“Can New Arrivals Earn Twice As Much?”

The rule does not change, whether it is a family-run, domestically-owned but professionally-managed or foreign company; newly recruited personnel and executives earn more than those who are already at the company. There are even cases where the new arrivals can earn up to twice as much as those already working in the company in the same position. This situation has a negative impact on the old employees’ motivation and loyalty to the company and increases internal tensions. Experts advise that the differential between the salaries of old and new personnel should not exceed 20 percent.

“We do the same job but the new recruit earns more than me.” These words belong to a high level financial executive. The fact that the new recruit earns more has a negative impact on this executive’s job motivation. A salary differential which rises to 70 percent generally has a negative impact on job motivation. The worst is when it destroys the bond with to the company.

So what kind of strategy should be pursued in response to situations which even the management textbooks advise avoiding? Experts are of the opinion that, in such a situation, a salary differential of 20-25 percent can be tolerated.

A Problem For All Companies
New arrivals earning more than existing personnel is a problem in almost all companies, not just family-owned ones. Human Resources Management Founding Partner Aylin Çoşkunoğlu Nazlıaka attributes the fact that new arrivals earn higher salaries to the inability of companies to train enough executives in the wake of the 2001 crisis. Nazlıaka says that a survey conducted last year in the financial sector found that, in 39 of 220 positions, new arrivals earned more than those already working in the same position.

Why Do They Earn More?
Market conditions and companies’ growth strategies can open up a gap in salaries between new arrivals and those already working in the company. For example, companies which are active in the same sector and trying to grow in the same areas can pay higher salaries to those coming from outside coming than to existing employees. Human resources consultant Artemiz Güler says that companies generally use salaries as a mechanism to try to attract to themselves accumulated knowledge and networks of contacts which they do not possess themselves.

The Sectors Where There Is A Major Difference
In sectors in which the demand for new personnel is continually increasing, such as banking, telecommunications, automotives, insurance, retailing, foodstuffs and rapid consumer goods, the salaries of new arrivals are much higher than those of existing personnel, particularly for critical positions.

According to data from Mercer Türkiye, in the finance sector, the increase in competition and growth strategies as management becomes more market-focused, can result in the differential rising to over 25 percent.

Ayşe Tarcan Aksakal
aaksakal@capital.com.tr