Author: Noel Madolid

A long line of people, some carrying belongings, walk along a dirt road in a rural landscape with mountains in the background.

DRC UNDER SIEGE: M23 ADVANCE FUELS HUMANITARIAN CRISIS AND BUSINESS DISRUPTION

Written by Noel Madolid on . Posted in Uncategorized.

Birches Group provides insights into volatile labor markets that are making news headlines, focusing on key developments.  

Since early 2025, the Democratic Republic of Congo (DRC) has been gripped by escalating conflict as the March 23 Movement (M23) armed rebel group seizes critical urban centers, including Goma and Bukavu. This surge in violence has rapidly destabilized the region, creating an exceptionally volatile environment for organizations and their employees. The situation demands immediate and decisive action from organizations operating in Africa’s second-largest country. 

To navigate these complex challenges, organizations must adopt resilient and adaptable strategies, potentially including the implementation of special measures to address the unique demands of this crisis. Establishing clear protocols for these measures enhances organizational resilience and operational continuity, even in the face of extreme adversity. 

The M23’s renewed offensive 

The intensifying crisis in the DRC is rooted in the dramatic resurgence of the M23. The rebels, the most prominent of over 100 armed groups vying for dominance in the mineral-rich east, reignited their offensive after a period of relative dormancy, exploiting existing regional tensions and vulnerabilities.  

This resurgence has demonstrated a level of organization and military capability that caught both regional and international observers off guard. Recent intelligence reports suggest advanced weaponry and sophisticated logistical support, potentially indicating external backing and fueling regional tensions. 

Rapid territorial gains 

Over the past several weeks, the M23 expanded its territorial holdings in eastern DRC. In late January 2025, they occupied Goma, the provincial capital of North Kivu and an economic and humanitarian center. This resulted in the large-scale displacement of civilians. In mid-February 2025, the crisis when the M23 took possession of Bukavu, the provincial capital of South Kivu, further extending their area of control. The rebel group has threatened to continue their offensive toward Kinshasa, the DRC’s capital. 

The Congolese government, backed by regional and international forces, is struggling to contain the M23’s advances. Protests in Kinshasa have seen demonstrators demanding immediate government action and expressing anger at the international community’s perceived inaction. 

Humanitarian crisis 

The fall of both cities has caused massive displacement, straining humanitarian resources. Millions have fled, seeking refuge in overcrowded camps. The insecurity has forced most organizations to suspend operations, leaving families without essential supplies. 

The UN High Commissioner for Refugees (UNHCR) reports that the escalation of violence since January 2025 has pushed the number of internally displaced persons to a record high of 6.4 million, with over 90,000 seeking refuge in neighboring countries. 

These figures underscore the immense human cost of the conflict, with hundreds of thousands of individuals and families uprooted from their homes, often multiple times, seeking safety and necessities. 

Regional instability 

The implications of this conflict extend far beyond the DRC’s borders. The M23’s resurgence has destabilized the region, exacerbating existing tensions between neighboring states. Allegations of Rwanda’s support for the M23 remain a central point of contention.  

Efforts to find a peaceful resolution have included direct talks between the presidents of the DRC and Rwanda in Doha, Qatar, on March 18, 2025. However, parallel peace negotiations between the Congolese government and the M23 in Luanda, Angola, were called off, with the M23 citing European Union sanctions as a primary reason. 

Impact on organizations and employees 

Beyond security threats, the conflict ignited a humanitarian crisis, compounding operational challenges. The workforce is devastated, with disrupted services, fear, and the threat of violence. 

  • Mass displacement. The UNHCR reports extensive displacement, with communities fleeing to overcrowded camps and neighboring regions. 
  • Economic disruption and market instability. International financial institutions report severe disruption of economic activity, impacting various sectors, including the crucial mining industry. 
  • Heightened security risks. Increased kidnappings, looting, and armed robberies, along with heightened security presence and checkpoints, pose significant risks. 

The situation in eastern DRC remains dire and unpredictable, with concerns about the a wider regional war. UNHCR Chief Volker Türk warned of potentially catastrophic consequences, “If nothing is done, the worst may be yet to come, for the people of the eastern DRC, but also beyond the country’s borders.” 

The necessity of a Special Measures Policy 

Operating in volatile labor markets like the DRC, with its displacement, economic disruption, and security, requires more than standard human resources (HR) policies and procedures. Traditional HR policies often prove inadequate in the face of such instability, demanding a proactive and resilient approach. A comprehensive Special Measures Policy becomes essential. 

A Special Measures Policy assists managers and supports staff during crises like civil unrest. It defines clear triggers and immediate responses to protect employees and ensure business continuity while the organization adapts to changing labor market conditions in the following months. 

Crisis HR: The Birches Group advantage 

The current situation in the DRC requires a strategic approach to workforce management. Organizations must prioritize HR policies that mitigate risk and ensure operational continuity. 

Birches Group provides specialized expertise in designing Special Measures Policies tailored to high-risk environments. We help organizations develop policies that fit local conditions while aligning with corporate objectives. 

For organizations committed to maintaining operational resilience and safeguarding their workforce in the DRC, strategic HR planning is essential. Birches Group offers the expertise and resources necessary to navigate these challenges effectively. Book a strategy call with us today. 

References 

A diverse group of four people gathers around a laptop in an office setting, smiling and engaged. One woman uses a wheelchair. Plants and office supplies are visible in the background. Workplace Equity

EQUITY IN ACTION: ENSURE FAIRNESS ACROSS HR

Written by Noel Madolid on . Posted in Resources.

We’ve all heard the buzzwords: diversity, equity, inclusion. But how many organizations walk the walk when it comes to equity in managing their organization? It’s time to move beyond theoretical discussions and translate those well-intentioned conversations into concrete actions. 

Our “Equity in Action” series explored the building blocks of a truly equitable workplace, from establishing the equivalent worth of jobs and developing a grading structure to utilizing salary surveys and implementing a salary scale and fair pay management mechanisms. In this final installment, we’ll share how your organization can embed equity into every facet of its HR program, whether it’s recruiting new talent or planning for your successors.  

