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Coffee Talk

#41 - Variables that determine pay

Margrét and Henrike talk about the variables that determine pay. Should older employees be paid more than young ones doing the same job? Are there alternative approaches to using age to represent experience? Our hosts also talk about employee performance, the most controversial (and possibly most fun) variable to measure.

#41 - Variables that determine pay
Episode 41 - Variables that determine pay

This week, Henrike and Margrét start with an employer’s question. There are two employees, one who is 25 with 5 years of experience and one who is 35 with 15 years of experience, who both do the same job. Should they be paid the same?

This question is essentially about the variables that determine pay. These variables can and should differ depending on the company. So the answer to the employer’s question depends on their pay philosophy.

But as Henrike points out, experience is an especially tricky variable. Because it’s hard to measure, many employers use age as a surrogate. But many younger employees may think this is not fair: just because another employee is older doesn’t necessarily mean they do the job better.

For this reason, as Margrét has seen, many employers have begun using time in role or time in organization instead of age to indicate experience. Others have developed schemes that assign a grade to each job within the organization. These grades inherently capture the employees’ experience, so age makes less of a difference.

In the time remaining, Margrét and Henrike chat about another variable, Margrét’s favorite “because it’s always so controversial and it’s so fun to analyze and discuss” — employee performance. Surprisingly, organizations claiming to be performance-driven often do not include performance in their pay structures.

Overall, the increasing need to quantify variables like experience and performance, especially in the light of new legislation, may motivate countries to adopt a more disciplined approach to pay decisions.

Friday Coffee Talk from Planet Fair is a YouTube series co-hosted by PayAnalytics founder Margrét Bjarnadóttir and Henrike Von Platen, founder and CEO of the FPI Fair Pay Innovation Lab in Berlin.

#42 - Would joint leadership work for you?
Coffee Talk

#42 - Would joint leadership work for you?

​​Among the practices that helped earn BMW its gold medal for universal fair pay leadership, the company allows joint leadership for some leadership positions. In this coffee talk, Margrét and Henrike discuss this practice: when can it be helpful to allow one full-time position to be filled by two part-time workers instead?

#39 - A Good Week for Pay Equity: International Women’s Day and Fair Pay Certification

Margrét and Henrike talk about good news for pay equity: International Women’s Day and a major Universal Fair Pay Check win from BMW. The duo discuss why companies pursue fair pay certification. (It’s not just about employer branding – it can build lasting trust with employees.) Plus, they outline the two first steps companies take in order to get certified.