Why do companies have staff policies like this.
Discussion
Facts and figures are for illustrative purposes only.
Manager leaves his ~£60k job a few weeks back. His defacto second in command is put in charge of the group as an interim measure. The managers job is then offered to the second as he is by far the best candidate for the role (years of proven experience, very good at his job, well liked on site etc) - but second is only offered ~£45k as that is the maximum dictated by some "20% maximum payrise" rule. £45k wouldn't even bring the second's pay into the bottom end of the manager grade pay bracket.
Second would like to stay as job is near family, but refuses the role as he has been offered a job elsewhere on almost 50% more, with less responsibility, good relocation package etc. Company try to persuade second to stay - but won't give a revised offer claiming their "hands are tied". Second hands his notice in and leaves.
If the manager's job is now advertised externally (which is likely as there is nobody else with the required knowledge/skills within the company) - the company will have to offer the market rate of around £55-60K to get somebody with the required skill set - plus incur all of the costs of recruiting, training, relocation, lost productivity - and potentially get somebody who is worse.
I have come across this many times over the years whereby internal promotions/pay rises are never as generous as the packages offered to new staff.
Can anyone within HR shed any light on why companies do this? Why not just offer the second a fair wage for the role and be done with it? Surely it can't make sense from a financial perspective?
Manager leaves his ~£60k job a few weeks back. His defacto second in command is put in charge of the group as an interim measure. The managers job is then offered to the second as he is by far the best candidate for the role (years of proven experience, very good at his job, well liked on site etc) - but second is only offered ~£45k as that is the maximum dictated by some "20% maximum payrise" rule. £45k wouldn't even bring the second's pay into the bottom end of the manager grade pay bracket.
Second would like to stay as job is near family, but refuses the role as he has been offered a job elsewhere on almost 50% more, with less responsibility, good relocation package etc. Company try to persuade second to stay - but won't give a revised offer claiming their "hands are tied". Second hands his notice in and leaves.
If the manager's job is now advertised externally (which is likely as there is nobody else with the required knowledge/skills within the company) - the company will have to offer the market rate of around £55-60K to get somebody with the required skill set - plus incur all of the costs of recruiting, training, relocation, lost productivity - and potentially get somebody who is worse.
I have come across this many times over the years whereby internal promotions/pay rises are never as generous as the packages offered to new staff.
Can anyone within HR shed any light on why companies do this? Why not just offer the second a fair wage for the role and be done with it? Surely it can't make sense from a financial perspective?
Edited by Moonhawk on Monday 8th June 19:26
My company is exactly the same, I've never understood the reasoning. I've seen many, many skilled and experienced people leave without so much as a thanks, let alone a reasonable salary increase. Only for the jobs to be advertised externally for several thousand more than they were on. Surely you'd want to keep knowledge and skill within the company rather than watching it walk out of the door?
Scantily said:
My company is exactly the same, I've never understood the reasoning. I've seen many, many skilled and experienced people leave without so much as a thanks, let alone a reasonable salary increase. Only for the jobs to be advertised externally for several thousand more than they were on. Surely you'd want to keep knowledge and skill within the company rather than watching it walk out of the door?
Crazy isn't it. I found this study from the US about this very thing:http://knowledge.wharton.upenn.edu/article/why-ext...
Round these parts we would make clear to that individual that whilst 20% was a maximum, it is only and annual maximum, we would look to even things in year two.
Sounds like he was massively underpaid anyway, what sort of firm has such huge pay gaps between the manager and the strong second.
In the end any HR policies are a guideline, sometimes the commonsense thing to do is ignore them. Of course it sets a difficult precedent for the next example, but some times you have to see the bigger picture.
Gargamel said:
Sounds like he was massively underpaid anyway, what sort of firm has such huge pay gaps between the manager and the strong second.
