| solid comparison. There's a parallel here to the employee/consumer side too. A telco wants new customers. The way to do it is price, but lose if they cut everyone's price by 20% to gain 10% more customers. So price selectively. Companies want to hire the most when the market is best (that's why the market is good). That might require 20% higher salaries, but they don't want the whole salary bill to increase. So, they selectively "price" new hires (and usually also people who get competitive offers). In both cases, this also increases tension. Employees/consumers realize that they can get more if they switch. But switching is effort, and not everyone will make the effort. Not everyone will get completing offers either, so from the company's perspective it will always be more expensive to price match the best offer and offer it to everyone. Btw, it also works the other way, in bad markets. In bad labour markets, the salary you have is probably better than the salary you can get, and new hires earn less. Here, the company management hears about low wages their competitors pay and fume that it's impossibly hard to lower salaries across the board. Overall, I don't think it's that bad a thing. It seems stupid when you're caught in it. Why do I need to change jobs/bank/plans just to get "market rate?" Systemically though, it helps create dynamism. You aren't supposed to in a job or Telco plan for life. |
Here, the company management hears about low wages their competitors pay and fume that it's impossibly hard to lower salaries across the board."
ohhh, you're a young one, no? Companies do that all the time, by closing entire divisions, calling it "restructuring" and making your above the market salary disappear over night by re-branding the positions. That's how they do it legally. Fire you because your position doesn't exists anymore and hire you again if you want at a lower salary doing the same job with same tools and even same PC/chair.