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
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
For more information about our program, click on the link