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They get paid how much?!

Two interesting news articles have been written over the past week about employee pay: One outlines how some organisations are trying to disclose full earnings transparency for staff; the other describes how a law firm in London proposes a 20% cut in salary for staff who choose to work permanently from home.

Both concepts of course have the potential for conflict.

Although the subject matter is different, there are similarities between the two issues. Each represents a form of information disclosure and a subsequent structuring of expectations. On the plus side, if you were an applicant applying for a position at one of these organisations you would already have clarity on certain terms of employment.

In commercial conflict, a proposal which is vague can be open to misinterpretation or undermined by more specific counter proposals. A positive here is that by being clear and specific, the process of selection may well be faster and more efficient.

In the news article about pay transparency, such a revelation can potentially reduce the mismatch between some candidates’ expectations of the maximum that the firm is prepared to pay, versus what it will actually pay. Of course, market forces typically determine that the smaller the number of candidates for an important role, the greater pressure there is for higher pay. In this case the market will decide if pay transparency is a viable concept for the firm to use.

A further suggestion is that pay transparency can help to reduce the gender pay gap which is generally accepted as a good thing (currently 13% in the UK). This should be easy to monitor and assess if people are performing exactly the same jobs with exactly the same conditions. It could however, become diluted and more difficult when people want choice which best fits their lifestyle and their preferences e.g., home working, hybrid or office working.

In the second article the suggestion is that a 20% pay reduction reflects the decrease in travel time and cost incurred by employees who don’t work in the office. The downside is that it may penalise a more culturally diverse workforce working outside London – resulting in a company which has a more white, pale and stale, London-centric workforce.

Focusing on pay alone prompts a reminder that a job is often about more than simple remuneration – there can be a number of other factors which are equally, if not more important for people and whether we like it or not, these are all intertwined with pay.

One school of thought might believe that restricting a candidate’s ability to negotiate pay creates potentially two issues:

  1. It limits a firm’s ability to offer a full package of terms and conditions that most accurately meet the needs of the candidate and the firm. Introducing new/different variables actually makes it harder for people to draw specific comparisons with each other, and limits the danger of comparing vagaries such as who works harder/better/smarter.

  2. Negotiation is an extremely important business skill which can deliver significant benefits both internally and externally to organisations. Removing a candidate’s ability to express this, limits the organisation’s assessment of a significant and highly beneficial skill.

Companies will no doubt continue to make changes that are designed to improve employee experience, increase diversity and shave more off the bottom line, but the question is: Does this new idea cause new challenges?

So, if your company has employed a candidate who was not given the opportunity to negotiate their salary as part of their package and they need more training and practice, send them to Savage Macbeth. We’ll make sure that they get the very best training and coaching for this key skill (but perhaps watch out for their next pay review!).

Sam Macbeth, 6th May 2022

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