What do you do when … your employees are discussing their pay?

You see Tara and Linda talking in the break room. It’s nothing unusual – they are good employees and are taking a little break. As they walk out of the break room, Linda’s face is red and she looks upset. For the rest of the day, she sits quietly at her desk, not talking to anyone.

At the end of the day, she asks if she can talk to you. “I’d like to know why Tara makes money than I do,” she said. “I have more experience and a degree. It’s not fair.”

http://www.flickr.com/photos/dollarfolds/

You squirm in your seat. The only reason Tara is paid more is because she negotiated her salary when she was hired, and Linda didn’t. But you don’t want to tell Linda that because it’s not fair – she’s right.  You’re busted!

On the one hand, employees really should not discuss their pay. It’s an unwritten rule. But they do, unfortunately, and usually two people suffer: the employee is making less than everyone else, and you – the boss – because you are going to hear about it and you may lose a valuable employee as a result.

That is why you must have a process for determining what to pay your employees. And on top of that, as part of your budgeting process, you want to make sure that your salaries are in line with the market is paying. You don’t want to lose your best people to another company that is going to pay them a better wage.

It’s tough trying to determine what to pay your employees! You’re literally putting a price tag on someone’s head! But when you have a fair process in place that helps you arrive at employee wages in a logical manner, you can’t go wrong.

Getting back to Linda … I’d give her a raise. What would you do?

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