I was reading an article recently that surveyed Gen Z workers about what they wanted. The first finding was that pay mattered to Gen Z workers. I'm sure many readers are saying "of course". Those that have read me before might even be saying "I told you - you said it didn't matter, but I told you".
Reading of the article and the results is required though. The article says that Gen Z workers want to be paid "fairly". That is the key word. They aren't looking to get the most money or break the bank. What they want is to be treated fairly. The problem is that organizations will equate fairness with high pay. Your sales person doesn't want to be the highest paid salesperson ever, but she doesn't want to make a small fraction of what a salesperson at a competitor makes.
That Gen Z worker also doesn't want to hear that raises are capped at 3% because of budgets, but then the CEO gets a 50% raise.
Pay is a complicated issue that requires looking at many factors. It rarely is as simple as managers and executives make it out to be. This is why they miss the boat so often.