Marie: Fair Pay and Pay Transparency Lead to A Better Retention

A perceived fair salary can increase employee retention by 30 percent or more, according to recent studies. To achieve fair pay, companies need a salary strategy and pay transparency.

June 27, 2023
"This recent research finding is not surprising, as salaries reflect employees' sense of appreciation. If they feel unfairly compensated, it can lead to frustration and potential resignations. What is surprising is the lack of investment and development in pay strategies and communications with in organisations", comments our Managing Partner Marie Kanellopulos.

Fair Pay refers to ensuring that employees receive compensation that accurately reflects the value of their work. This includes eliminating wage disparities among different groups, such as those based on gender, ethnic background, or socioeconomic status.

Pay Transparency focuses on internal communication and ensuring that employees understand the fairness of their compensation. This involves providing meaningful and clear explanations for why individuals earn more or less than others.

How To Build An Effective Pay Strategy?

·     Conduct a comprehensive compensation audit to identify any disparities or inequities. This involves analysing pay scales, salary ranges, and benefits to ensure alignment with market standards and internal equity.

·     Implement clear and consistent pay structures that define how compensation is determined. This may include establishing salary bands, pay grades, or job classification systems based on factors such as skills, experience, and responsibilities.

·     Develop a pay equity program, where People & Culture actively address any existing pay disparities by implementing initiatives to eliminate all forms of wage discrimination. This may involve reviewing and adjusting salaries to ensure fairness.

·     Regularly conduct salary surveys to gather data on market compensation trends and industry benchmarks.This information helps ensure fair pay in the long run.

How To Ensure Pay Transparency?

·     Provide transparent information about pay scales, performance evaluation criteria, and any bonus or incentive structures, so employees can understand the rules governing fair pay. However, the most crucial aspect of pay communication is explaining how employees can earn more and the timeframe for such increases.

·     Empower managers to have effective conversations about compensation with their team members. HR should provide training on fair compensation practices, including understanding bias, conducting performance evaluations, and making equitable pay decisions.

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