Friday, August 1, 2014

Holding back the money: Are employers paying employees what they're worth?

Interviews are so much fun aren’t they? Aside from all the grueling questions designed to determine your skill set, personality, knowledge, education and behavior patterns, one remaining question always seems to be the hardest to answer.

This question makes candidates tense up, breath harder, stammer barely audible responses and maybe even break out into a sweat. What question could be so terrifying it encourages such awkward and tense responses?

Pretty simple: How much would you like to get paid?

In defense of anyone who has ever applied for a job, this is one of the worst questions to navigate an intelligent and fair response to – ensuring you don’t respond with too high or too low a figure
without knowledge of what the position pays.

From an employer’s side, if candidates respond with a figure lower than what the position typically pays, most employers feel this is a rare treat to be able to pay someone under budget for a position. On the other hand, if a candidate asks for a figure too high usually this means there will be some serious negotiations or the candidate will not be considered.

So if this question has ever stumped you, coming from the other side, you aren’t alone and there are many others who share your pain, including employers trying to negotiate fair rates in many cases.

Anyone who has successfully completed an interview and landed a job more than likely succeeded in answering this question, or possibly was told the starting rate and you agreed to it.

However, after a few conversations with your co-workers who have inappropriately shared what they make every other week. So now you know what your co-worker makes. Maybe it’s more than you or maybe it’s less, but nevertheless it has you wondering whether you getting paid what you are worth.

A word to the wise on sharing salary information. Most companies have policies regarding confidentiality of wages, so this would not be a practice I would recommend ever.

Over the years as an employee I wondered and watched as the economy took its roller coaster of a ride to get to 2014. I have watched salary analysis through different Web sites, read statistics
through state agencies, and predicted at one time shortly after I relocated to Idaho Falls, that
I may have moved to the most underpaid city in the United States.

Then I read this great article by MSN Money this week identifying Idaho Falls as No. 1 in wage growth. Here’s the link
soaring#tscptmf. This is no joke.

Keep in mind this article specifically cites statistics related to increase of weekly earnings in conjunction to unemployment rates locally – so there isn’t an MSN Money investigative reporter actually working with local employers to determine who makes this list.

Does this mean employers are paying “market worth” to their employees in Idaho Falls and beyond? There’s not a simple answer to that question.

Economically, you have to remember that employees are resources for a company, subject to basic economic principles such as supply and demand and averaging pricing (wages). If an employer is not paying fairly or at least “market value” for the positions they have they are 1.) less likely to attract solid job applicants – in fact recruiting and hiring is probably a challenge for them -- and 2.) less likely to retain employees.

If there is less “supply” of a certain position or specialty in an area there is more “demand” for
people to fill those positions, which in turn means that market pricing doesn’t likely apply to these positions.

This is in turn means they can’t find people to perform the work that needs to be done and they can’t keep people in the company doing the work that needs to be done. This is a very costly way to operate, and most successful businesses see the financial feasibility and and value of paying market rates (or even above market rates) for their positions.

It also means that if you have a specialized skill set or education within certain industries, you are going to be making money like it is going out of style in contrast with your friends and family that don’t have that same education or skill set (think brain surgeons). Now this doesn’t necessarily mean that your employer is paying you fairly. If you question whether you are being paid fairly, I'll have more to say about it next week.

Monica Bitrick is the owner of Bitrick Consulting Group, a human resources consulting company in Idaho Falls.