Toll Free: 877.880.4477
Phone: 281.880.6525
www.hrp.net
Poor Communication About Pay
May Sap Employee Motivation
www.hrp.net
Almost all employers who responded to a recent poll
by WorldatWork* say they have a compensation
philosophy. A...
What is Revealed
While very few employers reveal "actual pay levels for all employees," many
more -- 44 percent -- say the...
www.hrp.net
Authors of the "Compensation Programs and Practices" report surmise that
"the fact that so many organizations ...
Reliance on Market Data
A huge majority say their goal is to set base salaries at the median level for
their "relevant lab...
www.hrp.net
Asked how they determine pay raises, the following methods were identified
by survey respondents:
1. Individua...
COLA Raises: a Rarity
COLA-based raises are rare: Only 11 percent of employers offer those. Only 3
percent give automatic ...
www.hrp.net
When the time comes to discuss an employee's pay increase, the majority of
employers do so only with "brief" w...
www.hrp.net
Percentage of employers using category
Pay category 2010 2012 2014
Bonuses (example, sign-on,
retention)
59 76...
14550 Torrey Chase Blvd., Ste. 360 Houston, TX 77014 USA
www.hrp.net
E-mail : info@hrp.net
Toll Free
Phone
Fax
:
:
:
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Poor Communication About Pay May Sap Employee Motivation

Don't hold back on talking to employees about why they are paid what they are paid. Many employers don't, and that can diminish the motivational potential of paying your workers a competitive salary based on an understood compensation philosophy and some objective market research. Here's what others are doing.
Published on: Mar 4, 2016
Published in: Business      
Source: www.slideshare.net


Transcripts - Poor Communication About Pay May Sap Employee Motivation

  • 1. Toll Free: 877.880.4477 Phone: 281.880.6525 www.hrp.net Poor Communication About Pay May Sap Employee Motivation
  • 2. www.hrp.net Almost all employers who responded to a recent poll by WorldatWork* say they have a compensation philosophy. And about two-thirds of those employers say they have committed it to writing. Trouble is, only 27 percent of them believe that the majority of their workers actually understand it. That might not be surprising because a significant number -- 39 percent -- reported that they share only "minimal" pay-related information with their employees. What kind of information?
  • 3. What is Revealed While very few employers reveal "actual pay levels for all employees," many more -- 44 percent -- say they tell employees the pay range for their pay grade, or provide some information on how they set pay levels. Only about 16 percent reveal base pay salary ranges for all pay grades or jobs. www.hrp.net
  • 4. www.hrp.net Authors of the "Compensation Programs and Practices" report surmise that "the fact that so many organizations are following a similar pay policy has led to some level of malaise in communication, where 'no change' equates to 'no communication is necessary.'“ The message is clear: Even when you haven't overhauled your compensation philosophy or practices, it's important to continue to let employees know that you don't set their pay by throwing darts at a dart board. In addition, the survey reveals that "employees' understanding of the organization's compensation philosophy improves when there is a higher differentiation in increases between average and top performers.“ Whether effectively communicated or not, what approach are employers taking toward setting pay levels?
  • 5. Reliance on Market Data A huge majority say their goal is to set base salaries at the median level for their "relevant labor market." (Eight percent target above the 50th percentile but below the 75th .) That doesn't mean, however, that they pull it off. Only two-thirds reported achieving that goal. When establishing the "relative value of jobs" for purposes of setting pay levels, most employers said "market pricing" was part of the process. In addition, nearly one in five survey respondents said they also use a point factor system (assigning a numeric value to all the key elements of a job and adding them up). The same percentage reported using a simple job classification system. www.hrp.net
  • 6. www.hrp.net Asked how they determine pay raises, the following methods were identified by survey respondents: 1. Individual performance against job standards: 71 percent 2. Position in range: 59 percent 3. Individual performance against management-by-objectives or similar personal objectives: 49 percent 4. Skill or competency acquisition: 22 percent 5. Years of service: 11 percent 6. Education/certifications: 10 percent. Most respondents said they "typically" adjust pay on an annual basis, although about one quarter report doing so "as needed based on market conditions." Another 14 percent give raises only every two years.
  • 7. COLA Raises: a Rarity COLA-based raises are rare: Only 11 percent of employers offer those. Only 3 percent give automatic raises based on length of service. www.hrp.net
  • 8. www.hrp.net When the time comes to discuss an employee's pay increase, the majority of employers do so only with "brief" written or verbal forms of communication. Less than one-third give "detailed" written communication, and fewer than one in five provide detailed verbal communication. Employers report that performance is key to the level of raises. How much bigger are the raises given to top performers than the average? The largest percentage of employers -- 45 percent -- report top performers get raises about 50 percent higher than the others. However, less than one-fifth say the gap is double the amount, that is, if the average is 3 percent, high performers get 6 percent. More than half of employers who responded to the survey have five performance category tiers.
  • 9. www.hrp.net Percentage of employers using category Pay category 2010 2012 2014 Bonuses (example, sign-on, retention) 59 76 82 Recognition (example, spot award) 60 66 66 Performance sharing 57 58 65 Individual incentives (excluding sales) 67 59 42 Profit sharing 19 19 19 Variable Pay Category Trends 2010-2014
  • 10. 14550 Torrey Chase Blvd., Ste. 360 Houston, TX 77014 USA www.hrp.net E-mail : info@hrp.net Toll Free Phone Fax : : : 877.880.4477 281.880.6525 281.866.9426

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