The key is a unified and objective approach to assessing employee skills and capabilities throughout the entire employee lifecycle. Think of standardized processes, clear metrics, and tools that evaluate employees based on their work. This blog post will share how you can integrate equity into your HR functions, ensuring fairness in every stage of a staff member’s journey. 

The challenge of subjectivity and flexibility 

For far too long, HR processes have been marred by subjective assessments. This approach not only hampers the quest for equality but also exacerbates inequality when each HR function is handled on a case-by-case basis. 

Are performance evaluations based on objective criteria, or are some staff members given more leeway than others? Is career advancement based solely on merit and potential, or do personal relationships and “gut feelings” come into play? Are all employees given equal access to training and development programs, or are specific individuals favored? 

These subjective and flexible approaches can create an uneven playing field, where some staff members are inadvertently given an advantage while others are held back. 

To counteract this, organizations need to shift toward a standardized, objective, and consistent approach to evaluating skills and competencies. This involves: 

  • Establishing clear criteria and metrics. Define what success looks like for each grade level and use these objective measures to assess their contributions and performance. 
  • Implementing standardized evaluation processes. Use the same tools and framework for all staff members in similar roles to ensure consistency and fairness. 
  • Providing regular and transparent feedback. Give staff members clear, actionable feedback based on objective data to help them understand their strengths and areas for development. 

By removing subjectivity and flexibility and, more importantly, embracing a more standardized approach, organizations can create a more equitable workplace where all employees are judged on their skills and work output and have a fair chance of succeeding. 

Birches Group’s five-step approach to achieving equity 

In our first post in this “Equity in Action” series, we introduced Birches Group’s five-step approach to achieving equity in compensation management. We highlighted the urgent need for organizations to move beyond discussions and take concrete action to address inequities in their compensation structures.  

Building on this framework, we examine how this integrated approach can be applied across all HR functions, creating an equitable workplace where every process— from recruitment to succession planning—is grounded in the principle of establishing the equivalent worth of each job within your organization. By minimizing the influence of personal biases at every HR function, we can ensure a level playing field for all staff. 

This integrated approach, as we discussed in the first post, offers a multitude of benefits that can transform your organization: 

  • It reduces bias and increases fairness by relying on objective criteria, thus minimizing the impact of unconscious bias and ensuring all employees are treated equitably.  
  • This approach also enhances transparency and trust. Clear, consistent processes foster transparency and build trust between employees and the organization. 
  • Furthermore, standardized processes streamline HR operations and free up resources for strategic initiatives, improving efficiency and effectiveness.  
  • Finally, objective data offers valuable insights into workforce trends and enables informed, data-driven decision-making. 

However, we understand that bridging the gap between the theoretical ideals of equity and real-world implementation can be challenging. Organizations often encounter obstacles like bias creeping into decision-making despite best intentions, vague criteria making it difficult to assess staff members objectively and consistently, and inconsistent processes leading to unfair treatment. 

To overcome these challenges, we encourage you to conduct an equity assessment and evaluate your current HR policies and practices critically. Ask yourself these questions: 

  • Does the candidate’s skill level determine your starting salaries, or are they influenced by factors like negotiation skills or salary history?  
  • Are your performance reviews based on clear, measurable metrics based on the expectations of the job, or are they prone to subjectivity and bias?  
  • Are your promotion criteria transparent and consistently applied, or are they open to interpretation?  
  • Does your compensation structure reflect the value of each grade level, or are there unexplained pay gaps?  

These are areas where most of the inequities and inconsistencies begin. 

An integrated framework and tool, like Birches Group’s CommunityTM platform, can be especially invaluable.  

It provides standardized processes to ensure consistency and fairness across all HR functions. Additionally, CommunityTM presents clear metrics to deliver objective measures of skills, competencies, and performance.  

By reducing reliance on subjective judgment, your organization can minimize the impact of bias and promote data-driven decision-making. This creates a truly equitable workplace where all employees are empowered to reach their full potential. 

Applying the approach across HR 

Let’s explore how our integrated approach to achieving equity can be applied across various HR functions: 

Recruitment 

Imagine a recruitment process where every decision is rooted in the defined skills profile of the job. This means targeting your recruitment efforts to attract candidates with the specific skills and competencies needed for the role, ensuring a diverse pool of qualified applicants. It also means using standardized assessments to evaluate each candidate’s skills and abilities, eliminating bias and ensuring that hiring decisions are based solely on knowledge and experience.  

Finally, it involves determining starting salaries based on demonstrated skill level within the respective pay range of the job, eliminating the need for salary negotiations and ensuring pay equity from day one. 

Pay movement 

With an integrated approach, pay increases become a transparent and objective process. Salary adjustments are tied to clearly defined skills growth and contributions, ensuring all staff members are rewarded fairly for their development. Clear criteria are established for salary adjustments, such as acquiring new skills, taking on increased responsibilities leading to bigger contributions, reducing the potential for pay gaps, and ensuring that pay decisions are data-driven. 

Learning & development 

Our approach transforms learning & development from a generic offering to a targeted investment in employee growth. It starts with using objective skills assessments to identify individual skill gaps and development needs, enabling personalized learning journeys.  

Then, staff members work on their personal learning & development assignments specifically tailored to address those identified needs either deeper into the role or work toward the next higher grade level, maximizing employee growth and engagement. This fosters a culture of continuous learning & development, where staff are encouraged to acquire new skills and advance their careers.  

Furthermore, our approach promotes shared responsibility between managers and employees for development, with managers actively supporting their team members’ growth by providing/identifying opportunities and staff taking ownership of their learning journey. 

Succession planning 

Organizations can build a strong leadership pipeline by applying an objective lens to succession planning. Standardized criteria assess employees’ readiness for promotion, ensuring that advancement decisions are based on merit and potential, not favoritism.  

Clear succession pathways and policies are established based on skills and competencies, providing staff members with a roadmap for career progression. This cultivates a talented pool of future leaders, ensuring the long-term sustainability of your organization.  

How CommunityTM can support your equity journey   

Putting these principles into practice may seem daunting, but Birches Group’s CommunityTM framework and tool can seamlessly guide your organization through the five-step approach from start to finish. This integrated platform provides the structure and resources you need to operationalize equity across all your HR processes. 

