How to handle pay discrepancies in the face of staff shortages

Welcome to Ask an Adviser, EBN's weekly column in which benefit brokers and advisers answer (anonymous) queries sent in by our readers. Looking for some expert advice? Please submit questions to askanadviser@arizent.com. This week, we asked Nadene Evans, director of growth marketing at Zenefits, to weigh in on the following: How do we handle employees asking for a raise when a higher pay scale has been set for new hires to combat staffing shortages?

With staff shortages still ravaging dozens of industries across every state in the U.S., employers are offering more lucrative deals to attract and secure the talent they need, both in terms of salary and workplace perks. While this means great opportunities for workers in transition who are looking to fill new roles, existing employees may question why their compensation doesn't equal that of new recruits.

These employees are well within their rights to take issue with staff being brought in at their level and earning more money. Asking for equal pay is something all employees should feel comfortable doing, and most will consider it if they feel they're being shortchanged. Although this hurdle has only arisen as a result of factors including the Great Resignation and global talent shortage, the current state of affairs does give employees more leverage when asking for a bump in pay. 

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As an HR practitioner, you will, no doubt, have experienced recruitment challenges. But while this shouldn't be seen as an opportunity for employees to take advantage of, it does open the door to a conversation about their contribution and progression.

If an employee asks for a meeting with his or her line manager, it's important to make time to invite them to discuss any concerns. It's also a great opportunity to outline their value and why they are important to the business. Employees shouldn't be asking for a pay raise for the sake of it, but if they are deserving of it, they should be given a reward for their hard work, either in the form of higher pay or an improvement in workplace perks to offset living expenses. 

At the heart of it, all HR professionals should aim to ensure that employees are happy in their role rather than feeling cheated or dissatisfied. So, if this situation arises, although tricky and uncomfortable, it's worth taking the time to explain the reasons why a new hire has been placed in his or her current position, because there are legitimate reasons for pay disparity. 

It may be the case that a new staffer has more experience than another employee with the same job title, or may have slightly different responsibilities. However, in the current recruitment climate, the most likely reason for the pay disparity between two people performing the same job is because market demand for certain skills was lower when the first member of staff was hired. 

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From a legal perspective, as an employer, you can legally pay two employees working in the same role different amounts so long as there are non-discriminatory factors that explain the reason for the difference. This means that ultimately, it's completely up to the employer how much their workers earn and new hires won't change that.

It's important, as HR professionals, to remain objective and make every decision on a case-by-case basis. As already mentioned, if someone is doing good work and their contribution to the organization is valued and you don't want to lose them, then a positive resolution is a must. 

That may be in the form of a salary adjustment, but it also could be increasing an employee's responsibilities, or the implementation of a progression plan. A great way to improve productivity and drive within your organization is to set goals and schedule regular performance reviews, giving employees clear objectives to work toward to earn the pay rise or promotion they're looking for. Not only does this demonstrate that you are willing to invest in their progression, but it also shows your team that there is a clear career path for them within the business.