Paying Wages Far Above Market Rates

Do you think paying wages substantially above market benchmarks is an advantage or disadvantage to employees? 

There was an interesting article on a blog site for Workforce Management.

The article identifies that paying employees “well above” the market rates for jobs is the worst thing a company can do to them short of something illegal.

The definition of “well above” in the article is identified as a rate 50% to 100% above the market.

The 2 main disadvantages noted were:

1. Employees not recognizing that they are overpaid.

2. Employees building lifestyles that they cannot sustain if an economic tragedy befalls them.

HR POINTER: The fact is that there are serious disadvantages to paying employees far below or far above

the market rates for positions. Companies would do better to pay rates competitive with the market.  For companies looking to get aggressive in the compensation arena, pay salaries in the 90th percentile of market salary ranges, would be an excellent attraction and retention strategy.

With all the Internet salary resources available today, employees may think that they have good information as to where their salaries fall in relation to similar job titles.  Unfortunately, employees often do not have the experience to distinguish the subtleties between publicly available data and their own salaries.  As such, employees often walk into managers’ offices with erroneous compensation data as proof that they are underpaid.  Managers need to be prepared to handle these critical salary discussions.

A solution that we provide to companies is help in creating Wage & Salary Programs that are built around solid market research. In addition, we provide companies with a mechanism for communicating to employees the competitiveness of compensation.

Dedicated To Enhancing Your HR Assets!

Posted on April 18, 2018 by Richard Lukesh

Kiesha Valentine, PHR, SHRM-CP, CMHR
Human Resources
Cell: 714-982-1789
Mailing Address:
5753 E. Santa Ana Canyon Rd., Suite #G242
Anaheim Hills, CA 92807


Categories: HR NEWS

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