CommunityTM offers a range of solutions designed to support your equity journey: 

  • Centralized skills data. CommunityTM presents a central hub for managing all your skills data, enabling you to create a comprehensive skills inventory for your workforce and track staff skills development over time. This centralized system ensures that everyone is assessed against the same objective criteria. 
  • Objective assessment tools. With built-in assessment tools that utilize the same consistent framework, CommunityTM helps you evaluate skills and competencies objectively, minimizing bias and ensuring fair treatment.  
  • Data-driven insights. CommunityTM generates powerful data-driven insights that inform your decision-making across all HR functions. Identify skill gaps, track pay equity progress, and analyze workforce trends to make informed decisions that promote fairness and transparency. 
  • Support for key HR functions. CommunityTM offers the tools and resources to embed equity into every stage of the employee lifecycle, from recruitment and pay movement to learning & development and succession planning. 

By leveraging the power of CommunityTM, your organization can move beyond theoretical discussions of equity and take concrete action to build a fair workplace. With its integrated approach, objective assessment tools, and data-driven insights, Community™ empowers you to create an organization where every employee can thrive. 

What about performance? 

At this point, you might be wondering: “This all sounds great, but where does performance fit into this approach?” 

While our focus has been on building a foundation of equity through skills and competencies, we understand that performance is still a critical factor in employee development and motivation. Assessing skills and rewarding performance are separate but related pieces of the puzzle in retaining and motivating your workforce.  

Think of it this way: skills represent an individual’s growth in knowledge and experience, while performance reflects how effectively they use those skills to achieve results. Both are essential for a thriving organization. 

CommunityTM addresses this with a robust performance management system that offers a simple but comprehensive view of staff performance. This platform allows you to provide 360° feedback from various internal and external stakeholders. In addition, CommunityTM enables your organization to acknowledge and reward staff for their contributions, celebrating both those who meet expectations and those who exceed them, fostering a culture of appreciation and broad staff motivation.  

It’s important to emphasize that performance should be assessed solely for rewarding achievement. It should not be a factor in determining a staff member’s pay increase or promotion eligibility, as those decisions should be grounded in skills assessment. 

By keeping this distinction, you can ensure that your performance management system serves its purpose: to motivate employees and reward their contributions.  

Get in touch with Birches Group 

Achieving true equity across your HR processes requires a commitment to objectivity, transparency, and a unified approach. It demands a shift from ad-hoc arrangements to standardized processes, from subjective judgments to data-driven decisions. 

Birches Group is your trusted partner in navigating this journey. Our proven five-step approach and the CommunityTM platform provide the framework and tools you need to operationalize equity across your organization. 

Ready to create a workplace where every employee has a fair chance to thrive? Contact Birches Group today. Our team of experts is prepared to offer the guidance and support you need to make equity a reality. 

Carla is a part-time copywriter on our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr.

Follow us on LinkedIn for more content on pay management and HR solutions.

EQUITY IN ACTION: IMPLEMENT FAIR PAY MANAGEMENT MECHANISMS

Written by Noel Madolid on . Posted in Resources.

In pursuing workplace equity, we’ve examined the critical steps: establishing equivalent worth, developing a job grading structure, utilizing comprehensive salary surveys, and implementing a well-defined salary scale. These foundational elements create the framework for fair pay. 

But the journey continues. Transitioning from establishing the framework to actively managing pay is where equity flourishes. 

It’s time to take the final step: implementing fair pay management mechanisms. This ongoing process ensures that your meticulously crafted pay structure remains relevant and equitable long-term. Without equitable management, even the most robust compensation program can falter, leading to pay disparities and inequities. 

This post examines the essential mechanisms for ongoing pay management, empowering your organization to cultivate a genuinely equitable and fair workplace. 

Why traditional pay progression fails to achieve equity 

Pay management mechanisms are the processes and policies that govern how your people move through your established salary ranges. They drive your compensation program, ensuring ongoing equity within your organization. 

However, traditional approaches to pay progression often miss the mark when it comes to fairness. Why? Let’s examine two common methods: 

  • Time-based steps. While clear, predictable, and easy to administer, this approach suffers from a critical flaw: everyone receives an increase regardless of performance. Someone exceeding expectations gets the same raise as someone barely meeting minimum standards. This can be incredibly demotivating for high performers and fails to recognize individual growth. 
  • Pay-for-performance or merit increases. This method aims to reward top performers with higher raises, but it, too, often falls short. Pay increases are frequently too small to truly differentiate meaningfully between performance levels. Additionally, basing salary adjustments solely on annual performance reviews is problematic. Performance can fluctuate year to year, meaning a one-time “good” year can lead to a permanent salary increase, even if performance later declines. 

Both approaches fail to create a truly equitable pay structure, lacking the flexibility and nuance to accurately recognize individual contributions and growth. This can lead to pay gaps, dissatisfaction and, ultimately, a less equitable workplace. 

To create a truly equitable pay system, organizations must move beyond outdated models and explore more objective, transparent, and equitable approaches to pay progression. 

A truly equitable pay management system hinges on transparency and clearly defined criteria for progression. This means establishing a clear and consistent pathway for employees to advance through the salary scale based on objective measures such as skills, competencies, and contributions aligned with their jobs and the organization’s mission. 

Think of it like a roadmap. Every employee should understand the route to progress within their role and have equal opportunity to reach their career goals. This fosters a sense of fairness but motivates staff to develop their skills and contribute meaningfully. 

Developing a system for staff progression through the salary scale 

Creating a transparent and fair system for salary progression is imperative for fostering a culture of equity. Here are key strategies to achieve this: 

Skills-based progression 

Implement a framework that objectively measures staff skills, linking it directly to pay progression. This means clearly defining the skills and competencies required at each level of the salary range and using standardized assessments to measure employee skills against these levels. Be transparent about how acquiring new skills or demonstrating increased expertise translates to salary increases or promotions. This approach ensures that pay progression is tied to tangible growth and development. 

Regular reviews and updates 

The market and your organization are constantly evolving. Regularly review and update your salary structure and progression system to demonstrate a commitment to fair pay. This allows you to maintain market competitiveness, address any internal pay disparities that may arise, and provide opportunities for employees to move through the salary range based on the growth of their skills and the impact of their contributions. 

