Most companies apparently just make up their employees' salaries as they go

A lot of employers make up their employees salaries as they go.

(Image credit: iStock.)

published 5 August 2016

When it comes to employees' salaries, many companies are making it up as they go along. Only 38 percent of employers have a formal compensation structure or philosophy guiding their pay decisions, according to a study of 7,600 firms by compensation analysis firm PayScale Inc. Particularly for salaried employees, many companies arbitrarily decide on new hires' wages based on experience and performance on the job, The Wall Street Journal reports, a soft sort of subjectivity that some human resources experts say can lend itself to discrimination. But there is some good news: The study found 34 percent of employers without a formal pay structure are currently working to develop one.