Some individuals work to live; others live to work. The ideal job comes in many shapes and sizes but usually boils down to fulfilment, success and happiness. Yet it is difficult for many of us to resist the urge to measure our self-worth by what we get paid for our contributions. Surprisingly, a large segment of the workforce doesn’t have a good understanding of why they make the money they do or how the larger structure around them dictates who makes more or less than they do.
Ceridian’s Pulse of Talent external survey of 800 Canadian workers found that many Canadian companies don’t have a clearly defined compensation policy to underline different pay and benefits levels. It showed that 50% of employees of organizations with fewer than 100 people are not aware of a clearly defined compensation policy, and even if such a policy existed, it is not always correctly explained to them.
Other survey findings included:
Lack of employee awareness. In cases where policies do exist, many employees don’t know the basics about compensation at their places of business: who’s paid how much and why.
Confusion over salary calculations. Everyone knows that they make a certain amount of money per hour or per year, but many are not sure how their employer arrived at that figure.
Curiosity about competitive pay. In a void of information, employees have to conduct their own research to evaluate the adequacy and fairness of their compensation. Even though it’s easier than ever to look up pay rates, most workers don’t understand how their paycheque compares with the market rate.
Statistics show that there is room for improvement among Canadian organizations looking to enlighten their staff about their compensation programs and policies. Here are some ways for employers to address the gaps identified in the survey.
•Develop clear, easy-to-understand compensation rules and pay scales and take the time to explain how an employee’s pay is determined.
•Communicate salaries across pay scales to show how employees’ salaries compare with those of fellow colleagues in other roles within the organization and how their salaries and benefits compare with the industry average.
•Provide information about total compensation; the non-salary components of compensation can add up.
•Ensure managers are briefed on the information used to make pay decisions.
•Provide periodic information sessions where compensation policy updates are given to all employees.
•Ensure consistent and fair application of policies across the organization and review compensation policies every few years.
Communicating clearly about compensation can be a powerful tool for reinforcing organizational values and for creating desirable changes in workplace behaviour or work culture, including:
Talent engagement and retention. When employees understand their compensation and see it as fair, their engagement level may be positively affected, which reflects on their productivity and loyalty to their employer and helps drive business success.
Clear performance expectations. As performance expectations are often intimately linked to pay, organizations with clear compensation programs can more easily set standards for their staff to achieve.
Transparency and consistency. Keeping compensation packages consistent across roles will go a long way toward keeping employees happy and avoiding conflict. Without transparent salaries across an organization, employees might be quick to believe their co-workers are unfairly taking home more money.
Being more open about a delicate topic like pay might require a shift in culture for some organizations. Managers often run away from conversations about pay, but keeping valued employees happy is good for business. •
Kelly Allder is vice-president for human resources programs at Ceridian, a global human capital management technology company.
