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This is a story I heard from an acquaintance, and I was wondering how I would handle it if I were the boss in this situation.

The organization used to have a policy of giving employees a salary increase of X for having a relevant master's degree. This was applicable to both new hires and to current staff. Thus, a new hire with a master's degree would earn X more than she otherwise would, and if a current employee gained a master's degree during her employment her salary would increase by X. This policy has recently changed, and now employees are no longer given X for having a master's degree. Employees that already have a master's degree will have X phased out of their salary over a period of time.

Jane Doe is a current employee at this organization who will soon finish her master's degree. She did not enroll in the masters degree for this organization, nor did she enroll in the degree for the purpose of getting an extra X per year. However, she is annoyed that she has put in time for this degree with the expectation of earning and extra X, and now that she is about to finish the degree she won't get any salary adjustment for it.

Any thoughts or recommendations as to what a good response would be from the organization? My initial thoughts are that this organization doesn't have a well-thought out compensation strategy, but I don't know much beyond what I've written here. I figured that some of the smart people here might have some good insights to share.

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  • "Employees that already have a master's degree will have X phased out of their salary over a period of time." Just to clarify something that might be obvious: this means that their salary will be reduced by X over a period of time (e.g., a year or two)?
    – zmike
    Commented Apr 24, 2022 at 6:40
  • @zmike It could just mean future raises would be lower to eventually bring them back to the non-masters average. Both inflation and the additional value of experience means this is an average that often will catch up to a stationary wage. But I suppose this doesn't apply to Jane Doe either way.
    – Nathan
    Commented Apr 24, 2022 at 7:55
  • @zmike I'm not completely clear on the details, but that is my understanding. For example: if X is 1200 per month, then maybe the send month the person would only be paid 1100, the third month the person would be paid 1000, the fourth month 900, etc.
    – anon
    Commented Apr 25, 2022 at 3:51

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This is a badly thought out policy unless the people are easily replaceable.

I worked where they upped my pay for each certification, when after a while they changed that policy, I was fine with that. But if they'd have downgraded my remuneration based on their policy change I'd have immediately started job searching seriously. This is the risk they're taking, it's better to discontinue the policy than penalise those who have already benefitted from it.

Some people may miss out, but you can get past that with a little time. But downgrading pay is different matter. That's an aggressive act, not a passive one.

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The organization used to have a policy of giving employees a salary increase of X for having a relevant master's degree.

That's not a great policy unless the master degree correlates well with performance and business outcomes, which I highly doubt.

This policy has recently changed,

Understandable. It's not a smart policy.

Employees that already have a master's degree will have X phased out of their salary over a period of time.

That's really dumb. People are VERY sensitive about pay-cuts especially if they are related to something out of their control. The company will see a lot of anger and frustration and possible some non-trivial attrition.

Jane Doe is ... annoyed that she has put in time ...

Too bad so sad. Sorry Jane, but unless you had this guaranteed in writing you can't rely on it.

Any thoughts or recommendations as to what a good response would be from the organization?

DON'T DO PAY CUTS or at least hide them so they are less obvious. If you take something away you should give something of equal or larger value. Ideally there is new policy in place that has new rules that are at least in some respects better than the old policy. Focus communication on the new benefits and downplay the downsides.

If this is really just a one-sided pay cut, than there is little you can to put lip stick on that pig and the company will need to prepare for a major employee upheaval.

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