HR Managers Combat Pay Compression with Aggressive Merit Pay Programs
HR managers are tackling pay compression, a situation where employees, regardless of experience or skill, have similar pay. To address this, they're turning to aggressive merit pay programs, as advised by the Society for Human Resource Management (SHRM).
Pay compression occurs when the pay gap between employees is minimal, regardless of their tenure, skills, or level. To correct this, HR managers are implementing aggressive merit pay programs. These programs differentiate compensation based on individual performance and experience.
SHRM, in its SHRM-SCP certification materials, highlights the impact of such programs. They reward high-performing, long-term employees with larger increases, ensuring they're compensated accordingly. New hires or average performers receive smaller increases, aligning pay with performance and experience.
An effective merit pay program includes clear performance criteria, objective measurement, a structured increase process, employee communication, and regular analysis and adjustment.
By adopting aggressive merit pay programs, HR managers can correct pay compression, ensuring fair compensation based on performance and experience. This approach, backed by SHRM, benefits both employees and the organization by fostering a performance-driven culture.
