In a buoyant market where winning top candidates is increasingly difficult, pay disparities are on the rise. The battle for talent is seeing potential hires receiving enticing salary offers as encouragement to come on board, resulting in a growing wage gulf between new and existing employees.
According to recent research, one fifth of employers acknowledge not offering equal pay, whilst one seventh of managers admit to knowingly paying some employees more than others despite doing the same job. Meanwhile, over half of employees believe that they are not earning the salary they should.
We spoke to Adam Wagster, Director at Uniting Ambition, to find out about the real impact of pay inconsistencies on both employers and employees alike.
“The past decade has seen a switch in the marketplace,” says Adam. “From fierce competition between multiple candidates for individual roles, we are now seeing fierce competition between employers for individual candidates. For many professional services jobs, external market value has increased at an accelerated rate, outstripping the rise in company salary levels. As a result, new recruits are being offered top competitive market value, whilst existing employees working in the same roles could be falling behind the external market and missing out.
“It’s important to stress that equal pay is not always a feasible option for employees who have the same job title. Factors such as skills and experience must always be considered: a new recruit may have more knowledge than an existing employee working the same role and as such can command a higher salary. For example, if a new hire is bringing an abundance of desirable skills which the team currently in place is lacking, offering a salary which is higher than the average is both acceptable and understandable.
“In instances where low supply and high demand is the sole factor affecting equal pay, however, employers can’t afford to offer new recruits more money than existing ones to work the same role. Yes, you need to offer an attractive remuneration package to win top talent, but failing to offer the same rewards to equally skilled team members already in place will hit you hard when it comes to retention.
“Knowing that you are being paid less than a new hire despite being equally matched is demoralising. Workplace morale will suffer, and so too will output. Employers who do not offer equal pay for equal jobs will find themselves with a frustrated workforce who will inevitably leave to earn their true market value.
“75% of workers have said that they would consider asking for a pay rise if they knew someone doing the same job as them was being paid more money. However, a staggering 95% of managers have turned down requests for pay rises from their existing employees. This kind of behaviour will only result in high staff turnover.
“Employers who not only want to win the market’s best candidates but also hold on to their best employees must ensure that they don’t fall into the trap of offering higher salaries to new recruits. Equal pay for equal candidates and equal workloads is the only way to both recruit and retain top talent.”