I have been asked numerous times if I see pay discrimination in organizations. My answer is I always see a very consistent discrimination in every organization against a specific group. The person always starts listing off the usual groups. It is never the groups which are listed off. The group which is underappreciated is always the same.
The best employees are always underpaid for their value
I have written about this in the past and I have focused on a positive solution. Pay the high achievers based on their objective value. This will create a desire on the part of the other employees to attain that status. This will create higher productivity and value, which you should be more then glad to pay for.
However, I have never written about the converse of this issue. This issue exists in the vast majority of organizations. They pay their best employees a relatively small amount over the amount paid for the average employee. This is a giant red flag to the employees. They have an objective reason to not put forth any extra effort. If you continue to underpay the higher achievers you will end up with a cultural issue which motivates lower productivity.
The best employees will move on. The bad employees will stay. You will not be able to recruit the better employees. They will want to know during the interview process how they are rewarded for their value. Some of the best employees out there are the ones who don’t want to be the CEO. They want a job they enjoy and the appropriate rewards for their work.
Show employees there is a direct relationship between pay and value
I know what some of you are thinking. “How do I do that?” Many people have trouble translating theory and plans into numbers. This is the very thing the best employees want to see. There are many examples of how this can be done. One organization had an employee who could perform every job in a certain production line. Every day they would move people around based on who showed up. They could always count on this one employee. Because he was so flexible they did not have to bring in a person from a temporary agency. Doing that saved them $3 an hour. The organization felt it was fair to pay him $1.00 more an hour.
How quickly do you think this got around to the other employees? How many of those other employees wanted that same $1.00? My experience is all the good ones do.
