Mind the gap: How much pay is too much in your organization, and what to do about it?

Abstract

Today a majority of the global workforce is struggling to make ends meet, battling a cost-of-living crisis and inadequate wages. Meanwhile a minority of higher level executives have reportedly never had it so good. Understandably, remuneration at both ends of the wage spectrum has become a polarizing issue, not only for society but also for workplace relations and organizational performance. We all probably need some form of guidance to better be able to design fair, sustainable and effective wage systems. Gauging where your gap is at, and if it is too much doing something to fix it, is the overall purpose in this article. Finding the ‘right’ gap, from your organization’s own wage ceiling to its floor and in-between, is a question for organizational dynamics and performance. Minding that gap entails finding ‘what works here,’ in your own wage context, including for all staff and organization alike. Societal debates on inequality often overlook this organizational and dynamic, performance-based perspective, even though research warns us not to. Between countries, inequality is rising, driven in part by unequal wages. It is also rising within countries, often occurring between - and more importantly for us - within organizations. Managing that gap is the ultimate aim and objective in this article.