Benefits of a structured progression system 

But why go to all this effort? Because a well-structured approach to pay movement offers significant benefits for both your staff and your organization. 

  • Increased transparency and trust. Employees understand how pay decisions are made, fostering a sense of fairness and trust in the organization. 
  • Enhanced motivation and engagement. Clear pathways for advancement motivate employees to invest in their development and contribute their best work. 
  • Reduced pay disparities and improved retention. Objective criteria minimize the risk of bias and discrimination in pay decisions, promoting equity and increasing employee satisfaction. 

How Birches Group’s Community™ Skills can help 

Developing and implementing fair pay management mechanisms can be challenging. But your HR team doesn’t have to go on this journey alone. 

At Birches Group, we believe that pay movement should be tied to the development and growth of staff’s skills and experience. As employees gain experience, they develop a deeper understanding of their role and accumulate the skills needed to help them be more effective and produce higher-quality work.  

Birches Group Community™ Skills provides a way to measure this experience. Organizations can use our framework and tool to structure their compensation systems, rewarding employees for growth and development within their roles, rather than solely relying on performance metrics. Organizations can link their compensation administration to the progression of skills in any number of ways, from assessing and setting the appropriate starting salary based purely on candidates’ skill levels during recruitment to managing pay movement within the salary range and tailoring learning and development assignments to guide staff development and career pathing. 

Contact Birches Group today 

Implementing fair pay management mechanisms and a structured progression system is not about ticking boxes. It’s about fostering a workplace where every employee feels valued, recognized, and rewarded fairly. By embracing the five-step approach to workplace equity, your organization can create a culture of transparency, trust, and opportunity. 

We understand that this journey can be complex. That’s why we encourage you to seek guidance from experts who can help you navigate the intricacies of building an equitable compensation program. 

Is your organization ready to achieve workplace equity? Contact Birches Group today. Our team of experienced consultants can provide the expertise and support you need. 

Carla is a part-time copywriter on our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr.

Follow us on LinkedIn for more content on pay management and HR solutions.

Equity in Action: Implement a Salary Scale

EQUITY IN ACTION: IMPLEMENT A SALARY SCALE

Written by Noel Madolid on . Posted in Resources.

Welcome back to our series on workplace equity! In our previous blog posts, we explored the foundational steps toward achieving a fair and equitable work environment, from establishing equivalent worth and developing a grading structure to utilizing salary surveys. We emphasized the importance of transparency and communication in building trust with your staff. 

Now, it’s time to take the next significant step in your equity journey: implementing a salary scale. While establishing clear job grades and salary ranges is essential, it’s only the beginning. A salary scale provides a structured framework for your compensation, ensuring consistent and fair pay across your organization. It acts as a roadmap for staff progression within those ranges, ensuring that growth and compensation are aligned in a way that’s both fair and motivating.  

In this post, we’ll discuss how implementing a well-defined salary scale can be a vital tool in your equity journey. We’ll explore the benefits of having pay ranges, guide you through developing a salary scale that supports your equity goals, and offer practical tips for successful implementation. 

Why a salary scale matters 

The salary scale defines the minimum, midpoint, and maximum pay for each role within an organization. The salary scale is the most important document in human resources, providing valuable insights into the organization’s structure, job grading, and the value placed on different grade levels. The overlap between grades also illustrates how staff can progress through the ranks. 

Think of a salary scale as a roadmap for compensation. This roadmap guides both employers and employees, ensuring everyone understands the organization’s compensation philosophy and policy.  

For employers, a clearly defined salary scale offers numerous advantages, including: 

  1. Budgeting and forecasting. Salary scales facilitate accurate budgeting and forecasting by providing a clear picture of salary costs. This predictability allows for better financial planning and resource allocation. 
  1. Transparency and trust. With clearly defined pay ranges, organizations promote transparency and build trust with their employees. Everyone understands the compensation philosophy and how their pay is determined, reducing the potential for confusion or resentment. 
  1. Legal compliance. Having a salary scale ensures compliance with equal pay regulations and lessens the chances of pay discrimination. By establishing clear criteria for pay, organizations minimize legal risks and promote fair treatment. 
  1. Talent attraction and retention. A competitive salary scale helps to attract talent and retain existing staff. When employees know their employer is ensuring their compensation is fair and competitive, they are more likely to stay with the organization and contribute to its success. 
  1. Pay movement based on skills growth. As staff develop their abilities and expertise, their value and contributions to the organization increase, and their compensation can reflect that growth. This framework ensures fairness and equity by recognizing employees for continuously improving and developing within their roles. 

Salary scales also provide significant value for employees: 

  1. Clarity and understanding. Employees gain a clear understanding of the salary range for their role and how their pay is determined. This transparency fosters trust in the compensation strategy. 
  1. Fairness and equity. A structured salary scale ensures pay is based on objective criteria, such as the equivalent worth of the job (job evaluation) and referencing external labor market conditions (salary benchmarking). This helps eliminate biases and promotes a sense of fairness. 
  1. Career growth. Salary scales provide a roadmap for career progression. Employees can see the potential for salary increases as they gain experience deeper into the range, or take on a higher level of responsibility and scope and advance within the organization. 
  1. Motivation. Knowing their pay is linked to skills growth motivates staff to perform well, seek development opportunities, and improve their capabilities. 
  1. Organizational culture. A structured pay scale provides employees with a sense of security and stability. 

Developing an equitable salary scale 

Developing an effective and equitable salary scale requires careful planning and execution. It involves creating a tool that reflects your organization’s values, ensures internal cohesion, and remains competitive within the labor market. Here are the key steps: 

  1. Establish a job structure. A clear job structure shows how jobs are organized and ranked based on their purpose, scope, and placement within the organization. 
  1. Develop a compensation philosophy. Your compensation philosophy outlines your approach to choosing comparable organizations, setting your desired market position (lead, match, or lag), and benefits package. 
  1. Benchmark salaries against the market. Assess your organization’s competitiveness by benchmarking your jobs against similar grade levels in the labor market. This step involves comparing your internal pay grades and salaries for specific roles with those offered by similar organizations. 
  1. Define your composition and position. Define your target market position and the criteria for selecting your target comparator organizations. 
  1. Tailor job levels. Adopt a tailored approach that reflects expectations around employment and opportunities for each job level. 
  1. Design your compensation package from a ‘total compensation’ perspective. In most markets around the world, especially in developing markets, benefits make up a significant portion of compensation. To truly be competitive in the markets you’re trying to reach, analyze your total compensation package to include cash and in-kind benefits that are common practice in those markets. Consider locally mandated benefits, market practices, and benefits that promote desirable behaviors. 

