Pay Fairness, Transparency Can Fuel Employee Engagement

Nov. 18, 2017 — Employee engagement continues to be a much-desired (and lagging) business objective for employers. But a surprising finding from a recent survey found that, to boost worker satisfaction, employers should pay close attention not to just what they pay, but how they pay it.

Research from PayScale Inc., revealed that how employees feel about the pay process at their organization — in terms of fairness and transparency — is 5.4 times more impactful on how satisfied they are than how they're paid relative to market.

In its survey of more than 500,000 employees, results also show that when employees feel appreciated by their employer — and they believe their company has a bright future — they are far more likely to be satisfied at work and remain at the company.

These results demonstrate that fostering open communication with employees about their role and performance — including talking with them about compensation — have never been more important to the bottom line, according to Lydia Frank, PayScale's vice president of content strategy.

"This research aims to shed new light on employee satisfaction and intent to leave in an era where engagement is at an all-time low," Frank said, adding that PayScale is seeing an emerging trend across many forward-thinking companies who are investing in fostering a richer sense of value and fairness with their employees.

"Our study shows that just by having an open dialogue about the pay process and employees' contributions at the company, employers can ultimately drive better outcomes for their businesses," she said.

Paying fairly matters a lot: 75% of respondents who think they are paid at or above the market rate said they were satisfied with their job, compared to only 59% of workers who felt they are paid below the market rate.

"Aptitude's own research has shown that compensation is a top consideration when joining a company, and plays the largest role in engagement and retention," said Mollie Lombardi, CEO of the analyst firm Aptitude Research Partners.

The PayScale study not only reinforces that, but helps shine a light on the fact that perception is reality when it comes to pay, she added, noting that as a result, organizations and managers will need to be much more transparent, and have access to the right data to provide context for pay decisions.

While the findings didn't specifically tackle pay gender pay equity, the fairness and transparency issue dovetails with recent research from WorldatWork, which found that more than half of respondents said their organization conducts regular analyses to ensure pay equity, but one in five doesn't have any formal programs or practices in place.

The biggest barriers to establishing pay equity? Costs required to fix inequities, and getting leadership to buy into the idea that pay equity is worth the investment of time and resources. It's also difficult to establish criteria to ensure fair comparisons are made. The top reasons inequity is justified are work experience, job performance and education/training/experience.

Contents © 2017 WorldatWork. For more information, contact the Copyright Department at WorldatWork.

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