‘Why don’t you pay me more?’

Equal pay audits, transparency, HR can help employees feel better about their compensation
By Jeff Aplin
|Canadian HR Reporter|Last Updated: 04/23/2013

When it comes to pay practices, employers can’t afford to make mistakes because unfair pay practices could chase their most talented employees away.

In looking at the relationship between leadership and employee engagement, superior results are achieved when employers have strength in vision, strategy and execution, along with highly engaged workers.

To better understand employee job satisfaction, David Aplin Group conducted a survey of more than 1,400 employees and 400 managers in 2012. It found the top five reasons managers believe employees leave a company are:

• insufficient pay or unfair pay practices

• a desire to pursue personal goals

• an excessive workload

• a job opportunity

• a lack of feedback or recognition.

And when employees were asked for their opinion, the top reason was the same as for managers:

• insufficient pay or unfair pay practices

• a lack of honesty, integrity, ethics

• a lack of trust in senior leaders

• a lack of work-life balance

• an unhealthy or undesirable culture.

The notion of unfair pay practices goes beyond gender equality at the workplace though, unfortunately, a significant earnings gap still exists between men and women.

It is important for organizations to balance not only internal pay equity (comparing individuals in similar positions at a company) but also external pay equity (comparing individuals in similar positions outside of a company).

In order to conduct an equal pay audit, it is important to compare positions that are substantially equal in terms of job content as opposed to job title.

Salary structures, whether broadband (with an emphasis on career development) or narrowband (with an emphasis on job promotion) can provide a framework for fair and consistent pay practices and allow companies to reward performance and development while maintaining costs.

Increasing transparency — though not a practice that is right for all organizations — is a proven way to stop speculation about pay (employees will know they are being paid fairly in relation to their job responsibilities) and demonstrate possible pay opportunities for employees.

At a minimum, managers should be prepared to openly discuss with employees the compensation framework under which top performers will be rewarded in order to set realistic expectations.

However, money is not the only answer to turnover — 49 per cent of respondents said a higher salary or pay raise would not increase their tolerance of internal factors that would cause them to leave a job, regardless of how high the pay or earning potential was.

These factors include an unhealthy corporate culture, personal health or stress, an unethical work environment, poor working conditions, an excessive workload and poor management.

Employers would be well-advised to take note of what is turning off employees. And there are demographic changes to consider, with baby boomers retiring and younger generations taking over.

“I definitely am seeing a shift as younger professionals are being promoted into managers. They are not as patient as their predecessors. They want money, perks, opportunity — and quickly too,” said Holly Hetherington, vice-president of executive search at the David Aplin Group in Calgary.

While most companies pay a lot of attention to building and preserving a culture that fits their corporate goals, one of the most critical elements of any great culture is one that gets very little press — fairness. Even though a company may have many positive programs, if these are not seen to be applied fairly, any positive can quickly become a negative.

The very definition of fairness in the workplace is shifting from the traditional golden rule of “treat others the way you want to be treated” to the platinum rule of “treat others the way they want to be treated.” Fairness is the secret sauce that can deliver high employee engagement and make a culture a multiplier of results.

So, what’s to be done? Managers need to better understand the wants of their workforce. And HR should facilitate this process, as it is in the best position to deliver the information.

It is important for HR to tune into stakeholder expectations in order to design and implement processes that meet those expectations — give employees a voice and space to express themselves (as through intranet forums or town hall meetings), share success stories about HR initiatives with management and employees and, ultimately, facilitate a culture that works.

Jeff Aplin is president of recruiting firm David Aplin Group in Calgary. For more information, visit www.aplin.com.