Due to wage pressures the last two years, tenured employees in high-paying job groups may make less money than new employees, according to an April 20 Syndio report — and this wage compression may threaten retention and employee engagement.
In 83% of these high-paying job groups, defined by Syndio as jobs with average salaries of $125,000 or more, tenured employees make the same as newly hired employees; tenured employees actually make less than new workers at least 30% of the time, according to the report.
Such compression varied by role in lower-paying job groups (defined as having salaries of $75,000 or less). Positions in retail, manufacturing and other front-line jobs tend to pay more to tenured workers, while pay in corporate support roles, such as HR, marketing, IT and analytics, generally didn’t vary by tenure.
The news comes as employers tighten budgets and freeze hiring amid recession concerns and inflation. At the same time, workers are expecting more transparency when it comes to salary in job advertisements, creating a “perfect storm” for employers, Syndio said in its report.
“An organization may want homegrown talent, they may value the fresh perspective that external hires bring, and they may want a mix. All of these approaches are valid. But the reality is that we’re in the pay transparency era and salary ranges are out in the open. Companies have to be prepared to publicly explain why there may be pay gaps between tenured and new employees,” said Chris Martin, research economist at Syndio, in a statement.
Poor communication around pay can tank engagement, other studies have shown; while many employers have a compensation plan, a February Salary.com report said, they tend not to share them with workers, and only a third said they train managers on having compensation conversations.
A pay structure that is well-communicated to workers can help with the dichotomy between tenured and new employee pay, a McLean and Co. report said.
“Remember, with pay, perception is reality: how employees feel about their compensation impacts their satisfaction with their employer and their desire to stay,” Martin said.
