Improve Employee Satisfaction With Equitable Pay Practices

DECEMBER 5, 2023

When it comes to employee satisfaction, perception is everything. Employees who perceive their pay is unfair — even if it’s competitive — will seek employment elsewhere. Increased legislative activity around pay transparency is also creating pressure for employers to be more up front about wages — which may create additional employee questions or concerns.

Pay transparency is a good first step toward creating an equitable workplace where employees feel their wages reflect their worth. However, transparency must be combined with strategy and communications, and will require meaningful conversations.


Evaluate Pay Practices and Philosophy

More transparency about compensation means employees will have questions about how their pay is determined and how it compares to their colleagues’ pay. To prepare for these conversations, employers should evaluate current pay practices and take steps to standardize. Conducting a pay equity study can help determine whether pay practices take controllable differences, such as performance, education and experience, into account to determine differences in compensation between employees.

Pay equity studies help:

  • Uncover pay discrepancies
  • Increase job performance
  • Decrease workforce turnover
  • Mitigate legal and financial risks
  • Better manage future pay equity considerations
  • Audit potential gaps in pay structures
  • Meet regulatory requirements

An effective pay equity analysis utilizes multiple statistical assessment models to determine whether disparities are within an acceptable deviation explainable by objective factors, such as tenure. Pay disparities that are not within an acceptable deviation suggest that subjective forces, including potential bias, are influencing compensation practices.

Communicating Compensation With Your employees

How do employers begin to have conversations with employees about compensation? It starts at the top. Create talking points for leadership, managers and supervisors to help articulate the organization’s compensation philosophy and explain that pay is determined based on a disciplined and objective approach. Define “performance” and discuss how it includes both work that has already been delivered and future potential. Provide details relating to potential and what factors are evaluated. This could include contribution level, quality of work, reliability and consistency, readiness and initiative for career growth and taking on additional responsibilities, and ability to mentor or train other employees.