Perspectives on The Hidden Cost of Undervaluing Talent - A Lesson in Fair Compensation

Introduction

On July 2, 2025, Ambassador Maryben Omollo—an internationally respected mental health and leadership coach, 17-time award-winning speaker, and founder of the Maryben Foundation—shared a compelling insight into one of the most overlooked issues in modern recruitment: the long-term cost of underpaying employees. With a global reach of over 50 million and a mission to build resilient and inclusive workplaces across Africa, Omollo’s reflections continue to challenge outdated HR practices and promote people-first leadership. Her story, though brief, reveals a common yet damaging scenario in many organisations: the illusion of cost-saving through salary negotiation, and the hidden price it exacts on morale, retention, and organisational performance.

The Scenario: A Negotiation Gone Wrong

A candidate applies for a role and, when asked about their salary expectations, responds confidently:

“Between $8,000 and $10,000 per month.”

The HR representative, recognising the candidate as the best fit for the role, responds:

“We can only offer $7,000.”

The candidate, eager to secure the opportunity, agrees. What the candidate doesn’t know is that the actual budget for the role is $15,000. HR feels triumphant, believing they’ve saved the company money. Management is pleased. On the surface, it appears to be a win. But beneath that surface, a storm is brewing.

The Fallout: Disengagement and Departure

Once the new employee joins the organisation, they begin to observe internal dynamics. They notice discrepancies in pay, benefits, and recognition. They realise they are being paid significantly less than what the role is worth—and possibly less than their peers.

The result?

1. Dissatisfaction: The employee feels undervalued.
2. Disengagement: Motivation declines, and productivity suffers.
3. Disloyalty: Trust in the organisation erodes.

Within two months, the employee resigns for a better-paying opportunity. The company is forced to restart the recruitment process, incurring additional costs in advertising, interviewing, onboarding, and training. Meanwhile, the team experiences performance gaps, and morale takes a hit. What initially seemed like a cost-saving decision turns into a costly mistake.

The Illusion of Savings

Omollo’s story highlights a critical flaw in traditional HR thinking: the belief that negotiating a lower salary is a win for the company. In reality, underpaying talent often leads to:

1. High turnover rates
2. Loss of institutional knowledge
3. Reduced team cohesion
4. Increased recruitment and training expenses

The short-term savings are quickly outweighed by long-term losses.

The Value of Paying People What They’re Worth

To attract and retain top talent, organisations must be willing to invest in their people. This means offering compensation that reflects:

1. Market standards
2. The complexity and responsibility of the role
3. The candidate’s experience and qualifications
4. The value they bring to the organisation

Fair pay is not just a financial transaction—it’s a signal of respect, trust, and commitment.

The Psychological Impact of Pay Disparity

Beyond the financial implications, pay disparity has a profound psychological effect on employees. When individuals discover they are being underpaid:

1. They feel undervalued and betrayed.
2. Their motivation declines.
3. They become less likely to go above and beyond.
4. They may speak negatively about the organisation, affecting its reputation.

In contrast, fair compensation fosters loyalty, engagement, and a sense of belonging.

A Call for Transparent and Ethical Hiring

Omollo’s message is a call to HR professionals and organisational leaders to rethink their approach to hiring and compensation. She advocates for:

1. Transparency in salary discussions
2. Integrity in honouring budget allocations
3. Empathy in understanding the human side of employment
4. Equity in ensuring all employees are fairly compensated for their contributions

These principles are not just ethical—they are strategic. They build trust, reduce turnover, and enhance organisational performance.

The Role of Leadership in Compensation Culture

Leaders play a crucial role in shaping compensation culture. When leadership prioritises fairness and transparency, it sets the tone for the entire organisation. This includes:

1. Empowering HR to offer competitive salaries
2. Encouraging open conversations about compensation
3. Regularly reviewing pay structures for equity
4. Recognising and rewarding performance appropriately

Leadership that values people over pennies builds organisations that thrive.

Reflection

Ambassador Maryben Omollo’s story is a powerful reminder that how we treat people—especially during the hiring process—matters deeply. Compensation is more than a number; it’s a reflection of how much an organisation values its people. The candidate in the story didn’t leave because they were unqualified or uncommitted. They left because they felt deceived and undervalued. And their departure cost the organisation far more than the $1,000 they thought they saved. In a world where talent is one of the most valuable assets, organisations cannot afford to cut corners on compensation. Fair pay is not just a moral obligation—it’s a business imperative.

Lesson to Learn

Pay people what they are worth. Underpaying talent may seem like a win in the short term, but it leads to long-term losses in morale, retention, and performance. Compensation should reflect not just the role, but the respect an organisation has for its people. When you value your employees, they will value your mission.