I recently heard a speaker talk about employee pay and engagement. They said, “Misunderstood pay can be a huge distraction.” They’re absolutely right. But, misunderstanding pay is different from being disappointed or frustrated about pay. I’d like to think if an employee doesn’t understand their compensation, it can be resolved with education.
First and foremost, candidates need to know how the company establishes starting wages. Most organizations have a philosophy when it comes to hiring and negotiating starting salaries. They have a range that they’re working with. It’s important to let candidates know whether they’re in the ballpark. Otherwise, the company and the candidate are wasting their time. And the conversation will end up frustrating everyone.
HR must let employees know about all of the benefits and perks they have. I’ve been surprised many times in my career that employees were not aware of their benefits. I felt HR was really getting the word out about a benefit and they were obviously not. HR has to find a way to remind employees of their benefits.
New employees should learn in orientation how pay increases work. If companies are linking pay and performance, then employees need to understand how the system works. This includes when performance reviews happen, when employees are eligible for increases, and how the company determines pay increase amounts. If the company offers a bonus program, this also includes bonuses and how they are calculated.
Managers can inform employees how performance impacts promotions and transfers. One way that employees can advance their careers (and their compensation) is by accepting a promotion or transfer. Managers will want to let employees know how the process works and what the eligibility requirements are.
Organizations need to let employees know that they survey wages. I once worked for a company that told employees, “We survey employee compensation every year.” It didn’t guarantee that wages were going to change, but it did let employees know that the company was committed to staying on top of the data.