Outside of my love for both Recruitment and Talent Management lies a fascination with Compensation Strategy. It is the window of opportunity that every company has to compete for talent. Not every company can deal the same cards. Some will lag the market, some will lead and others will mirror the market. Even more fascinating is this sentiment that a person’s worth in an organization should be marginalized by the salaries of others- a.k.a. internal equity.
If you are unaware of internal equity, here is the breakdown in a story: you are courting a new Accountant from the outside. You already have six other accountants company-wide with varying levels of knowledge, skills, abilities and tenure. You ask the new Accountant for their salary requirements; but before you oblige their wish list you check the salary spread across the six individuals you currently employ. In doing so, you find that the lowest paid Accountant gets $65,000 per year and the highest paid Accountant gets $85,000. Your rockstar Accountant candidate is making $85,000 plus a $10,000 per year bonus. To make him whole he is looking for $93,000- 96,000 per year. Despite your salary range of $63,800- $94,000, you decide to offer $87,000 because you would hate to disturb your internal equity among Accountants.