PPB September 2022

competitive, an organization must understand who its competitors for talent are and that these can vary significantly by job type and geographic location. Employees in roles such as accounting, human resources, IT and customer service can easily find jobs in other industries. Entry level employees also can choose jobs in different industries, so if you regularly hire entry level employees, it’s critical to understand who else is looking to hire them. INTERNALLY EQUITABLE Employees in similar positions with similar skills should be compensated similarly. Worth noting: Similar doesn’t mean the same. In organizations with formal compensation structures, internal equity is achieved by assigning specific jobs to a specific salary “grade” and salary “range” and paying individuals within that range based on performance, skills, length of service, etc. In organizations without formal compensation structures, these same factors are frequently used to determine individual rates of pay. PAY EQUITY The term pay equity is sometimes used interchangeably with internal equity. In the past, the two were pretty much the same, but pay equity has recently taken on a different meaning. It now refers most commonly to legislation (primarily at state levels) requiring employers to pay men and women equally for “substantially similar” work. Some states have expanded this legislation to include fair pay requirements for race and other protected characteristics. The recent labor agreements for equal pay for the U.S. men’s and women’s soccer teams represent the settlement of a pay equity lawsuit. SALARY COMPRESSION This occurs when the pay of one or more employees is close to or even exceeds the pay of other employees doing the same or similar work. Salary compression can occur throughout an organization, but ismost commonwhen newhires (hard to come by in this labor market) demand salaries higher than incumbents withmore experience andwhen salaries for new entry level employees (also in high demand) equal or exceed salaries for lead or supervisory employees. It’s easy to blame salary compression issues on the pandemic, The Great Resignation, The Great Reprioritization, The Great Recognition, or whatever term best describes this crazy labor market. The reality is that salary compression has been a problem organizations have faced for many years. It’s a complex issue that occurs over a long period of time and, as a result, doesn’t have an easy fix. Regular reviews of paid salaries and salary adjustments based on these reviews are critical steps in addressing salary compression. Palé is a contributor for Affinity HRGroup, Inc., PPAI’s affiliated human resources partner, which specializes in providing human resources assistance to associations, including PPAI and its member companies. www.affinityHRgroup.com. Ask HR Q: With rising costs, I want to give my employees a gift card to reward them for their hard work. What should I consider? A: Acknowledging an employee’s contribution is almost always a good thing. It helps reinforce their commitment to the company. Regardless of the type, timing, or value of the reward, be sure to give it with the right message. Just handing someone a gift card will not have the same impact as giving it along with a personalized conversation or note about their contribution to express how much you value them. Worth noting: When you give a gift card (or any monetary benefit) to an employee, you should consider the tax implications. Usually discretionary bonuses—those that are given “just because”—are not taxable. However, if they become expected or a regular occurrence, then they may be. Regular reviews of paid salaries and salary adjustments based on these reviews are critical steps in addressing salary compression. | SEPTEMBER 2022 | 81 THINK