CompLogix Blog

Employee Perceptions of Pay Equity

Communication and pay transparency are key to building trust

For businesses still digging out from the economic impact of the Covid19 pandemic, difficulties hiring and retaining employees have become an all too common reality. Tough decisions that had to be made at the time – layoffs, deferred pay raises, salary freezes and cuts – left gaping wounds that will take a while to heal in the minds of today’s workers. 

Today’s labor shortages can’t all be attributed to pandemic burnout. Still, the fact remains that in today’s labor market, there are simply too many job openings and too few workers able or willing to fill them. In November 2022, The U.S. Chamber of Commerce reported there are 10 million job openings, but only about 5.7 million unemployed workers. 

At no time before in our workforce history has it been more important to develop strategies to retain the quality employees you do have. 

When knowledgeable employees leave an organization, this turnover can have a serious downstream impact on morale, job performance, and attrition. Losing quality employees directly correlates to a business’ declining financial health, especially if the problem is allowed to fester and grow.

Perceived Gaps in Pay

We’ve just started to see some relief from what is often called the Great Resignation – the time immediately after the pandemic when large numbers of workers changed jobs, often for a higher wage.  Without a doubt, compensation is one of the critical components that drive employees’ intent to stay or look for opportunities elsewhere. That doesn’t mean that giving every employee a pay raise will solve the problem. 

Maybe the problem isn’t about the amount of compensation being paid at all.

A mid-2022 study from Gartner found that only about one-third of U.S. workers think they are getting fair pay. Add today’s economic conditions and rising inflation, the bad taste still lingering from COVID-related business decisions, and thousands of new job openings, even the best employees are becoming more sensitive about perceived pay gaps and looking to see if the grass may be greener in another role.

The Gartner survey also found that employees who perceive their pay as unequitable have a 15% lower intent to stay with their employer and have 13% lower engagement at work than employees who perceive their pay as fairly distributed. Conversely, when employees receive education about how pay is determined, trust in the organization increases by 10% and pay equity perceptions increase by 11%.

Open the Compensation Conversation

One way to close the perceived gaps in pay is to dial up conversations and transparency around compensation. In fact, increasing communication and staying accountable to employees are among the best ways to address perceived pay equity disparities, build trust, and retain valuable employees.

In our next blog, we’ll talk more about pay transparency, the new laws that make it mandatory for some state’s employers, and how having an open compensation strategy can benefit your organization. 

Until then, tracking pay equity effectively using a compensation technology solution designed to do just that is an important step toward instilling perceptions of pay equity among your employees. Compensation management platforms that eliminate manual error and subjectivity can provide the systematic solutions needed to administer pay fairly, which leads to greater employee confidence that their compensation is handled fairly and with care.

If you are ready to talk about the ways a web-based compensation management solution could contribute to pay transparency and equity for your organization, CompLogix is here to answer your questions. Get a no-obligation demo and learn more!

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