personnel and new starters was just an average of £650 a year.
This pay compression left 69% of young professionals who found out their colleagues’ incomes feeling devalued, frustrated or disappointed. For many, it has led to rapid action: a third have asked their existing employers for a pay boost and 16% have already accepted another job offer altogether.
Iris polled 500 UK employees with between two and five years’ experience, and 511 senior HR directors,
“It’s no surprise that frustration is building when young professionals are taking on harder work, more responsibility and helping train the next intake, but see almost no difference in their pay,” said Stephanie Coward, managing director for human capital management at Iris.
Why Pay Compression Is Increasing
Starting salaries have been pushed up by external pressures like as hikes to the national minimum wage and national living wage, but internal reasons were also to blame, the Iris research said.
HR directors said they weren’t reviewing salary bands frequently enough; nearly half anticipated to see salary bands tighten significantly in the next two years.
Young Employees Facing Pay Discontent
Nearly a quarter of HR directors said their current systems were not able to connect pay adjustments with employee abilities and responsibilities, making it hard to see compression. A poll has revealed that while 84 per cent of HR directors worried about losing talented personnel over it, only one in five companies were planning to make targeted wage changes to sort out the problem.
What Employers Can Do About Pay Compression
Coward encouraged firms to gather data to determine where pay compression is occurring and intervene before employees choose to exit. “Better visibility gives businesses the opportunity to intervene sooner – be that through targeted pay increases, clearer progression or simply having a more informed conversation with employees about the value of their experience,” added Coward.