During this time of both economic and societal upheaval, organizational commitment to fair pay remains high according to Salary.com’s 2020 Pay Practices and Compensation Survey*. Seventy-three percent of organizations agree, or strongly agree, that their employees are paid fairly and almost half rated their employee engagement as “excellent or above average.” However, the survey revealed a lack of structure to support and validate that fair pay commitment.
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More than half (56 percent) of organizations do not have a formal process in place to address pay equity and 70 percent do not use salary structures to manage pay. “At a time when the issue of pay equity is of heightened national interest, it is concerning that a majority of organizations lack a formal pay equity process, though I predict that next year’s survey will find progress made in this area,” said Chris Fusco, Salary.com’s Senior Vice President of Compensation.
Formal compensation philosophies are slowing gaining more traction, with 62 percent of participating companies reporting having a compensation philosophy, up from 57 percent in 2019. However, 74 percent still do not provide formal training to managers on how to talk with their employees about pay.
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“Communication, a critical element of pay program success, continues to be an area where organizations are lacking,” said Fusco. “Any manager at any company must be able to honestly and accurately answer the question from an employee, ‘How is my pay determined?’. To integrate a greater understanding of a compensation philosophy, employers must increase their level of transparency and let go of some of the discretion involved in making pay decisions.”
Transparency requires the review and improvement of pay policies and practices so they will be perceived by employees as fair: both externally competitive and internally equitable. Forty-six percent of participating organizations rated their employee engagement as “excellent or above average.” The top driver of employee engagement is a healthy relationship between managers and employees.
According to Fusco, to increase employee engagement, managers must foster interactive employee relationships and incorporate the practice of open communication into ongoing performance monitoring.
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