Organizations are not doing right if they hire new employees on new rates while leaving their old employees languish in their old rates.
It is the primary responsibility of HR to make sure that the FOUR (4) compensation principles are at work in their organization. If the principles are not at work, then HR has failed in its job.
The four compensation principles that I am talking about are the following:
1. Internal Equity
2. External Competitiveness
If the first principle (internal equity) is being observed by an organization, old employees are not supposed to have a problem because any adjustment to the hiring rate of new employees would have automatically protected them. This view presumes that old employees have been properly evaluated and graded/classified and that the company uses the appropriate "salary grade" in an internationally accepted salary structure. Indeed, internationally valid salary structures can easily adjust should there be any need to adjust hiring rates.
There is only a problem in countries whose employees' salaries are based on individual negotiation (during hiring) and whose "rates components" are interpreted as "the salary structure" itself. Under this methodology, adjustments of old salaries would be a major issue as HR will have to look at many things and factors per employee. And, it is expected that there will be a lot of subjectivity and/ or bias in any adjustment decisions, esp. if no standards are issued on the matter.
My company helps business organizations worldwide migrate their compensation and salary structures to international standards and processes. Let me know if you need help and has budget for an external consultant.
Ed Llarena, Jr.
From Philippines, Parañaque