Can be quite easy in firms that have relatively flat structures (meaning large leaps between grades) and wide pay bands.If the manager was in the top quarter of his salary band and the second was in the bottom quarter of his - that could easily account for £20k+ PA difference. I have worked for companies that had salary bands that were in excess of £20k wide for the same grade.
Edited by Moonhawk on Monday 8th June 21:33
SimonD said:
Of course the mistake is to limit the pay rise to a person, when it should actually be linked to a position. Thus, if you move positions you are not capped, but if you simply 'improve' within your existing position you are. Simple. A bit like a lot of HR people I've met...
Yes than makes more sense. There probably has to be some sort of control to prevent people simply threatening to leave every time they want a payrise. But to limit pay to the person and not the role they are performing seems pretty ridiculous.
I've experienced exactly the same, at a FTSE 250 plc.
Role advertised externally for £XX - £YY
I was successful as an internal candidate yet was offered more than 10% below the lower limit they pitched it externally.
When questioned with the external advert, the ONLY reasoning HR and Senior Director could come up with was that 'it was still an increase on my previous salary'.
I said thanks but no thanks and explained I'd hand my 3 month notice in by the end of the week.
They changed their mind a day later and I was with the company for another 3 years.
However, I've never understood how they thought anyone internal would accept at that level.
It was a reasonably senior role at a level which required someone with common sense. How did they think such a person would (a) not find the external advert/salary, and (b) not be aware that by going internally they'd also be saving a 30% recruitment fee
Role advertised externally for £XX - £YY
I was successful as an internal candidate yet was offered more than 10% below the lower limit they pitched it externally.
When questioned with the external advert, the ONLY reasoning HR and Senior Director could come up with was that 'it was still an increase on my previous salary'.
I said thanks but no thanks and explained I'd hand my 3 month notice in by the end of the week.
They changed their mind a day later and I was with the company for another 3 years.
However, I've never understood how they thought anyone internal would accept at that level.
It was a reasonably senior role at a level which required someone with common sense. How did they think such a person would (a) not find the external advert/salary, and (b) not be aware that by going internally they'd also be saving a 30% recruitment fee
At my previous company we had pay bands per role / position in the company which over lapped so you could move up a position and get a healthy raise albeit never above the band for that particular role. Such a thing should ensure that the chap that left would be reasonably close to his 2nd in command. The downside to bumper raises of course is that the person that gets it then brags about it which can "unsettle the horses".
TX.
TX.
Depends on the person, for everyone that says no, there are probably 3 more who would suck it up for a couple of years for the title and then chip off...
I've been asked in interviews to rank these 3 things, education (what you'll learn I mean), money, and title - that says to me that some people actually put title at the top of that list whereas I put it at the bottom, and sounds like your man also did perhaps?
I've been asked in interviews to rank these 3 things, education (what you'll learn I mean), money, and title - that says to me that some people actually put title at the top of that list whereas I put it at the bottom, and sounds like your man also did perhaps?
Hackney said:
Surely rules related to a "pay rise" are only for doing the same job.
A promotion is by definition a different job and not covered by the pay rise rules.
Or am I using too much common sense?
Yes I have worked places where there is a caveat for promotions or change of job roles. It would make sense wouldn't it...A promotion is by definition a different job and not covered by the pay rise rules.
Or am I using too much common sense?
98elise said:
Another example is where the current market means new staff are paid more than existing staff. The only way for existing staff to get the current mark rates is to leave and work somewhere else.
This happened at my place. A colleague realised his job commanded £10k more in the wider world, so he asked for it, they said no, so he left and went to work for £10k more elsewhere. His vacant position was then advertised for £10k more then he'd been on even though they wouldn't give him it. Same applies to my role. It's pathetic. bucksmanuk said:
HR behaving like w@nkers shocker!
Sounds to me more like a weak senior manager, having held various salary budgets I felt it was my responsibility to A) defend it hard from any challenge B) use it very wisely.An HR objective maybe completely at odds to an operational one- key thing is, who holds the budget?
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