RETHINKING REWARDS: INTERNAL EQUITY VS. MARKET DATA
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Description
The inspiration for our second debate comes from a conversation Sarah and Neelie had when they first met to talk about this episode of HR Debatable. Funnily enough, then Rachel also posted something about this topic on her LinkedIn page and she beautifully said what Sarah was talking about which gave Neelie the idea for an interesting debate:
“Traditional economic theories have often assumed that employers possess perfect knowledge, which is far from reality. In my experience, employers grapple with two elements of imperfect knowledge: the market information and their own data.
Market data is inherently imperfect, particularly in environments with high inflation where it quickly becomes outdated. Access to benchmark data is often restricted by high costs, limiting entry to organizations with large budgets, and its reliability depends on the accuracy of entries made by participants.
Speaking with specialists, this area is already being disrupted with live data and, increasingly AI interventions, leading to lower costs, greater efficiencies and better outcomes.
Meanwhile, organizations continue to grapple with the challenge of managing their own internal data. One of my clients had to buy back their own information from the payroll provider as that was the only globally reliable source.
Imagine working with this data and also having to include complementary or variable components for as many as 27 countries as part of the EU's Gender Pay Gap reporting requirements.
The balance of information which employees hold is going to fundamentally shift and companies need to prepare, starting with the fundamentals.”
This brings us to the second statement of today:
“Internal equity is more important than external benchmark data.”
