How to break the "salary inversion" between old and new employees in the workplace?

An old employee asked the company to increase his salary from 8,000 to 10,000, but the company did not agree and the old employee left.

After he left, HR recruited a replacement at 15,000 a month, only to find out sadly after 3 months that the new person was much less competent than the old employee.

When they finally found a suitable candidate who was more or less the same as the old employee, they offered him a salary of more than 20,000.

The new employee is paid significantly more than the old employee, a phenomenon called salary inversion, which often occurs between new and old employees.

①Is this a problem?

I was talking to a friend about this issue.

Someone said, "That wouldn't be a problem, old employees who don't accept low pay can leave, the company just needs to give the salary promised upon joining."

This is the employee perspective, but for HR or managers to see it that way is to ignore that the problem exists and is unqualified.

Some people say, "You can't solve it, you can only de-escalate the conflict, or as long as the boss gives money"

But the question is if the problem can be solved by spending money, what does the boss need HR for?

Is salary inversion a problem or not?

Two of the most basic principles of pay design theory are that it should be fair internally and competitive externally.

The inverse salary is obviously in conflict with these two principles: either recruiting highly paid people to break internal fairness or using an internal pay scale is not competitive in the market.

In other words, either no one is recruited and no one does anything, or they are recruited and morale is affected, which is a dilemma.

As long as a company wants to have a team full of fighters and stable business development, salary inversion is an important issue that must be taken seriously and addressed.

②What is the cause?

Payroll inversions are common in both small and medium-sized companies with a weak management base and large, established companies, but the reasons vary.

SMEs because

1. the owner or management is relatively stingy, focusing only on immediate or short-term interests, not willing to give old employees a salary increase; waiting for people to leave and need people to do things and are forced to recruit people at market rates, or the company's business value added is low and lacks sufficient capacity to give old employees a salary increase.

2. the boss or management feels that the old staff have limited ability and general performance and little potential, and did not take the initiative to fire on the good.

3. There is no set of ability and performance evaluation system, who does a good job and who does a poor job do not know, even if you want to increase the salary also do not know how to increase to whom to increase.

4. think that foreign monks have good scripture, the old stuff in the eyes of only shortcomings and deficiencies, see the new only see the advantages and strengths

5. think that the staff is used, does not need training, and does not need to grow together, surplus value squeezed clean from the market to recruit people, do not care about the cost.

Large companies are often not short of money, let alone ideas or management systems, but often the problem lies with management.

1. desperately trying to increase the size of their team to increase their power, which inevitably requires high salaries to recruit people.

2. in order not to get themselves into trouble (to get a pay rise for their staff), they do not take the risk of fighting for the best staff in the team.

3. to ensure that their position is not threatened, force good old staff to leave through controlled pay adjustments.

There are, of course, two other important reasons common to both large companies and SMEs.

1. the magnitude of salary adjustments within the company, which in the vast majority of cases will be smaller than the jump in salary increases.

2. fast-growing/highly competitive industries and job markets, where there is always sufficient mobility and experienced staff are always in short supply.

These two reasons dictate that sometimes your salary system is no good even if it is perfect, some industries just keep losing old employees and new arrivals just demand high salaries.

So, in essence, the phenomenon of salary inversions will always exist, only the frequency of occurrence and the degree of impact on the development of the company will vary.

③What is the solution?

Finally, a few words about the solution.

Firstly, from a business perspective: is "talent" a key resource in your industry? Is the competition for "talent" fierce?

If it is a traditional manufacturing industry, obviously capital, equipment, and even the boss's customer resources are much more important than people as a factor, and the company does not have many key positions, so there is no need to care too much about this issue.

In the case of the Internet industry, which is dominated by "knowledge workers", the importance of talent is much higher and competition is much fiercer, so the company from top to bottom must pay attention to the possible salary inversion phenomenon.

Secondly, from an organizational perspective: the company's strategy, development stage, and remuneration policy.

Does the company want to grow fast and become bigger and stronger? Or does it want to be stable and conservative and profit-oriented?

This is related to the company's strategy and stage of development, which in turn determines whether the company's remuneration policy is to lead, follow or lag.

The company has to clarify its overall and core department/position remuneration policy so that limited resources can be invested in the most rewarding positions and money can be spent on the right side.

Finally, the HR perspective.

1. In the short term, 3 ways to recruit talent for key positions without breaking the premise of the original remuneration system.

a. Using long-term incentives: long-term incentives refer not to seniority pay (which is usually not much money spent for nothing), but to options or equity incentives, profit sharing, etc.

b. by way of project bonuses or year-end bonuses: new employees, who are usually paid a higher fixed salary, and older employees, who are more experienced and more likely to perform well, make up for the lack of a fixed salary using variable bonuses.

c. by way of a signing allowance: based on not breaking the original salary structure, give the newcomer an additional signing allowance for an agreed period (e.g. two years); if the newcomer is competent, the salary will naturally go up after two years; if he or she is not competent, there will naturally be no need to give it again.

2. in the long term, companies need to establish a sound, competent- and performance-based pay system.

