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30 Sep 2022

Do you pay a fair wage? Maybe you should ask your staff

The perception of fairness is more important than what people are actually paid. So it’s important companies demonstrate that the process is fair

Do you pay a fair wage? Maybe you should ask your staff.jpg 1

 

One of the top predictors of employee sentiment, according to compensation software company Payscale, is a company’s ability to communicate clearly about pay. So much so that it outweighs more typical employee engagement measures such as career advancement opportunities and employer appreciation.

Communicating better is therefore vital.

Pay communications can be tricky. Businesses want to make sure they are fair and consistent in how they manage employee pay. As mentioned in 3R Strategy’s last piece about pay rises, the perception of fairness is more important than what people are actually paid.

So it’s important companies demonstrate that the process is fair. Fairness is central to how employees feel about reward. That fairness can be further demonstrated through transparency and regular communication.

That doesn’t mean sending an email round or popping something on the intranet and forgetting about it. Communication needs to be ongoing. People often have hundreds of emails and notifications coming through. A single email or update is easily missed.

Personalisation and feedback

People consume information in different ways. Generation Y and Z employees, for instance, get most of their information from mobile devices. There are so many options available besides email and intranet, such as videos, webinars, posters and infographics. The key thing is personalisation – thinking beyond a generic template to help a messaging land.

A certain amount of personalisation can be achieved using technology. But the easiest way is to make sure leaders discuss pay and benefits in one-to-ones. This means making sure they have all the information and training they need, including guidance documents and FAQs to prepare them for the questions they may receive – and the answers they should give.

Even better, this approach doesn’t cost anything. HR produces the guidelines and FAQs, which equip line managers to have more meaningful one-to-ones with their teams. It also creates an open culture, enabling not just feedback, but a two-way exchange.

This means leaders are free ask questions too. They may wish to know what benefits people value or what concerns they have. Regular feedback is valuable and should be sought throughout someone’s career – not just at the exit interview. Addressing their points may even stop them from leaving.

Most of us seek purpose in the workplace. We don’t just want to complete a set of tasks so we can get paid. We want to feel part of something bigger. Effective communication shows people how they fit in.

Taking control of the conversation

We need to be even more communicative during times of uncertainty. Uncertainty takes its toll. One study even shows that uncertainty is more stressful than knowing something bad is definitely going to happen.

Uncertainty without communication leads to anxiety, speculation and the spreading of misinformation. When people don't know what’s happening around them, they start talking among themselves. It’s better for a business if it can shape those conversations, rather than reacting to them.

Transparency boosts perceptions of fairness, strengthens the link between pay and performance and helps avoid accusations of discrimination. To get there, leaders need to understand their organisation's compensation policies so they can communicate them effectively to employees.

Research by Payscale showed that when people understand why they are paid what they’re paid, job satisfaction rose from 40% to 82%. Even if you are only able to increase pay by 5%, it’s still below inflation, but communication doesn’t cost a thing and will make employees more engaged.

Managers need to learn how to carry out these difficult conversations. Many become nervous about handling situations that involve intense emotions and questions to which they may not have all the answers. Without the right training and skills, there is a tendency for managers to simply blame HR.

Reward and money are emotive, particularly when people are losing out. It’s important to sympathise, reiterate the why and try to offer something positive. But we shouldn’t treat employees like children or try to shield them from reality. Fairness, transparency and regular communication are significant steps towards happier, more motivated teams.

In partnership with 3R Strategy

Independent Pay & Reward Consultancy

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