Intelligent SME.tech Issue 27 - Page 53

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Only 32 % of employees believe their pay is fair

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FINANCE | SALES & MARKETING | CUSTOMER EXPERIENCE | HR SOLUTIONS
ess than one third of employees feel they are paid fairly , while just 34 % of employees believe their pay is equitable , according to a survey by Gartner .
The Gartner survey of 3,523 employees in 2022 also found that employees who perceive their pay as inequitable have a 15 % lower intent to stay with their employer and are 13 % less engaged at work than employees who perceive their pay as equitable .
“ Employees ’ sensitivity to perceived pay gaps is being exacerbated by today ’ s economic conditions , including rising inflation and the hot labour market , which is causing a shift in compensation between tenured employees and new hires ,” said Tony Guadagni , Senior Principal in the Gartner HR practice .
Most organisations are actively taking steps to close pay gaps ; a July 2022 Gartner survey of 104 total rewards leaders found that 84 % are conducting pay equity audits at least annually . While technical approaches are necessary , they don ’ t address employee perceptions .
“ Employee perceptions of pay equity aren ’ t rooted in compensation ,” said Guadagni . “ Instead , the main driver of perception is organisational trust – when employees don ’ t trust their employers , they don ’ t believe their pay is fair or equitable .”
Most employees ’ perceptions around pay are attributable to general trust in the organisation . Factors that erode organisational trust include poor culture and inclusivity , poor work-life harmonisation and unfair experiences .
To increase employee perceptions of pay , HR must rebuild employees ’ trust in the organisation .
More communication
Employees receive little pay information directly from their organisation . A Gartner survey of more than 3,200 employees in May 2022 found that nearly 43 % of employees discuss their pay with colleagues in the same role , while 45 % of employees consult thirdparty pay sites at least once a year . The same survey found that less than one third of employees are aware that their organisation is prioritising pay equity .
Communicating about pay equity builds organisational trust and improves employee perceptions , as does education about pay processes .
“ Only 38 % of the employees we surveyed report that they understand how their pay is determined ,” added Guadagni . “ When organisations educate employees about how pay is determined , employee trust in the organisation increases by 10 % and pay equity perceptions increase by 11 %.”
Broader accountability
Most actions that create pay equity issues occur outside of the HR function and are the result of management decisions . Most pay gaps arise from decisions surrounding hiring , promotion and performance assessment . Despite limited influence over these factors , pay equity processes are siloed within the HR function at most organisations . To effectively address and sustain pay equity across the organisation , HR leaders must broaden the scope of accountability for pay equity and ensure that managers consider pay equity implications when making critical staffing and compensation decisions . �
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