Generally speaking, employees' remuneration includes: fixed salary + variable salary + long-term incentives + benefits

The most critical of these are the first three.

a. Fixed wages, based on the relative value of the position, individual competencies, and external competitiveness, which require the company to do regular job value assessments, competency assessments, and external salary market surveys.

b. Variable salary, based on performance contribution, including organizational performance and individual performance. Requires enterprises to design and operate reliable target management and performance evaluation systems.

c. Long-term incentives, such as partnership plans and management bonus plans for management; equity and option incentive plans for all employees.

3. In addition to compensation, which is a straightforward means of spending money, there are many less expensive but complex and time-consuming management tools.

a. Establishing clear, well-defined career development paths for employees

b. Establishing an effective system for the growth of staff competencies (training system, talent ladder, etc.).

c. Establishing a simple, good corporate culture to create a capable and leading cadre.

HR should pay attention to this.

1. HR should have several accounts in mind: one is the business needs and recruitment plan; two is the key departments and key positions; three is the external market and labor costs.

Business needs to determine how many people to recruit, the level of requirements, and priorities.

key departments and key positions determine which are priorities requiring a major investment of effort.

external markets and labor costs determine how much money is available and how it should be spent.

2. HR should regularly analyze the reasons why employees leave, focusing on key departments and key positions, i.e. those with high contribution value, fierce external competition, and market scarcity.

It should be combined with the job performance of the employees and focus on the outstanding employees once they are found to be leaving at a higher rate. There are two points here: HR should pay attention to the evaluation of department managers (after all, they know the most about employee performance) but have their evaluation (they should not be led by the nose); SME owners should have their judgment and have a list of core employees in mind.

Do not blindly pursue a low turnover rate, but try to reduce the turnover rate of good employees; do not put your energy into all positions, focus on the core of the core department (to know who is the key to making money for the company).

3. HR should communicate regularly with managers (including bosses) and do coaching for typical cases.

Put the work in front and focus on preventive work (pay attention to the psychological dynamics and core needs of good employees), rather than desperately trying to retain employees after they have proposed to leave (it is usually too late).

4. have a long-term vision (reserve core and key positions of talent according to the company's strategy), but also a pragmatic approach (spend every penny on the knife edge).

Any problem that can be solved by spending money is not a problem, the problem is prepreciseat there is often not that much money. When to make a strategic talent pool, when to be every penny repeatedly negotiated, HR should have sensitivity and a dogmatic spirit.

5. to be able to solve the problem of blood transfusion (recruiting to peo), but also to be able to solve the problem of blood creation (training to peo).

When the wind comes, not only the enterprise is a pig on the skin the same for the practitioners of this industry, even a pig in the sky, like two years ago I was in the e-commerce industry, just graduated from college student studentittle internship experience to 7-8,000 base salary, who jumped ship even if they only did half a year to 2-3K salary increase, no other, the industry wind came just.

But in fact, large-scale recruitment is actually particularly uneconomical, training and often seems slow to keep up with the pace of business, this time HR should be a fast recruiting while accelerating training, and efforts to make the speed of blood catch up with the blood transfusion, which is essentially also in the enterprise to save costs, less money wasted.

The above is all about how to solve this problem for business managers and HR.

What about individuals?

For employees who complain about low pay, strong performance may be an illusion; for new employees who are complacent about high pay, high pay may just be a flash in the pan.

Much older employeMany not much better, and their greatest strength is not their ability. Rather, they are more familiar with the company, have certain contacts, and know the unspoken rule, and laws of the company.

In other words, the reason why he can function here is not because of his ability, but because e familiar with this processing mechanism than others, processing better able to get resources by selling his face.

This is particularly, particularly common in large companies of all kinds, and there are very, very many old people like this. They don't have 10 years of experience, they are 2 years of experience used for 10 years.

For many newcomers, especially in the rapid development of the industry in the wind, easy to jump ship to get a high salary is not because of their own excellent, but after the capital into the premium just, in essence, is not possible for a long time. If you don't understand the situation and think you are good and let yourself grow, you will soon suffer the pain of returning to the norm after the windfall.

So, for veterans, when you have been working in the same company for 2 years (1 year is fine in some industries), if the salary increase does not meet your expectations or if the knowledge and skills you have learned make you feel that you have not grown enough, then you can go out for an interview to see.

Not that you must jump ship, but through the interview to see how many offers they can take salary increase is how much, whether you jump or not, at least you have to know the market price, but also to know their value, maybe you take a circle of an offer to find the price is not as good as their own, or to get a satisfactory offer, that means the company did not treat you badly, you are worth the price, set your mind right, good You should put your mind at ease and work well.

For people in the workplace, don't jump ship easily, but make sure you can jump ship at any time.

Focal is important to understand that a high salary may not always be a good thing to enter a company.

It is important to understand that salary confidentiality is never easy to achieve. If the salary gap is too wide, you may face ostracism from colleagues and tests from superiors as soon as you come in, and whether you can survive the probationary period is a toss-up.

Even if you survive, if you can't improve your professional ability as soon as possible, your high salary is also a source of water without a root, because price and value deviation will not be a kind of norm, sooner or later t return to normal.

Recognizing yourself, setting your mindset, seeing the Recognizeehind phenomenon of upside down in the workplace, and polishing your professional skills is a necessary skills for people ie the workplace.