Unexplained Wage Gap Kills Culture And Happiness

person laughing at a man in white top
Photo by Yan Krukov on Pexels.com

How much is enough? What’s less and what’s more? These are not so easy questions to answer when it comes to employee wages. One thing is certain though: unexplained and unjustified wage gap destroys work culture and erodes trust.

Employee salaries shouldn’t be treated as a finite number. Salary is relative. Relative to a lot of influencing parameters.

Need, aspirations and equality are three of most influential parameters.

  • Need and aspirations define “How much is enough?”
  • Equality of pay or pay parity influences happiness and pride.

The OECD Report on Global Purchasing Power Parity

Recently, there were more than a few posts on LinkedIn referencing a report by OECD – OCDE – Purchasing Power Parity by countries.

asian woman with basket full of fresh produce. Purchasing power is an important determinant to fix salaries and reduce wage gap.
Photo by Sam Lion on Pexels.com

As per the report, a person living in India needs to earn approximately $28,836 annually to live the equivalent of a $100,000 lifestyle in the US. The requirement for a similar lifestyle in the UK was reported to be $81,493.

That report brings clarity to how we perceive salary packages when comparing job offers from companies in the USA, UK and India.

I was advising a very close friend of mine whether he should accept a job offer to relocate from India to UK. Hence, this study was of interest to me.

Another personal example of perspective and equality to understand the effects of wage gap.

This takes me back more than 15 years when I happened to be employed with one of India’s leading ITeS providers.

My job satisfaction, pride in my job role, pride in where I worked and my overall happiness were unparalleled. Needless to say I was great at my work and I did receive job offers rather frequently. However none were considered.

I was a loyalist and till date I’ve maintained that if ever I’ll go back to working for a company, it will be none other than Wipro.

However one incident back in 2007 or 2008 jolted me hard enough.

Someone in the human resources function unintentionally revealed my salary to two of my co-workers. Now, as an internally promoted employee, I was earning relatively and significantly lower than my co-workers who were hired for the same role from other organizations.

I should make a note that the HR executive was not at fault here. She was resolving one of the concerns raised by my co-workers and they happened to see a list of employees and their salaries while discussing their concern.

However they decided to mock and taunt me for my lower wage.

This unrelated incident did not change any of my needs and aspirations. However, this changed my perspective and challenged my worth.

My happiness and pride crashed in an instant. I felt humiliated and embarrassed.

So, I raised the wage gap concern with my immediate bosses and I was generously compensated in the next appraisal. I was fortunate to be working for the right organization and bosses who acknowledged my concern and resolved it.

So coming back to the wage gap and its relation to culture and happiness at work.

  • Needs and aspirations define “how much is enough?”
  • Equality influences happiness and pride. Happiness and pride at work are directly proportional to a productive work culture

It’s every leader’s responsibility to fix both the above – ensure that the job role offers enough to cover needs and aspirations. Particularly needs.

And, maintain pay parity. Both internally and externally.

There are several reports and websites that can be used to get a comparative salary report for each job role and work location. LinkedIn salary comparison, Paycheck, Glassdoor are some examples. Try and be among the top 10% payers if you can. And if you cannot, question how to improve the productivity and efficiency to push you higher up the scale.

Everything else – employee engagement, goodie bags, walls of fame, appreciation letters, meal vouchers, cannot bail you out if wage gap and inequality are prevalent in your workplace.

Pay for what a talent is worth. And if you may, pay more than what a talent is worth.

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By Nitesh Verma

Founder - Business Management Blog. I am an independent business strategy consultant, helping companies take data driven business decisions. My mission is to find and implement simple solutions for complex business problems.

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