Everyone wants to make more money, receive better benefits, and work in a great environment. At the core, however, is there something even simpler and straightforward motivating employees to focus on compensation?
From entry-level on up, all employees wants their pay to be fair (not equal, necessarily, but fair). Simple as that may seem, fair is far from an objective measure, and everyone may have a different understanding of what ‘fair’ really is.
Perception is Reality
Employees interpret their salaries based on various factors. Without an internal reasoning or context for knowing if one is being paid fairly, external information is all that current and potential employees can rely upon check my source. Lacking information from the company itself on why and how HR determined their compensation, employees will suspect that they are being undercompensated, particularly when told by their family and friends that this is so.
Why does an employee’s perception matter? It matters because employees who believe they are being paid fairly are nearly twice as engaged as those who don’t and are twice as likely to stay with their organizations.
Given the chronic problems with productivity and retaining employees, it should come as no surprise that less than half of US employees believe they are paid fairly.
While the external market is perhaps the best and only real way to measure how “fair” compensation is, at some point it simply doesn’t matter because perception of fairness will overrule any objective in reality. All it takes for employees to believe they are being underpaid is a peek at another’s check or the story of a higher wage elsewhere, and dissatisfaction sets in.
Optimizing the Program
Your organization has the opportunity to be one of the voices influencing your employees’ perception. By being open and communicating with employees, it can become less about the salary itself and more about the reasoning and logic behind that number.
It is critical to spend time and energy on a market-based pay program that is externally competitive and internally equitable, but the only way to maximize the power of that tool is to show employees how their compensation is determined, how they themselves can maximize that number for growth potential, and how pay is linked to their own performance. By communicating transparently with your employees, you can demonstrate the well-thought out compensation plan you’ve invested in and be a more credible influencer than the external voices striving for discord.
We all want to be appreciated and feel as though our employers are doing right by us. So even disregarding the numbers themselves, the very act of attempting–and showing your attempts–to achieve fairness in your compensation strategy can foster appreciation and goodwill among employees. Take the extra step to make the most of your compensation strategy.
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