Implementing and maintaining your salary scale 

Now that you’ve developed your salary scale, the next step is to communicate your analysis to management and prepare to communicate the changes to your staff. 

Laying the foundation 

Before introducing the salary scale, it’s best to establish solid groundwork. Laying the foundation for your salary scale includes taking the following measures: 

  • Secure management buy-in. Clearly articulate the rationale behind having an up-to-date salary scale. Highlight the issues it can address, such as pay inequities, challenges in attracting talent, and potential legal risks. Underscore how the salary scale will contribute to a more equitable and competitive compensation structure, ultimately benefiting the organization as a whole. 
  • Establish a robust job evaluation process. Ensure that your job evaluation process is in place before developing your salary scale, as it provides the basis for slotting jobs accurately within the structure. 
  • Ensure transparency. Openly communicate how the new salary scale will be implemented. Outline the timelines, phasing plans, and any potential impact on existing compensation arrangements to manage expectations.  

Rolling out the scale 

Once the groundwork is laid, the focus shifts to effectively rolling out the new scale and ensuring its smooth integration into your compensation strategy: 

  • Equip managers for effective communication. Managers play an important role in communicating the changes to their teams. Provide them with the necessary resources, such as talking points, FAQs, and training on handling sensitive questions. Doing so will help ensure a smooth transition and minimize potential misunderstandings or concerns. 
  • Link skills growth with salary progression. Clearly define the link between growth in knowledge and experience and salary progression within the scale. Establish transparent expectations and criteria for advancement, ensuring employees understand how their growth in skills can influence their compensation growth. 

Maintaining and reviewing the scale 

Implementing your salary scale is not a “set it and forget it” exercise. Continuous maintenance and review are crucial to ensure its ongoing effectiveness and relevance. This ongoing process includes: 

  • Regular reviews and updates. Markets are dynamic, and your salary scale should be, too. Review and revise your scale annually to stay competitive. Consider factors such as labor market data and industry trends to ensure your compensation remains aligned with the labor market. 
  • Conducting pay equity audits. Regularly conduct pay equity audits to identify and address any potential gaps or inconsistencies within the salary scale. This should be a continuing process to ensure the scale remains fair, effective, and compliant. 

Partner with the experts at Birches Group 

Developing, rolling out, and maintaining your salary scale can be complex. While the tips and best practices outlined above provide a solid starting point, navigating the intricacies of compensation management often requires specialized expertise. This is particularly true when it comes to implementing fair pay management mechanisms, which is the focus of our final blog post in our Equity in Action series. 

Successfully integrating fair pay practices into your compensation strategy calls for a deep understanding of legal frameworks, labor market dynamics, and ethical considerations. This is where partnering with experienced compensation professionals can make all the difference. 

Our team of experts specializes in: 

  • Pay equity audits. We conduct comprehensive audits to identify and address any gender, race, or other pay gaps, ensuring your organization meets legal requirements and promotes fairness. 
  • Salary scale design. We design robust and competitive salary structures tailored to your organization’s needs and market benchmarks. 
  • Compensation strategy consulting: We provide guidance on developing and implementing effective compensation strategies. 

Birches Group’s consultants have years of experience designing salary scales for different types of organizations. Download our comprehensive e-book, Strategy, Structure, and Synthesis, to learn more.  

Ready to create a fair and equitable compensation program? Contact Birches Group today for a strategy consultation. 

Carla is a part-time copywriter on our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr.

Follow us on LinkedIn for more content on pay management and HR solutions.

A person reviews charts and graphs on paper, seated at a glass table with a laptop and a notebook.

EQUITY IN ACTION: UTILIZE SALARY SURVEYS

Written by Noel Madolid on . Posted in Resources.

In our ongoing blog series on workplace equity, we’ve explored the importance of fair and just compensation practices. We’ve discussed equity, which means paying employees fairly based on their skills and contributions. We’ve introduced a five-step framework for achieving equity. This framework highlights the significance of establishing equivalent worth in developing a grading structure.

However, achieving workplace equity goes beyond internal alignment. It’s about ensuring that your organization’s compensation is competitive within the labor market. This is where salary surveys become valuable.

Building the foundation with a consistent approach

To make sure you’re paying your employees fairly, we recommend using a consistent approach to evaluating jobs. It is best to implement a job evaluation methodology that aligns with the job matching applied in the salary survey.

Many organizations use a job evaluation approach that differs from what was applied in the surveys they use. But doing so makes it difficult to ensure the accuracy of the survey results, which could impact how pay is managed.

The role of salary surveys in workplace equity

Salary surveys offer a window into the labor market, providing insights into current compensation trends and benchmarks. Using salary survey data, organizations can ensure fair pay that is aligned with the market.

These surveys are comprehensive reports that collect and analyze data on compensation practices across a range of jobs, sectors, and geographical locations. The data includes details about base salaries, bonuses, cash and in-kind benefits, and non-salary and after- service benefits.

By providing an objective, real-time snapshot of prevailing market rates, salary surveys enable organizations to  

  • Evaluate internal pay structures against the labor market and identify potential pay gaps.
  • Understand the market forces influencing compensation, enabling informed decisions about pay practices.
  • Offer competitive compensation packages that attract and retain talent, as well as align with their Employment Value Proposition (EVP).

Ultimately, salary surveys help inform organizations in developing their compensation strategies that foster equity and support their overall objectives.

Aligning salary surveys with internal grading structures

In previous blog posts, we discussed how grading structures—categorizing jobs based on value and complexity— establish consistent pay practices within your organization. Each job grade within this structure is associated with a specific salary range.

Salary survey data is critical in informing the design and ongoing update of these structures. By referring to labor market data, your organization ensures that its compensation remains aligned with prevailing trends, essential for promoting equity.

