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Seeing Both Sides of the Compensation Story
Authored By: Megan Mohr on 12/22/2014

As they say, there’s two sides to every coin – especially when it comes to compensation and pay perception. Employees usually feel underpaid and undervalued while the organization as a whole is trying its best to be fair and equitable. How can these two sides meet in the middle? By improving pay perception.

Improving pay perception may seem like an insurmountable task, but it’s not if your organization focuses on three things: communication, resources and management.

  • Communication
    Instead of sending out various emails or intranet articles about compensation, build a comprehensive plan with consistent and strategic messaging for your staff. Make a connection on how their individual performance affects the overall success of your organization. Plus, use instructive communications that inform staff how to think about the information they read.
  • Resources
    Instead of overloading your employees with compensation information and resources, remember that each employee probably needs different information – and delivered in different ways. Give them a library of information to choose from in different formats such as articles, videos, podcasts, charts, etc.
  • Management
    The majority of pay messages employees receive is through their managers. Take an active part in directing what that information is and how it should be delivered. The Pay Communication Benchmarking Study from the member-based advisory company CEB shows that less than a quarter of employees feel their manager is effective at communicating pay. More telling, only 41% of the managers surveyed say they’re effective at these communications.

The Whole Story

Research from the Kenexa High Performance Institute shows that employees who believe their pay is fair are more engaged, are less likely to quit, are less stressed at work, feel more physically and mentally fit, and are more satisfied with their personal life. CEB’s study also discovered that improving employees’ pay perception translates into a revenue gain of $27 million and $5 million in profit gains for the average Fortune 500 company.

So, obviously it pays to improve pay perceptions in more ways than one. The messaging needed to accomplish this is fairly straightforward. Your staff needs to understand three basic factors to believe they’re being paid fairly:

  • How pay is determined
  • How to maximize pay
  • The correlation between performance and pay

Just keep in mind that even if your organization’s pay is fair and equitable, what really matters is if your staff sees it that way. Focusing on pay perception not only leads to happier employees, it can add to your company’s bottom line. It pays to see both sides of the compensation coin.

If your organization needs a little help with compensation, contact HR Performance Solutions. Compease, our dynamic compensation administration and salary planning program, is a powerful tool. Plus, our HR Consultants are always here to lend a hand. 


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