Pay is top of mind for employees right now. A recession is looming, and individuals are facing a cost of living crisis where they are struggling to make ends meet at the end of the month.
As a result, many employees are risking job security and leaving their current roles and companies.
This situation is complicated by the fact that many employees are not just frustrated that their employer won’t give them a pay rise in the cost of living crisis (and they know they can get a salary boost in a new job), but because they feel they aren’t paid fairly or equitably.
Less than a third of the 3,500 employees surveyed by Gartner said they were paid fairly. These workers had a 15% lower intent to stay in their current job and were 13% less engaged at work.
It’s time to rebuild trust
Thankfully, it’s not all doom and gloom. This pay inequity factor could be a solution for employers who cannot offer salary rises to all, but do want to do something in the cost of living crisis.
This will help avoid high attrition rates, but there is the double benefit of pay equity policies helping to build trust and engagement at work, which are also feeding into the war for talent.
Tony Guadagni, senior principal in the Gartner HR practice, shares with UNLEASH: “By and large, if employees feel that they are generally treated fairly and equitably by their employer, they tend to believe that their pay is equitable as well.”
When employee trust increases by 10%, employee perceptions about pay equity also rise by 11%, according to the Gartner study.
But Guadagni warns that employers must think carefully about the precise pay equity policies they introduce to build this trust:
“Organizations generally focus on the technical elements of pay equity – that is, the process of examining employees’ compensation and correcting unjustifiable pay gaps.
“While these activities are important and necessary, they do little to address employees’ perceptions of pay equity. In addition to regular pay equity audits, organizations should work to build employees’ trust in pay.
“Affirming the organization’s pay equity goals and educating employees on the process by which pay is determined are some of the most impactful things that an organization can do in that regard.”
Another thing organizations can do is to create a dedicated team around pay equity. Guadagni added: “An ideal pay equity team consists of leaders and employees across levels, business units and functions with insight into the practices and processes that create pay equity gaps and a visible commitment to pay equity within the organization.”
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