Utilizing salary surveys to inform pay ranges

Once you have aligned your job grades with the market, use survey data to inform your organization’s compensation strategies for establishing appropriate pay ranges for each grade. These pay ranges typically include a minimum, midpoint, and maximum.

When setting pay ranges, consider:

  1. Target market position. What is your organization’s desired percentile ranking compared to the market?
  2. Target market composition. With which specific sectors and organizations does your organization compete for talent?

Because the labor market evolves, your organization needs to regularly review and update these pay ranges based on the latest market data. This ensures your compensation packages remain competitive and attractive.

Best practices for utilizing salary surveys

Selecting and using the right salary surveys is the key. Here are a few best practices to keep in mind:

  • Choose reputable and relevant surveys. To get good data, make sure the surveys use a good sample of employers in your target market and are done by credible organizations. Consider the survey methodology, job matching and data collection process, and the quality of comparators. Ensure the survey fully captures employer practices on salaries and benefits. This is especially important in developing markets where benefits can be a significant part of totalcompensation.
  • Analyze and interpret survey data carefully. Don’t just rely on the raw figures. Understand the data within the context of your organization’s specific needs and goals.
  • Use multiple surveys. To gain a broader perspective and validate your findings, relying on multiple salary surveys from different providers is often helpful.

Tapping Birches Group for labor market data

As we’ve seen, salary surveys are an indispensable tool for promoting equity in compensation. By making the most of salary survey data, organizations can determine if their pay practices are fair and aligned with the labor market.

At Birches Group, we offer comprehensive compensation consulting and salary survey data to help organizations achieve pay equity. Our team of experts can guide you through survey participation, data analysis, and the development of a compensation strategy that fosters equity and supports your organization’s goals. Contact us today to learn more.

Coming next

In the next installment of our Equity in Action series, we’ll walk through developing and implementing pay ranges. We’ll show you how to define and manage these ranges within your internal grading structure to help your organization achieve pay equity.

In the meantime, if you have any questions about workplace equity, please don’t hesitate to reach out to Birches Group. We’re here to support your journey toward a more equitable workplace.

Carla is a part-time copywriter on our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr.

Follow us on LinkedIn for more content on pay management and HR solutions.

Ethiopia’s Birr Devaluation: How Employers Can Address the Crisis

Written by Noel Madolid on . Posted in Uncategorized.

Birches Group delivers expertise on emerging labor markets from around the world, including insights into current trends and events that affect these markets. 

Ethiopia’s central bank allowed the Birr, its local currency, to float or trade freely based on market forces on July 29, 2024. This decision triggered an immediate plunge of about 30% in the Birr’s value against the United States (US) Dollar. According to the Commercial Bank of Ethiopia, the country’s largest lender, the exchange rate had been 57.48 Birr per dollar on July 26, 2024. By August 16, 2024, it devalued further to 103.96 Birr per dollar, a drop of over 80%. 

Understanding the devaluation 

Ethiopia’s adoption of a new exchange rate policy, as reported by the Associated Press and Africanews, marks a historic shift. For half a century, the government maintained control over foreign currency prices.  

The National Bank of Ethiopia introduced this policy change, alongside other reforms, with several key goals in mind:  

  • Curbing the rise of an unregulated parallel market for foreign exchange 
  • Enhancing the country’s appeal to foreign investors 
  • Securing up to US$10.7 billion in financial aid from the International Monetary Fund (IMF), the World Bank, and other creditors. 

Ethiopia, Africa’s second-most populous country, faces severe economic hurdles. It grapples with high inflation rates of approximately 20% and a critical shortage of foreign currency reserves. The Associated Press highlights that the Birr has been one of the weakest currencies in the region in recent months. Moreover, the country defaulted on its debts in December 2023, worsening its economic difficulties. 

Analysts are concerned that Ethiopia’s currency crisis could further stoke inflation and potentially trigger social unrest. Bloomberg notes that Nigeria and Egypt, which partially relaxed controls on their local currencies in 2023 and March 2024 to secure IMF funding, have since grappled with rising prices and growing civil unrest. 

Ethiopia’s move toward a more flexible exchange rate marks a significant but risky step. The government aims to stabilize the economy and attract foreign investment, but the potential for increased inflation and social instability underscores the complexities of this transition. 

What the Birches Group’s Market Monitor reveals 

Based on our review of our Market Monitor reports over the past 12 months, labor market conditions in Ethiopia have significantly changed since August 2024. 

In our Market Monitor, dated August 1, 2024, Ethiopia entered our Six Levels of Volatility at Level Two. Such a volatility level shows dynamic market conditions, with an exchange rate movement exceeding 20% within the last six months. Our tracking shows a 32.8% exchange rate movement in Ethiopia over the past six months. This shift suggests increasing volatility and potentially emerging economic pressures that have begun to affect the labor market. 

In our most recent Market Monitor, dated August 15, 2024, the situation escalated dramatically, with Ethiopia’s volatility level rising to Level Four. This corresponds to a “sudden or unexpected socio-economic event,” which includes a currency devaluation of 50% or more in six months or less, as well as a disjointed and unclear comparator response in our salary surveys. Our tracking now shows a 79.8% exchange rate movement in Ethiopia over the past six months. 

Next steps for employers 

The devaluation of the Ethiopian Birr presents a challenging landscape for employers in Ethiopia. However, decisive and informed action can mitigate the impact on both your workforce and your organization. 

Take immediate action 

The recent devaluation of the Birr has created an immediate need for employers in Ethiopia to adjust their compensation strategies.

For employers that denominate salaries in Birr:

An immediate adjustment is highly recommended. To mitigate the impact of the devaluation on employees’ purchasing power, an increase of 10 to 20% should be applied now. While this does not fully match the prevailing rate of inflation or completely close the gap, it is a significant measure. A 10-20% increase is a substantial adjustment, and staff would appreciate it if they received it tomorrow.

Organizations that have not dollarized now face pressure to raise salaries to stay competitive. This gap of 80–90% compared to dollarized employers will be hard to ignore and will require adjustments. You should make moderate adjustments to start closing the gap without overcompensating, as market conditions are likely to shift over the next 12–24 months. Historically, it takes about 2.5 years for a market to stabilize after a major exchange rate change. Managing these expectations will be crucial. Some organizations may feel compelled to dollarize simply to keep up with others, but if you choose to remain Birr-pegged, you’ll need a strong rationale for both your senior management and staff.

