For compensation programs to deliver maximum value, they need to be perceived as being fair.
From an employee vantage point, perceptions of pay fairness emerge based on three major considerations:
One of the challenges in tackling pay fairness is that perceptions don’t have to be accurate to be impactful. If there’s a viewpoint that some individuals or groups are paid unduly high or low, that perception – true or not – can undermine trust in leaders, erode performance and teamwork, and even fuel turnover.
At the same time, employees today have more access to information about market pay practices than ever before thanks to the Internet. This includes online access to recruiting sites, jobs and pay ranges of other companies and online salary surveys.
This has changed the compensation management landscape because employees now expect to be able to access information about company pay programs and no longer accept that such information should be kept a secret.
Here, we’re not talking about how much given individuals are paid. But many companies still struggle when employees want to know the details of their salary range, or the next range up. Or the pay range associated with a job posting.
At the same time, online information – including data from some self-reported surveys – may not necessarily be accurate or relevant to an employee’s particular job. So all that information sometimes just adds noise and confusion to the debate over what fair pay should look like.
So today, saying nothing about pay isn’t really an option for organizations that want their compensation programs to be seen as fair and credible.
To that end, if you want to begin to communicate more openly about matters of compensation, here are a few key steps to get you started.
First, conduct a review of your compensation programs and practices and test for any areas of potential inequity. Before you begin compensation-related communications, you should ensure your house is in order:
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