Show me the money

By Claudine Kapel

It’s easy to confirm that compensation matters. Just watch what happens when employees become dissatisfied with how they’re paid.

According to a new Mercer study entitled Inside Employees’ Minds, pay is now the most important part of the employment deal – and by a wide margin.

Yet only 53 per cent of study respondents said they are satisfied with their base pay. And only slightly more (58 per cent) feel they are paid fairly given their performance and contributions to the organization.

Further, only 52 per cent believe their current pay is the same as or better than what they could earn elsewhere.

Not surprisingly, the study also found that one in three employees is seriously considering leaving his or her organization, while one in five is ambivalent about whether to stay or go.

The findings paint a rather bleak picture of organizational life in the wake of sustained economic turbulence. “Employees are not happy,” Mercer reports in its study, pointing to the series of takeaways that employees have experienced in recent years – from pay freezes and smaller merit increases, to cuts in training, promotions and jobs.

So how does an organization stem the tide of pay discontent? Here are five action steps that can help.

• Examine your pay programs to test for issues. Are pay levels still competitive? Is the salary structure up-to-date? How has the organization been addressing pay for performance?
• Develop a plan to address issues and close gaps. Depending on affordability considerations, you may need a multi-year plan to get compensation programs to where you need them to be.
• Examine whether managers are being effectively engaged in pay administration. You may need to provide managers with new or additional training on how to make sound pay decisions and how to recognize and reward employees. The Mercer study found employees who had a performance review in the last year were significantly more positive about their organization and its ability to manage talent.
• Develop a communication strategy to address employee concerns. This should focus on the actions the organization will be taking to address concerns about pay – or even total rewards. For communications to be effective, the organization needs to follow through on commitments while managing expectations on what types of changes may be possible.
• Align the “say” and the “do.” Most people understand the principle of belt-tightening during financially challenging times. But inconsistencies in how the pain is shared can fan the flames of employee discontent. Employees aren’t likely to accept a wage freeze or other types of cuts if they see that managers or leaders are still getting raises and bonuses.

Every organization must sometimes make tough decisions. An emphasis on fairness, leadership and open communications can help make stormy seas easier to navigate.