The term internal relativity has a few definitions however, the simplest one is that salaries are paid fairly and competitively, taking into account the market place, value and based upon an accurate evaluation of the positon.
Susan Doughty states in her article, that "Let’s face it, internal relativity has always been a ‘thorn in the side’ for HR professionals".
We constantly need to be aware of the ‘bigger picture’ when valuing jobs relative to others, both within the organisation and externally. The issue has been exacerbated by the need to get new staff through the door at any price, by making external relativity the primary driver over internal relativity. Of course we all want to be externally competitive, that’s a given. And there will always be internal relativity differences because of tenure and performance, but the imbalance is beginning to take its toll. As for some time now we have been living with the illusion that we can continue to keep hiring new staff at premium pay rates without addressing the consequences, the impact on our existing staff and their retention.
There is no doubt that the gap between current and new employees is getting wider, and will continue to do so as we compete head-on for talent at the best price in this volatile market. Add to this the impact of other rising compliance costs such KiwiSaver and additional annual leave and we find ourselves with a dilemma. How do we fund everything and still run a profitable business?
To access the full article, written by Susan Doughty, for HRINZ publication which is listed below for your information.