Returning Employees Want Higher Pay: How to Handle Salary Disparities in Construction?

I am working in the construction industry. We have employees who left the company and want to come back after a duration of 6 months. Now, I am facing a situation where, when he left the company, his salary was about $30,000, and now his present salary is $45,000, with his expectation being at least $50,000. We have other employees at the same level with similar qualifications and experience whose salary range is from $30,000 to $40,000. The operations people strongly recommend taking back the employee.

What should be done? If I take him on his expected salary, there will be disparity among the employees. I have many similar cases. Please advise.

Dear Prabhat,

This is called pay compression because in India, this dilemma always exists in compensation, and most organizations do not pay attention to this problem. New employees always draw higher-end salaries, and old employees are paid below new recruits in similar job families or occupational groups for similar experience and qualification brackets.

It's always better to maintain consistency in policy and internal equity in pay. New employees should be adjusted, and old employees should also be adjusted with a step up in pay equal to market price to avoid this kind of dilemma. You will end up paying more salary than the market because your organization's work profile does not require a person of such extraordinary qualifications and experience should also be verified.

In many cases, employees exceed the maximum salary limit for the job originally thought by management, which needs review every time. They may be overqualified just because they worked with a different profile in a different organization for higher pay, but that does not mean they should be paid based on a horse-trading formula.

Negotiations have limitations; you cannot pay beyond the market value for the assigned workload as well as the nature and level of the job. You also have to see what his job level is to evaluate your organization's pay equity problem. If his position is lower and his pay is more than his senior position in the organization, you are creating a huge problem and dissatisfaction in the organization.

Be careful.............

Regards,

Rashid

Dear Prabhat,

This is called pay compression because in India this dilemma always exists in compensation, and most organizations do not pay attention to this problem. New employees often receive higher salaries, while old employees are paid below new recruits in similar job families or occupational groups, despite having similar experience and qualifications.

It is always better to maintain consistency in policy and internal equity in pay. New employees should be adjusted, and old employees should also receive a pay raise equal to market rates to avoid this kind of dilemma. You may end up paying more than the market rate because your organization's work profile may not require individuals with extraordinary qualifications and experiences.

In many cases, employees exceed the maximum salary limit for the job originally envisioned by management, necessitating a review each time. An employee may be overqualified because they have previously worked in a different role at another organization for higher pay, but that does not mean they should be compensated based on a bartering formula.

Negotiations have limitations; you cannot pay beyond the market value for the assigned workload, nature, and level of the job. It is essential to consider the employee's job level to evaluate your organization's pay equity problem. If the pay for a lower-level position exceeds that of a more senior position in the organization, it creates significant problems and dissatisfaction within the organization.

Be cautious.

Regards,
Rashid

Hi,
Vous devez suivre «un salaire égal pour un travail égal politique" et que le salaire doit gamme fixée pour un employé de grade.
Faites votre ops directeur de comprendre la situation aussi lui dire si il; y a pas de la parité de rémunération alors il y aura attrition élevé.
REMARQUE: Ne pas compromettre les normes sur les HR.
-- Shash

Hello,

As discussed earlier, I support the view that there has to be internal equity within the organization.

If an increase in the salary of an employee leads to a failure of coordination among the rest of the employees or lowers job satisfaction, then a hike in the salary of one of the employees is not practical.

There are chances that the operations head from Britain may not take up any responsibility if the reappointment of one employee leads to lower productivity or increases the attrition level among other employees. Although the operations head may play a vital role in deciding on the issue, he may fail to take responsibility for the resultant outcomes.

The employee today may be demanding 50k to continue working with the company, but what is the guarantee that he will not demand more in the next couple of months?

If you are sure that he will not demand more than 50k in the next couple of months, after reviewing his performance, probably you can pay the extra 5k indirectly, i.e., maybe additional telephone allowance, traveling allowance, or any such allowances rather than giving him a hike in his Basic and DA.

All in all, in this season of market recession, a salary hike in a company should not be demanded by the employees; instead, they should be paid by the company based on his/her performance.

Thank you for your response.

