Are Experienced Workers’ Salaries Inflated?

July 26, 2011 at 2:45 pm 3 comments

Is it possible that the real problem with organizations’ bottom lines is that their experienced staff members are making too much money? That’s the assessment of three Booz & Co. consultants. They contend that there are too many long-time workers who have salaries that are beyond the value of their skills in today’s labor market. Between annual raises, bonuses and other benefits, these skilled workers are not worth what they are paid.

The answer is to determine a narrower pay band for each job, the consultants say. For those who are above those pay levels, require them to gain new skills, work to receive a promotion or leave the company. In other words, they need to “work up” to their salary level.

It’s an interesting and controversial strategy that has driven some of the best comments I’ve seen in the blogosphere lately. The recent post on BNET by Sean Silverthorne offered a clear overview of Booz’s strategy and some intelligent reader comments.

It’s true that some workers’ salaries are based more on seniority than their marketable skills. On the other hand, aren’t some of the intangibles that senior workers possess, such as understanding nuances of customer needs, company culture or the intricacies of a software system, worth their weight in gold during times of crisis? For example, I know a sales rep who stays up late at night to fix his customer database. When his company laid off experienced service reps, the job was piled on other employees who don’t have knowledge of the product or the time to input the data correctly. That long-time employee may be single-handedly avoiding serious errors and retaining those customers. I’m not sure that fact could be proven on a spreadsheet or sales report.

I believe the answer lies somewhere in the middle. Organizations need to turn a critical eye and evaluate the input of their long-time employees. If there’s an imbalance, encourage training, development or possibly a lateral move that will add value. However, when evaluating those employees, consider their ability to innovate and solve problems based on their experience. Ask yourself: “Could an employee with a few years of experience do the job in the same way?”


Entry filed under: Compensation, HR Management, Salaries. Tags: , , .

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3 Comments Add your own

  • 1. Nikki  |  July 26, 2011 at 3:01 pm

    I find it ironic that three consultants would have that to say about compensation, as I’m sure they’re making way more than most of those senior workers.

  • 2. SinAZ  |  July 26, 2011 at 7:28 pm

    I have a problem when you come into a position in Sr management and the worker bees are making more than me. In addition they are making well above what the market rate is and are not willing to get new skills. I had this problem in a previous job, but couldn’t get the owner to see that maybe she needed to re-address the situation. We all paid later on for these higher salaries, with cuts to our own.

  • 3. Brian Dostanko  |  August 9, 2011 at 7:54 am

    This problem does exist in the public sector where annual raises just for “being there” a year equals more pay. The problem in this environment is not touched on in this article. The problem is that we have a serious lack of qualified managers and leaders in organizations that should continue to coach, teach, and thus make these senior, higher-paid workers truly worth their pay. This is a two-way street, don’t get me wrong. Workers should want to get the most from their career as well, but the lion’s share of the responsibility is on our managers to challange employees.


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