The Principle of Internal Equity
By: Adeshola Aliogo
The compensation and benefits structure of every organisation depends on factors such as affordability, sustainability, Industry standard, Government regulations, External equity, Internal equity etc. The focus of this article is on Internal Equity and though this is very important, many organisations are under playing this seemingly minor principle.
Employees may understand when an organisation pays according to what they can afford, there is no guarantee of 100% satisfaction when it comes to rewards, we often feel we are not adequately rewarded for all the work we put in. But the worst feeling an employee can have is not not to feel fairly paid compared to their colleagues.
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What then is Internal Equity?
"Internal equity is the comparison of positions within your business to ensure fair pay. You must pay employees fairly compared to their coworkers. Employees mus also perceive that they are paid fairly compared to their coworkers. Otherwise, they might feel unvalued and leave". somewhere on Google.
The definition above is simple and straight to the point, organisations need to begin to see internal equity as a retention strategy. Thinking of the impact of some recruitment decisions on the rest of the team. Employees will always compare the work they do with their colleagues. The mere perception of unequal pay within an organisation is enough to sink employee engagement.
Human Resources professionals and Business Partners can be more strategic in their approach to determining or recommending pay. Such decisions need to be made with a futuristic mindset. When employees can trust that they are treated with equal respect, and there is transparency around company pay practices, employee morale is boosted, and loyalty improves.
Conduct a survey today, check your statistics. This may be the reason you are loosing valuable members of your team. If employees do similar work, then they should get similar rewards.
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Adeshola has over 10 years diversified exposure spanning the FMCG, Logistics and Management Consulting sectors; delivering value across the HR service delivery, with practical knowledge and experience in Talent Management, Talent Acquisition, HR Transaction Services, Performance Management as well as Learning and Development.
You can reach her on LinkedIn here.