Express the threats of a sudden pay hike leading to compensation crises and an increase in the budget in the next three months to subside the issue. Explain that this is a global practice, with the UK, USA, and the West all following these principles of pay adjustment. For the satisfaction of one employee, increasing the pay of the rest of the staff in the coming years is necessary because your benchmark will be well above the market, which is entirely abnormal.

He should take responsibility for this if he wants to reward employees beyond the market price of the job. The reason for this explanation is that most operational heads have a technical background and do not understand the HR phenomenon. Therefore, we need to explain and correct them so that they adopt a uniform policy and remain consistent.

No employee is indispensable, as organizations operate based on their own strengths.

Regards,
Rashid

Hi,

I would like to add some more comments to it. First of all, you should not entertain employees who have left your organization, even if it is due to pressure from operations. In that case, you need to make your operations team understand this, as it will create a disparity between the existing employees and the loyal employees. The loyal employees may start feeling insecure and may not deliver results. I believe this is a wrong practice and should be stopped.

Regards,
Tejasvi

Hi,

I would first like to know if he has approached you about wanting to rejoin your company or if it is that he is so good that the company can't do without him and hence is calling him back.

If it is the first (he approached you), then you are at a position of strength and you will be able to dictate the terms. Such employees should always be paid the same salary that they were last drawing. In case the employee has missed out on a review cycle when he was away, you may hike his salary by half the percentage of what he would have got since he was not an employee with the company for the entire review period. The salary that he is currently drawing does not have to be taken into cognizance at this time. If he joins back and stays on and proves himself through his performance, in his next review, the salary increase may include a correction (if any).

If it is the company that wants him back, then he may be given a hike in his salary taking into account the internal skills and salary parity. You cannot have one happy employee in the team at the cost of many unhappy ones for no fault of theirs.

All in all, the most important aspect to be considered should be that no employee can leave an organization and rejoin at his or her whim and fancy. No employer should be taken for granted in such a manner. You will have to use your convincing and negotiating skills to make this a win-win situation for the company/you as well as for the employee.

Hope this helps.

Hello Prabhat,

This is a problem in every industry. I am working as a manager in HR at the MFG unit in our company. An employee left the company at 36K and joined at 55K, but in reality, he is not worth it. Unfortunately, our management doesn't understand this situation, which is becoming critical. This trend is now prevalent in our industry.

The current trend seems to be: if you want a good salary, leave the company and come back in 2-3 months. What can be done..!! SENIORS, HELP US.

Please let me know if you need further assistance.

I'm surprised to note that no one here has mentioned anything about getting a rehire policy in place. A rehire policy would take care of such issues and could also be modified over time if a negative trend emerges as a result of it. As rightly said in one of the previous posts, depending on who is in a better position to leverage, the employer or the employee who wants to join back, a decision can be made.

It does not make sense to offer him a raise on what he was previously earning. A middle-ground solution could be to offer him just what he is currently receiving from his present employer, so that there are not too many grievances, and the candidate also does not feel that he is at a disadvantage. If not, then it is best to leave the decision to the management and let them be held accountable for any subsequent chaos. People do not simply leave their job and come back asking to be rehired at a higher salary because job hopping is not easy, and rehires are an exception. Also, it is necessary to rehire them at the same designation if a considerable time hasn't passed, as it could create unrest in the team if their former colleagues are lower in the hierarchy.

Rehiring old employees is always beneficial since they not only take less time to start delivering output but also add value by sharing best practices that they have learned in other organizations and can provide a third-person perspective. Also, the fact that they came back is a testimony to the organization, showing that it is worth returning to, and this does not go unnoticed among those already working there. That being said, all rehire cases need to be handled with extreme sensitivity since it takes no time for things to get blown out of proportion.

Hi,

Let's discuss why employees should not discuss their pay in your organization. Establish a clear rule that prohibits employees from disclosing their salaries. This can help prevent differences arising among employees.

Additionally, consider offering the employee the same salary they currently receive, along with an extra bonus after a certain period (e.g., 6 to 9 months of service). Set targets for the employee to achieve, along with providing benefits or perks. Ensure that these details remain confidential between management and the employee.

Lastly, consider offering the employee a more advanced role with increased responsibilities.

Thank you.

