Today's Cheap Hire ... Tomorrow's Internal Equity Issue?

I've been through the economic slowdown and recovery cycle before, as have many of you.  As such, I find it helpful to consider that history and try to anticipate the challenges that may be waiting around the bend, ready to ambush us as the economy improves. 

One frequent side effect experienced during job market comeback is internal pay equity problems.  As the typical organization recovers and resumes its hiring activity, inequities arise between new hires brought in during the improved economy and current employees, whose pay has been stagnant (or worse) or who may have been hired "on the cheap" during the downturn.  Morale and retention issues ensue and Human Resources is faced with brokering a solution, which invariably involves market pay adjustments along with other tactics. 

Many employers have taken advantage of the recession to "purchase" talent that they might not normally be in a position to afford ... and I appreciate that this represents a smart investment on their part.  But these employers would be well-advised to keep a watchful eye on the market cost of this talent as the economic picture changes lest these investments turn sour on them.  Reactive pay adjustments are invariably bigger than proactive ones, and reactive dollars are rarely as well spent as those delivered with a proactive message and intent.

And so ... forewarned is forearmed: those investments in underpriced talent need to managed carefully as the tides turn in order to truly maximize return.

Comments

[Chris Young]

Great post on a very intriguing topic, Ann! I'm interested to see how things pan out when the economy recovers.

I've featured your post in my weekly Rainmaker 'Fab Five' blog picks of the week (found here: http://www.maximizepossibility.com/employee_retention/2009/08/the-rainmaker-fab-five-blog-picks-of-the-week.html) to put this important issue on my readers' radar.

Be well Ann!

[Ann Bares]

Thanks, Chris! Always an honor to be featured in the Fab Five. Readers, be sure and click through to see all of Chris's blog picks for this week.

[Matt N Johnson]

I find it interesting that the topic of how we deal with the economic recovery is surfacing on more and more blogs daily. Does that mean the recovery is near? I hope so, but I also think that it shows that we're recognizing that the responses many organizations have put in place to the slow-down will have to be redressed or modified once the economy picks back up. Very thought provoking article Ann. Thank you!

[Ann Bares]

Matt:

Who can predict how near recovery is? I do see a lot of hopeful signs in my particular corner of the world, so I am optimistic that it is on its way! And, as you point out, it is incumbent on us to consider the future and the impact that so many of these "responses" will have as the economy turns around, even as we're putting the "responses" in place!

Thanks for the comment!