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Communication Key for Employees’ Perceptions of Pay Fairness

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Human resources professionals believe rewards policies and programs impact employee perceptions of fairness, and that male and female employees may develop perceptions of rewards fairness based on different criteria. 

This was a main finding from WorldatWork’s Study of Reward Fairness and Equity with Dow Scott, Ph.D., of Loyola University Chicago. The survey of 290 WorldatWork members revealed insights into employee concerns when it comes to pay and promotional opportunities and how communication of rewards practices is critical for organizations to achieve a positive pay fairness reputation both internally and externally.

“Employee rewards that tend to be based on subjective criteria, such as individual performance or aptitude tend to receive greater question from employees around the degree of fairness,” said Alison Avalos, director of membership and total rewards strategy at WorldatWork.

When it comes to internal equity, employers said they frequently receive the most concern about promotions (28%), career development opportunities (23%) and base-pay increases (22%). In terms of external fairness, employers frequently hear concerns about base-pay amount (31%), promotions (22%) and variable pay/incentives (20%).

Comparatively, retirement, health-care benefits and overtime concerns aren’t nearly as prominent, as more than one in four respondents said their employees never voice concerns about internal fairness of these programs. The same can mostly be said externally, as two in three respondents said their employees seldom or never complain about retirement benefits (67%) while more than half (56%) don’t complain about health-care benefits.

Ultimately, communication is key for an employer when it comes to employees’ perception of pay fairness. “How aware employees are of their organization’s compensation philosophy is directly tied to their perception of reward and pay fairness,” Avalos said. “This presents an opportunity for organizations. If they can raise awareness of their compensation strategies and gain employee buy-in, their employees are more likely to accept that the rewards offered are fair and equitable.”

Across gender lines, men and women assess pay fairness similarly, for the most part. However, men tend to focus more on external comparisons (37% vs. 9%) while women focus more internally (39% vs. 8%). Generally, men and women express concerns about fairness at similar rates, but women tend to be more vocal than men when there are differences, particularly around flexibility (52% vs. 2%) and base pay (38% vs 16%).

“What is curious is that male and female employees differ in terms of external and internal pay comparisons,” Scott said. “Overall, female employees were seen to have greater concerns about rewards fairness than did male employees.”

See the full survey results here.

About the Author

Brett Christie is a staff writer at WorldatWork.

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