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Fair pay – the thought that counts


“Pay matters not just because people need a paycheck, but because pay is a point of perceived fairness” – Heidi K. Gardner, professor of organizational behavior at Harvard Business School.

Performance reviews generally represent that time of the year when everyone looks back on their expected and achieved outcomes, draw the line and start pondering on future endeavors.

As such, if you are an employee, one of your main thoughts might be “was it worth it?”, reflecting on your job performance, the amount of effort you put into your work and whether your company has fairly rewarded you for it or not. Furthermore, if you are in such a position, in 6/10 cases you will consider yourself as being underpaid for your performance, regardless of the actual sum of money coming your way.

Perception is an incredibly powerful tool that can make or break companies in mere seconds. Or on a much less catastrophic note, can result in the departure of one or more key employees. Why is that? Well, according to a Pay Scale research study, out of 71.000 respondents, 64% of the “at market value” paid employees considered themselves to be “under the market value”. Moreover, only 30% from the same category felt they were fairly remunerated, whilst in the “above market value” category, 45% saw themselves as getting the paycheck they deserve.

Yes, even in the higher pay category, 35% see themselves as being underpaid for their work.

When this occurs, the aforementioned perception kicks in and members of staff develop feelings of disengagement or anxiety and for many of them, the prospect of switching companies becomes a vivid reality. The same research found out that 60% of those who felt underpaid conveyed thoughts of leaving the company in a near future if financial gains were not up to par – as in the market level.

So a high-performing company could potentially lose out on a lot, if among the many variables and KPIs used for measuring its gains and losses, it does not include transparency.

Scott Belsky, who runs Behance, a web platform designed for young and aspiring professionals to showcase their portfolios and make a name for themselves, iterates that “in tough times, when businesses are trying to keep a team engaged with projects, transparency is key; setting goals and milestones together is vital. The experience that we are gaining together, it should augment pay.”


Communication is a godsend and if managers have their company’s best interest at heart, one of the premier ways of ensuring utmost performance is by talking to the very large part of people who run it through thick and thin – the everyday employee. If you want your workers to perform their best on today’s extremely competitive business scene, making sure they know all the lines helps out a lot.

Talking about pay levels is a good starting point and generally, the most impactful one.

Communication clears up any misconceptions and ill-fated perceptions about one’s job remuneration and on top of that, it leads to developing a sense of fairness, just as Heidi Gardner mentioned in our earlier quote. Although considered by many as being just a filler for a more important variable, fairness is one of today’s most powerful aspects to have in mind, especially when considering salary levels, bonuses and so forth.

How so? Elementary, my dear reader. If a low-paying employer is honest about the reasons behind his/her smaller wage offer, those on the receiving end will take such news much, much lighter than those kept in the dark. And with that out of the way, that respective employer can offer his staff members various bonuses to their original work contract, such as more flexible working hours, which can be fit around an employee’s needs. Such boons will make up for any financial losses.

Wrapping up all of the above, we can see that pay is a very important element, one which if shrouded in mystery, tends to detract any would-be or even current employees. In this day and age, openness is one of the most important non-material resources which a company can easily cultivate to fruition – and that fruition is high performance. If an organization wants its members of staff performing at 101%, it best be honest about the hows and whys of its pay levels, as this will easily translate into greater levels of employee confidence and motivation.

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Oiling your Talent Management Machine at the 14th Annual HR Directors Business Summit 2016
The art of conflict at the 14th Annual HR Directors Business Summit 2016

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