For employers that denominate salaries in US Dollar:

A major risk factor is that employers have effectively lost control of the market position of their pay, which is now determined by the exchange rate of the Birr, not by the supply and demand for talent nor by other compensation market fundamentals. 

Such a drastic adjustment in a short period, especially when it’s beyond your control, poses significant challenges. While staff may enjoy the immediate increase in purchasing power (about 80% more in Birr than a few weeks ago), the real challenge will be managing expectations over the next year or two. The increase of 80–90% far exceeds adjustments made for inflation, which was 26% over the same period. It also surpasses market movement adjustments, which averaged about 20% based on our surveys from July 2023 and July 2024. Our surveys cover a wide range of roles, from general laborers to senior experts, and the general adjustment over the past year was about 20%, roughly aligning with inflation.

Experience shows that those who dollarized are now 80% ahead of the market position from three weeks ago and 90% ahead from a year ago. Such a gap is difficult to justify and maintain. You will face pressure to avoid further significant adjustments while managing expectations in a high-inflation environment, where inflation remains in double digits.

For organizations denominated in hard currency, it’s advisable to cut your losses and transition to Birr as soon as possible. Plan for a long adjustment period of 2 to 2.5 years with relatively low salary increases to avoid being significantly ahead of the market. Manage staff expectations during this period.

Monitor the market regularly 

The economic situation in Ethiopia remains fluid. Employers should stay abreast of labor market changes and adjust their strategies accordingly. Regularly reviewing salary data and the overall economic climate will help ensure compensation packages remain competitive and equitable. Given that Ethiopia is in Level Four, employers should review and update their salary scale three times a year to prevent compensation from lagging or leading the market. 

Avoid dollarization 

In times of currency volatility, the idea of dollarizing salaries can be appealing. But Birches Group advises against dollarization, except in extremely limited cases. Denominating salaries in US Dollars or other hard currencies creates a divide between the international development community and the broader local market. 

Dollarization may seem like a quick fix for your organization’s current challenges, but it can lead to significant overpayment of staff in the long run. As we highlighted to our clients in our August 15, 2024, webinar on the Ethiopia crisis: 

“Dollarized employers will be delivering approximately 80% more in pay today than they were two weeks ago, and over 90% more than one year ago, despite no significant underlying changes in the labor market fundamentals.” 

Once inflation slows down and the labor market catches up, likely within the next two years, organizations that have dollarized salaries will find themselves significantly out of sync with local pay scales. 

While dollarization might offer a temporary sense of stability, it’s a risky strategy that can create more problems than it solves. 

The critical need for a Special Measures Policy 

Employers need a clear plan for navigating the compensation challenges during economic crises. A Special Measures Policy defines how your organization will adapt its compensation approach in a crisis. But, more importantly, having such a policy allows you to act quickly as soon as unexpected volatile events like currency devaluation occur. 

Birches Group partners with organizations to craft Special Measures policies. Contact our team today to learn more.  

More resources 

Birches Group conducted a webinar about Ethiopia on August 15, 2024, attended by over 200 participants. We are happy to make the recording available to clients upon request, and are also publishing an FAQ that summarizes the most common questions and answers discussed during the webinar.

References:

EQUITY IN ACTION: DEVELOP A GRADING STRUCTURE 

Written by Noel Madolid on . Posted in Resources.

In our earlier blog articles on equity, we explored the foundational concepts of pay equity and transparency and the importance of job evaluation. Today, we’ll explore a practical tool that helps bring these principles to life: the grading structure.

A grading structure serves as the backbone of your compensation program. It systematically categorizes roles based on their responsibilities, skills, and value to the company. This clarity in roles and compensation levels not only ensures fair pay but also fosters transparency and trust within your workforce. 

The importance of role clarity before grading 

Before creating your grading structure, conducting a comprehensive job evaluation is imperative. The process involves analyzing each role within your organization to understand its distinct responsibilities, needed skills, and the value it brings to the organization. Well-defined roles are the building blocks of a fair and equitable grading system, preventing ambiguity, overlap, and potential pay disparities. 

Choosing the right grading structure model 

There are three types of grading structures, each with its own advantages and considerations: 

  1. Individual grade levels. This traditional, hierarchical system offers distinct levels for career progression, with promotions tied to skills growth and capacity development. While it can provide clear paths for advancement and is easier to manage, it may also create rigid structures where movement to the next grade requires an increase in salary. 
  1. Broad-banded grades. This approach features wider salary ranges and fewer levels, emphasizing lateral movement and skill broadening without necessarily increasing pay. It provides greater flexibility for employees to grow in skill or job level within the organization without focusing solely on climbing the ladder. 
A diagram illustrates a five-step salary grading structure, with each gradient-colored step labeled A to E, ascending from bottom left to top right, and a thick black arrow pointing upward.
  1. Project grade levels. This system is designed for organizations that need roles that have short lifespans to reflect the project timing without the possibility of promotion. A structure like this is only appropriate for project-based organizations with fixed-term contracts. Project-based structures often have higher minimums, reflecting the need for employers to reach experienced talent that can “hit the ground running.” 
A diagram with three rectangular blocks labeled A, B, and C. A is blue on the bottom left, B is green in the middle—the highest—and C is yellow on the top right, illustrating a clear salary grading structure.

At Birches Group, we primarily use a robust individual job-level system. Our years of experience in global human resources (HR) have allowed us to define 14 generic CommunityTM Job Levels. Each of the 14 levels, from BG-1 to BG-14, is expressed in milestones of contribution that show differences in depth and complexity. For an in-depth discussion on our 14 CommunityTM Job Levels, download a copy of our job evaluation e-book, Determining Equivalent Worth: The Simplest Approach to Job Evaluation. 

Defining your grade levels 

Once you’ve chosen a model, you can begin grouping roles with similar responsibilities, skills, and value into grade levels. 

The process of defining grade levels involves grouping roles with similar attributes. This ensures that employees with comparable responsibilities and skill sets are placed within the same grade, promoting fairness and transparency. 

