Employees think the competition pays more

Lack of communication about compensation is to blame: study

Most workers think the grass is greener on the other side of the fence when it comes to compensation.

Only two out of five employees (41 per cent) think they are paid as much as their peers in similar positions at other companies, according to Watson Wyatt’s WorkUSA 2002 study that surveyed 13,000 employees in the United States. The picture isn’t much better internally either. About 48 per cent think they are paid fairly when compared to people with similar jobs in their own companies.

“Companies must take a close look at employees’ perceptions of pay fairness both within and outside their own organizations or risk losing people once the economy improves and labour market mobility is restored,” said Ilene Gochman, national practice leader for organizational measurement at Watson Wyatt, adding that pay dissatisfaction is one of the top reasons why high-performers leave their companies.

The unhappiness with compensation has a lot to do with a lack of communication, the survey noted. Only 43 per cent said their companies do a good job explaining how their pay is determined, a 13 point drop since 2000 and the lowest figure for pay communication since 1994. About 20 per cent said they do not even know what their total compensation packages are worth.

Companies seem to do a better job in communication related to benefits. Almost 70 per cent of employees said their companies do a good job providing information on benefits, a strategy that appears to be paying off. The percentage who believe their benefits packages compare well to packages offered by other companies jumped 10 points between 2000 and 2002 to 42 per cent.

“The high marks given to companies for benefits communication suggest that improvements in pay communication are possible,” said Gochman. “Companies clearly know how to communicate. They just need to better apply their communication strategies to their pay-related practices.”

Latest stories