One of the most significant reasons for the instability of a company is an unjustified difference in salaries of the employees. It is a very critical problem faced by many companies and startups. This practice damages the open culture of the company. I have already talked about necessity of an open culture in one of my earlier article “Making a great company”. Along with retention issues, it causes much more long term damage to the company. Incentives and motivational increments as mentioned in my earlier article “Making a great company” is something different. But hiring a new batch or a part of team on unjustified packages and benefits is a whole different story. This happens sometimes due to clashes among top management or due to any other external or internal influence. Following is an extract of my personal and professional colleagues’ experiences. Let’s talk about each issue one by one.
1.Backdoor talks culture
I have already mentioned in my previous article “here” that if you want to make a great company culture, avoid back door talks, avoid secret conversations, and avoid discrimination. If you are going to decide something, take your employees in confidence. Share your ideas with them and ask for their opinions. Remember don’t let old school mentality ruin your company.
Having a salary difference among employees creates the backdoor culture. Managers start talking and fighting backdoors. It creates an unrest in the company. Employees start seeking some other factors in which company may be exploiting them. Ultimately company becomes a playground for hide and seek.
Trust between employees and company
When company starts creating differences among employees, then employees also start losing their trust on their company and management. Trust is the most valuable gift which a company can give to its employees, sometimes it’s more important than money. Money can be overlooked sometimes but not always, especially not in these scenarios. Companies which maintain trust with their employees, get saved at crucial times by their employees because they consider each other as a family.Motivation and Ownership
It is a human nature to be motivated when appreciated and take ownership of the work which they do. Motivation and ownership of the employees is an important factor to drive them productively. When they feel that they are being paid less or not being appreciated for their work and someone new in the company is being paid and appreciated more than them then things start corroding. People lose motivation, they start making wrong decisions, depression and behavioral issues start arising.Superiority & pride
Another wrong thing which arises with this dilemma is development of baseless sense of superiority and pride among those who are being paid and promoted unduly. Their behavior with “Victim” employees starts getting worse. This condition develops another breeze of unrest in the company. Company starts drowning in the dead whirl of superiority and inferiority complex.Grouping culture
When employees don’t get anywhere to discuss their issues, they start making their own groups and at worst a “Mob psychology” starts to arise in the company. Intentions and mindset of one person does less damage than the situation when this mindset is transferred to many it becomes a mob psychology.Alternate planning&Retention issues
Of course it’s natural that when people get hurt or lose, they try their best to move on and search something better for them. As soon as they find something better for them, they quit leaving everything as the responsibility of the company. And from here starts retention issues. If company fails to maintain retention of its employees, its success gets in trouble. Always remember, companies are not run by money, instead by people and their unity. Purpose of company is to make more money instead of relying on its previous money to make insane decisions.Confidentiality clause (A last nail in coffin)
Confidentiality clause is a part of the contract agreement with employees forbidding them to declare their salary. This is like a Last nail in the Coffin of a dying company. It hurts open culture, it hurts trust and self-respect of the employees and ultimately it’s a nail in the coffin of company not the employee so decide for yourself who is in danger more in this scenario.