The latest CIPD Reward Management report has just come out and it’s highlighting some big issues around the subject of fair pay. Only 33% of employees surveyed think that everyone in their organisation is fairly paid. When it came to their own pay, around half thought they weren’t paid fairly. There’s a significant mismatch between the HR and employee perspective in terms of pay fairness, given that three quarters of HR respondents believe employees are fairly paid for their skills, experience and accomplishments.
It does feel like pay issues have come under the spotlight recently like never before; not a day seems to go by where issues connected to pay don’t appear in the news. Executive pay is constantly under scrutiny. Recently there were concerns raised over the disability pay gap; at the start of this month the Office for National Statistics revealed that disabled employees were paid 12.2% less than their non-disabled peers, with London having the widest disability pay gap of 15.3%. Bank of England analysis recently revealed ethnic minorities are earning around 10% less than white employees.
The number of pay-related stories continues to reinforce the fact that pay is an issue with potentially significant consequences for business success. For example the Hays Salary and Recruiting Trends 2020 report found that the gender pay gap was affecting staff attraction and retention; around 60% of employers who knew they had such a gap acknowledged it was causing difficulties. Getting it wrong can affect levels of employee trust and affects performance and wellbeing too.
What steps can employers take to improve pay transparency?
Allowing employees to set their own pay might be a step too far for most organisations – although it is actually a process that some companies are experimenting with and others are already using. But there’s no avoiding the fact that not only must pay be fair, it needs to be perceived as such too. In some cases, companies might well be adopting a completely fair approach but if employees don’t know what lies behind the pay decisions that have been made, they won’t be aware of that fact. Significantly greater transparency is needed in many companies but that’s not an easy thing to achieve. What steps can an employer consider to improve pay transparency and perceptions of fairness?
Help employees understand the pay system
Is there a definition of what constitutes fair pay in your organisation? How much insight do employees have into processes like job evaluations and the pay brackets and levels that result? Are pay policies readily available and accessible to everyone? Enabling employees to have a clearer sense of the overall system is an important step towards transparency.
Address your line manager communication practices
The CIPD report found that 60% of companies believe they are open about the fairness of pay processes and outcomes yet only 10% of employees said their line manager always or often talked about them. Around three in five employees said their line manager has never explained exactly why they get paid what they receive.
So it looks like there could be a real opportunity to get line managers involved in explaining pay decisions to employees to give a better understanding of how and why pay decisions are made and what employees can do to progress in the pay structure. It’s also an opportunity to talk to employees about their overall total package too, giving them a better sense of the full value of the remuneration they’re getting.
Ensure pay audits are carried out and results shared
It’s an uncomfortable question to ask but are employees genuinely being paid fairly in your company? Do you ever analyse the current situation to monitor whether any issues about pay levels could be starting to manifest themselves? If you’re a medium or large business, ensure you are complying with all equal pay audit requirements. Not only should audits be carried out, but the results must lead to an action plan being put in place to deal with any discrepancies.
Corporate Payroll Solutions’ HR and payroll software offers accurate real time pay reporting that will support you in your work to ensure all employees are paid fairly in your company. Please do contact us for further details if you’d like to know more.