Hi,

I totally agree with Rashid's reply. You need to take a stand on the policies of the company and ensure that the old employees are not affected by the salary offered to the new employee. If you need to offer a salary outside the range, then you need to restructure the compensation package of the old employees according to market standards through benchmarking. This is a very sensitive issue, and you should deal with it logically. Failure to pay well may lead to employee attrition. They might resign and attempt to return with a higher pay and better designation.

This situation occurred in my previous organization where I worked. People were leaving and then rejoining with improved salary and designation. It harms the culture of the organization.

Regards, Neelima B

Neelima,

As HR professionals, we usually establish strict rules and communication guidelines stating that employees should not discuss salaries. However, inevitably, employees may still engage in these discussions or become aware of salary information. Consequently, it becomes challenging to monitor and control employees in this regard.

Regards,
Uday

Prabhat,

In an ideal scenario, you shouldn't offer this employee beyond the range within your organization. However, if your boss insists, you may first clarify the cultural differences between India and Britain and explain to him the consequences - the people you could lose because of hiring this person at a higher salary. Other factors that you may want to consider are:
- The time that this person will take to join your company
- The scheduled next revision for your existing employees

This data will help you understand the impact. Some companies, in such cases, offer a CTC within the existing range in the company and provide a joining bonus that fills the gap between the range and the expectation. You can also have certain conditions attached to the joining bonus, such as the minimum time one has to stay in the company, etc.

Anand

Dear Prabhat,

I followed the responses to your post and found them all to be reasonable and valid. As for actually executing the option, in case then it depends on 2 things as someone also pointed out in the responses:

1. Has he shown a desire to come back?
2. Has the company approached him to join back?

The bottom line in both cases should be: Is he worth enough to be taken back?

If the company really needs him, then he should be given the package in accordance with the structure prevalent in the company, and you can top it with performance-related incentives and add-ons. This way, the resentment in the company can be reduced. But after this, you would have to undertake the restructuring and salary alignment exercise to put the structure in place.

In the other case, if he has approached you and you feel he would be an advantage, then take him in the existing structure and promise him a hike based on performance. In normal practice, every organization should have annual increments and salary revisions based on market trends. If this practice is in place, then rehiring and salary grievances can be handled well. I really appreciate the suggestion of a rehiring policy. If the HR manual contains a rehiring policy, then automatically the problem can be taken care of.

-Renu

Dear Madam,

With due respect to your opinion, I would like to add here that first of all, we must understand that we have to eliminate the root cause which promotes such tendencies where employee migration yields more pay upon rejoining. Employee pay can be justified by the market value of the job, which does not mean that if only one or two companies, due to some mistake, offer above-market salaries, we should follow suit.

In the Indian context, jobs are not properly evaluated, and no job evaluation is used to identify relative worth or ensure proper matching of job descriptions with candidates. Candidates are either overqualified or underqualified, resulting in mismatches in salaries and market pricing of jobs.

This is a poor compensation strategy and practice.

One important issue we are ignoring here is that in India, people change organizations and come back because they find it very difficult to "sell" themselves with higher expectations to their employer, who offers them more than their previous employer under the impression that they will perform to the level of the salary offered. However, often both parties fail, and the employee seeks a rescue plan and refuge in their previous employer but wishes to cash in to restore their dignity rather than anything else.

Therefore, my previous reply was to eliminate technical problems, ensuring that any migration of employees has no adverse effect on the organization if the compensation, rewards, and recognition are at par with the market.

Kind Regards,

Rashid

You should not take on more than you can handle, as it may lead you into trouble. Handling such cases will come your way rapidly due to this one.

Hi!

Have you asked yourself why this former employee is so eager to come back? With the market situation as it is, you could simply tell him to forget it if he is adamant about asking for 50000. Operations almost always demand an exorbitant CTC for their employees/recruits. Remember, you are the HR; don't let the Operations run you - YOU run them!

"I am working in the construction industry. We have employees who left the company and want to come back after a duration of 6 months. Now, I am facing a situation here: when he left the company, his salary was about 30000, and now his present salary is 45000, with an expectation of at least 50000. We have other employees at the same level with similar qualifications and experience whose salary range is from 30000-40000. The operations people strongly recommend taking back the employee.

What should be done? If I take him on his expected salary, there will be disparity among employees. I have many similar cases. Please advice."

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