The Devastating Effects of Salary Compression on Employee Engagement (Part 1)
By James T. Stodd, SPHR, SHRM-SCP
October 12, 2015
Marissa’s Story
Marissa has just finished her second year as a recovery room nurse at the Weyman Surgical Center. This is her first nursing job after graduating cum laude with a bachelor’s degree in nursing, and passing her state board exam as a Registered Nurse. She loves her job, she loves helping people through the recovery process, and she especially loves interacting with family members and care givers as her patients progress through the recovery process. Even though the process repeats itself several times each day, Marissa gets a big thrill each time she transports a patient through the facility exit and helps them from the wheelchair to their car. It gives her a great sense of satisfaction to close that car door behind them, knowing that she/they have helped this person live a longer and better life.
For Marissa, nursing is a passion, but things didn’t start out that way for her. In fact, she started her career by getting her college degree and working as a medical technologist. And even though she was gifted in laboratory sciences, the lack of regular patient contact was just not fulfilling for her. That’s why she made the decision to go back to school and complete the requirements for a nursing degree.
Given her intelligence, breadth of education, and passion for helping people, Marissa has excelled as a nurse at Weyman. She performs her job in an exemplary fashion, and is very highly regarded by the medical, nursing and administrative staff of the clinic. In fact, one day the Director of Operations was overheard by one of Marissa’s closest friends to have said “my job would be much easier if I had more nurses with the ability and dedication of Marissa.”
Like most surgical centers of its type, Weyman provides each employee with an annual performance review and merit increase based upon that performance rating. The average merit increase Weyman has granted to staff over the last several years has been 3{56cd7e6aa1a9e8b37b474966a37e40db52ca317c7a8b7c79ab3d6ff71decf1c7}, which is pretty typical of most surgical centers. In Marissa’s case, she started out with the base salary customary to new graduates. However, given her exemplary performance, she has been one of a minority of employees to receive a “superior” rating on each of her two annual performance reviews, as well as 4{56cd7e6aa1a9e8b37b474966a37e40db52ca317c7a8b7c79ab3d6ff71decf1c7} merit increase along with each. She has been very proud of her accomplishments, and thus far the treatment she has received from the Weyman Surgical Center.
Marissa normally takes a lunch break with co-workers from her unit. However, several weeks ago Marissa was in the lunch room grabbing a quick bite on her own because the post-op center was extraordinarily busy that day, and they were short-handed due to staff illnesses. A couple tables away were Alison and Johanna, two recent graduates who had been hired several weeks prior to work as RN’s in the patient preparation area. Marissa had met them both before, but was not very close to them since they worked in different departments. She did know, from overhearing prior lunchroom conversations, that while attending nursing school both Alison and Johanna had been average students, at best, and that neither had passed their registry exam on the first taking. Nevertheless, having graduated and eventually obtained their licenses, both were hired by Weyman as staff nurses.
Given that she was sitting alone, she couldn’t help but overhear their conversation. Apparently several days prior, Alison had purchased her first brand new car, and was very excited about her purchase. Johanna, on the other hand, was still driving a 15 year old car that her parents had given her while attending college, and was really excited about the prospects of buying her own new car. So Alison was giving her some “coaching” on getting the price and financing she desired. That conversation included comments about promotional prices, credit reports, FICO scores, and other matters related to auto purchasing and financing, none of which was too exciting for Marissa. Then, all of a sudden, Alison said in a loud demonstrative voice, “if they give you any hassle, just tell that finance manager that you make $XX,XXX per year, and that will take care of that! It did for me!” Marissa couldn’t help but overhear the salary figure Alison had just blurted out, and based upon what she heard, it appeared that both Alison and Johanna were hired at a rate of pay a bit higher than what Marissa was currently making.
Marissa went back to her work station and continued taking care of the patients with her customary sense of dedication. However, what she had overheard in the lunchroom kept gnawing on her mind. “Surely Weyman wouldn’t pay a couple of new graduates more than she was being paid” she thought. After all, she had a much broader education, graduated tops in her class…twice, and had given the clinic two years of superior performance. “It just can’t be” she thought. But no matter how she tried to dismiss it, the sense of “inequity” just grated on her. And while Marissa dearly loved giving her best to serve patients, some of the luster that she had previously enjoyed at work was missing. Even more sadly, the sense of pride she had in her accomplishments as a Weyman nurse were being replaced with feelings of being disrespected, a loss of confidence, a loss of trust in management, and an increasing “anger.”
Comments
The individuals and organizations portrayed in this story are fictional, and are not intended to reflect in any way upon any individuals or organizations that share the same names as those used within the story. However, this fictional account does illustrate circumstances and scenarios that are played out in real life hundreds of times each day. Within this story, both Marissa and her employer (Weyman Surgical Center) are victims of what is known as “salary compression.” Salary compression occurs when salary increases given to existing staff members (often administered as “merit” increases) do not keep pace with the realities of the market. This frequently occurs not only with registered nurses, but also commonly occurs within other science, technology, engineering and math (STEM) fields, as well as other high demand occupations. Not only is salary compression common, it has reached epidemic proportions in today’s workplace.
Salary compression inevitably results in perceptions of “inequity” that naturally drive changes in behavior that are often detrimental to the interests of the employer. Those behavioral changes are often accompanied by feelings of being disregarded or disrespected, distrust of management, hard feelings amongst coworkers, diminished comradery and cooperation, declining performance, and in some cases even sabotage. Equally important, perceived “inequity” almost always results in a diminished belief that loyalty, dedication and hard work are the right formula for getting ahead, at least with respect to their current employer.
In short, salary compression is a serious threat to both employee engagement and talent retention that employers often overlook, or don’t take sufficient steps to prevent or rectify. This post provided an example to illustrate what salary compression is about. Part 2 will continue with Marissa’s Story so we can understand more about the mind and behavior of someone experiencing inequity. Then Part 3 will address what employers can do to prevent or fix the perceived “inequity” that often comes with salary compression.