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Company culture is the environment that is entwined throughout the organization. It is the sum of the company policies, communication methods, and the organization’s values and practices. Company culture sets the rules of engagement from management down and across the workplace.

Without going into an economic history lesson of how wages were and continue to be driven by supply and demand, let’s look at how workers value themselves compared to how employer values their assets. Traditionally, this is how compensation has been set. A bargaining strategy in an employer market leaves employees feeling undervalued. In an employee market, the opposite occurs as employees feel empowered to turn the tables. Both sometimes start the relationship with the company from a position of inequity.

We can see throughout the generations how the economy has influenced the behavior of the workforce and the employer. The Industrial Revolution saw the Traditionalist generation as the greatest in the workforce.

With the Traditionalist generation, company culture was set by a “heads down” and work hard mentality, leading to a 60-80 hour work week. There was little to zero negotiation for a pay increase. Engagement was generally a personal outcome and not in a company’s culture.   In return, if pay increases recognized individual success, the message documented in the handbook was “do not discuss salary.” The outside world knew by the new vehicle purchases, the bigger house, or the new clothes. Keeping up with and surpassing the Joneses was the driver behind keeping “the secret.”

This theory was then passed down to the Baby Boomer or Post-War generation. Negotiations started taking place as this generation became more driven by materialism.  Keeping up with the Joneses was no more a silent way of living. Salary negotiations became an everyday occurrence, turning the table of the traditionalists at the other side of the desk.

This tactic pitted hiring managers against employees right from the start. Managers were not trained on setting compensation from equality and equity points. They were given a single budget figure, and their role was to pay less, so they had dollars left to spend elsewhere. Employees were not trained in determining their value in the marketplace. They were not always negotiating from a place of equality.  Women and those of varied ethnic or racial backgrounds continued to be undervalued, and they came to the table without negotiating power.

The employment relationship begins with a lack of trust, fairness, and equity.

“Public news of pay inequality at companies with more secretive pay communication practices can seriously damage their reputation, as was the case at BBC and Google. Finally, studies indicate that, at least in the short term, pay transparency may have some important benefits for employees and their employers. For example, pay transparency has positive impacts on employees’ perceptions of trust, fairness, and job satisfaction and has been found to boost individual task performance” https://hbr.org/2022/08/research-the-unintended-consequences-of-pay-transparency

From the millennials on, we continue to see a power shift as workforce imbalance thrives.

Today, companies frequently point out that employees are the greatest asset to a business. Company culture dictates the how value of the employee as an asset are set.  As pay transparency becomes regulated and the distribution of equity (which has been regulated but, in some companies, ignored),  an employer’s culture has to take on an openness that might make them feel unprepared.

The conversation shift should be now placed into the hands of a Human Capital Management Strategy. Employees are no longer thought of as an asset which is commoditized (i.e., bought and sold or easily replaced) but a capital investment (resources invested for long-term sustainability). Does your organization and department strategy support that theory? Consider the following questions:

  • Do you have a strategy?
  • Has ownership bought in?
  • Does it address your client’s most pressing and potential long-term needs?
  • Cost of the program?
  • Resources needed to implement and administer the program?
  • How success will be tracked, measured, and reported
  • How long are you willing to support the program to see results?
  • How or if the solution competes with, supports or integrates with other employer-sponsored benefits/programs
  • Will it need individual promotion and/or education?

These tactics are about transparency and measuring the Return on Investment (ROI) against engagement. Employees are to be a part of the company’s mission and goals and not as a hidden dollar value while maintaining the required compliance.

Human Resources is a prime position to be elevated and become a strategic force for compliance and instituting leadership development, setting strategic compensation and hiring practices, and equalizing the playing field between employer and employee.