Aligning job grades with your organization’s needs 

Your grading structure should reflect your organization’s mission, the relationship between each grade level, and how staff should move from one level to the next. It’s essential to review and adjust your structure every five or so years to keep it aligned with your evolving organization. 

The Birches Group framework 

Birches Group helps organizations create appropriate grading structures that align with their roles and future needs. Our framework is known for its clarity and simplicity, making it easy to create effective and fair grading structures.  

We offer various tools, resources, and consulting services to help you navigate this process and achieve your equity goals. Our grade structure design consulting service mainly focuses on existing roles in your organization, job progression, and the anticipation of more teams or positions to be added. 

Coming up next 

In our next blog post in the equity series, we’ll explore how to use salary surveys to ensure your compensation practices remain competitive and equitable.  

If you’re ready to take the next step in your equity journey, contact Birches Group today. We’re here to guide you through the process and help you build a workplace where everyone feels valued, recognized, and rewarded. 

Carla is a part-time copywriter on our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr.

Follow us on LinkedIn for more content on pay management and HR solutions.

A group of six people, including men and women, are engaged in a business meeting in a modern conference room. One man in traditional Middle Eastern attire is standing and speaking.

Petrodollar Panic: Separating Fact from Fiction

Written by Noel Madolid on . Posted in Uncategorized.

Birches Group provides insights into global labor market trends and developments, with a focus on events that affect labor markets around the world. 

In June 2024, stories claiming Saudi Arabia didn’t renew a 50-year deal with the United States (US) to keep oil priced in dollars sparked speculation about the petrodollar’s collapse. Online commentators warned this could undermine the US dollar’s status as a hard currency. 

But is there any truth to this narrative? Birches Group is here to cut through the noise and provide human resources (HR) leaders with the facts. 

The myth of the petrodollar agreement 

Contrary to recent speculation, there is no evidence of a formal “petrodollar agreement” between the US and Saudi Arabia. The misconception stems from a 1974 pact signed by US Secretary of State Henry Kissinger and Saudi Prince Fahd bin Abdulaziz Al Saud. However, the pact fostered close economic and military cooperation, not an exclusive oil-for-dollars arrangement. 

MarketWatch reports that the closest thing to a “petrodollar agreement” was a secret deal between the two nations later that year: the US promised military aid and equipment in exchange for Saudi Arabia investing billions of dollars of its oil sale proceeds in US treasuries. Bloomberg News reported the confidential diplomatic cable, obtained from the US National Archives, in 2016. 

While an agreement in late 1974 involved Saudi investment in US treasuries for military aid, this falls short of a formal petrodollar deal. Experts and fact-checkers have confirmed these claims to be inaccurate. 

Why the misinformation spread 

The recent spread of misinformation can be attributed to several factors: 

  • Unverified claims can quickly gain traction on platforms where critical scrutiny is often lacking.  
  • Heightened geopolitical tensions can create a fertile ground for the dissemination of misleading information.
  • Economic uncertainties worsen the issue, making people more susceptible to sensationalist stories that tap into their fears. 

Moreover, the fake news—pushed by “a combination of crypto speculators, gold bugs, and conspiracy theorists”—is an example of confirmation bias among those eager to see the dollar’s decline. Paul Donovan, Global Chief Economist at UBS Wealth Management, adds that “confirmation bias encourages people to ignore what is realistic if their prejudices are seemingly confirmed.” 

The resilience of the US dollar 

The petrodollar’s demise is not as imminent as suggested, and the US dollar’s strength is still secure, Wall Street and foreign policy experts say. 

The dollar’s strength is rooted in an interplay of factors, including the size and stability of the US economy, its role in international trade, and the established trust in its financial institutions.  

Research from the US Federal Reserve System shows that the US dollar’s global popularity doesn’t depend on the goodwill of oil exporters. It’s based on the US’s status as the world’s largest economy and goods importer, with deep, liquid capital markets backed by the rule of law and military power.  

“Saving oil in dollars is not fundamentally what makes the dollar powerful in global trade,” notes David Wight, author of Oil Money: Middle East Petrodollars and the Transformation of US Empire, 1967-1988. “The power of the dollar in global trade is why most oil is sold for dollars.” 

The reality of the US-Saudi relationship 

According to the London-based newspaper The New Arab, US-Saudi relations have improved in recent months. The reality is far more nuanced than a simple oil-for-dollars arrangement—it encompasses security, trade, and diplomatic ties.  

Paul Salem, President of the Middle East Institute, says that Saudi Arabia is looking for a “deeper security assurance and relationship with the US.” However, the geopolitical and economic landscape are very much different from what they were decades ago. 

Mark Finley, an Energy and Global Oil Fellow with Rice University’s Baker Institute for Public Policy, notes that the US economy has a smaller share of the global economy than it was 50 years ago. In addition, Saudi Arabia has recently worked to diversify its alliances, including increasing its ties to Russia and China. 

“Saudi Arabia has ambitions to establish itself as a regional powerhouse, and this involves a complex balancing act,” says Carla Norrlof, a Professor of Political Science at the University of Toronto and a nonresident Senior Fellow with the Atlantic Council. Nevertheless, recent shifts in Saudi foreign policy reflect a diversification strategy rather than a complete abandonment of the US dollar.  

A landmark trade and defense deal 

Amid rumors that Saudi Arabia is not renewing a petrodollar pricing deal with the US, both countries are in fact close to signing a historic trade and defense agreement.

In May 2024, media outlets such as Foreign Policy, NBC News, Reuters, and The Wall Street Journal reported that the two nations are reaching the final stages of a Strategic Alliance Agreement. The treaty would commit the US to help defend Saudi Arabia. In exchange, Saudi Arabia would grant the US access to its territory and airspace to protect US interests and regional partners. 

Fact vs. fiction: The final verdict 

The notion of a formal “petrodollar agreement” is a myth, and the US dollar remains a resilient currency.  

HR leaders must navigate the complexities of the global economic landscape with a discerning eye, separating fact from fiction, to make informed decisions that safeguard their organizations and employees. HR teams should rely on credible resources for information on developments. Additionally, they should keep a close eye on evolving international relations and their potential impact on global business operations. 

References: