In this column, we continue our march through the seven individual attributes of the RESPECT model (Recognition, Exciting Work, Security, Pay, Education and Career Growth, Conditions, and Truth) by focusing on Pay.
Clearly, people don’t work only for money, but the pay-for-work exchange is the foundation of the employer-employee agreement. It serves as our motivation to come to work and is the medium by which people acquire their basic needs; therefore, it is a basic need in and of itself.
In my global research, 25 percent of employees state that fair compensation is the most important thing they want from their employer. Below is a sampling of their actual comments:
• “Fair compensation for the work I do”
• “Compensation that is fair and respectful”
• “A high salary”
• “Good pay for a hard day’s work”
• “Fair cost-of-living increases”
• “A decent pay rate and affordable benefits”
• “Honest pay for an honest day’s work”
• “To be paid competitively and recognized for the work I do”
• “A raise—it’s been three years”
WHY MONEY MATTERS TO EMPLOYEES
Employees say pay needs to be fair and it needs to be enough. They also comment frequently about pay raises. Beyond the black-and-white needs fulfilled by pay raises, there is an emotional component. Raises signal to employees that they are valued and important, and that their work matters.
Employees believing that their pay is fair leads to higher commitment. We explored the relationship between ratings of pay and intent to leave in the next 12 months. Among those who rated their pay as good or very good, only 21 percent intended to leave the company. But among those who rated their pay as poor or very poor, 45 percent intended to leave. This is more than double the rate for those who say their pay is good or very good.
HOW FAIR PAY HELPS BUSINESS
Except for the privileged few, we all need to be compensated for the work we perform. Pay and benefits are among the most potent tools organizations use to attract, retain, and motivate talented employees.
They are also a large expense: Compensation typically represents about 50 percent of operating budgets. Given the importance of pay and benefits to both employees and employers, it follows that pay and benefits programs tend to reflect company values and culture.
How employees view their total compensation can have an enormous impact on the success of a business. Research shows that high-quality compensation programs lower absenteeism and increase everything from employee engagement to productivity and motivation. They also can be an employee catalyst for learning new skills.
FAIR COMPENSATION DELIVERY TIPS
• Review compensation details with your employees. Provide employees with information about how much the company pays compared to the market. Clarify criteria for salary adjustments.
• Create an annual compensation and benefits review. Create a one-page summary of company sponsored pay and benefits for each employee. This should include the monetary value of benefits employees might not consider (e.g., health insurance).
• Give employees time off. If policies allow, give deserving employees extra hours or days off.
• Explain your benefits package to new hires. Don’t count on new employees reading the employee handbook. Outline company benefits and emphasize the unique and most valued features.
• Find opportunities to remind employees about useful benefits. If your company offers unique benefits (e.g., tuition reimbursement or a mass transit ticket purchase program), remind your employees and help them take advantage of them.