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New PayScale Study Reveals Employees’ Perceptions About Pay Fairness and Transparency are Five Times More Impactful on Engagement Than Actual Compensation

Research also shows employee engagement tightly linked to feeling appreciated and an employee’s view on the company outlook

Seattle, WA – November 7, 2017 – Today, PayScale, Inc., the leader in cloud compensation data and software for businesses and individuals, released surprising results from research designed to identify the drivers of employee engagement. PayScale surveyed more than 500,000 employees for its Employee Engagement research on various aspects of their job which could potentially contribute to both their satisfaction and intent to leave. When it comes to employee satisfaction, the results revealed that how employees feel about the pay process at their organization, in terms of fairness and transparency, is 5.4 times more impactful on how satisfied they are than how they’re paid relative to market. In addition, the results show that when employees feel appreciated by their employer and they believe their company has a bright future, they are far more likely to be satisfied at work and remain at the company. These results demonstrate that fostering open communication with employees about their role and performance — including talking with them about compensation — has never been more important to the bottom line.

“This research aims to shed new light on employee satisfaction and intent to leave in an era where engagement is at an all-time low,” said Lydia Frank, Vice President of Content Strategy at PayScale. “We’re seeing an emerging trend across many forward-thinking companies who are investing in fostering a richer sense of value and fairness with their employees. Our study shows that just by having an open dialogue about the pay process and employees’ contributions at the company, employers can ultimately drive better outcomes for their businesses.”

Here are key findings from the Employee Engagement research: 

  • Employee satisfaction is driven most by feeling the approach to pay is fair and transparent at the organization, not how much someone is actually paid: How people are paid relative to the market matters relatively little in terms of employee satisfaction. However, how employees feel about the organization’s pay philosophy and process has 5.4 times as much impact as their actual pay.
  • Employees don’t know whether they’re paid fairly: Of the respondents who felt they were paid below market rate, nearly 90 percent were actually paid at or above market rate. So, only 11 percent of people who felt they were underpaid were correct.
  • Paying fairly matters a lot: Research shows 75 percent of respondents who think they are paid at or above the market rate said they were satisfied with their job, compared to only 59 percent of workers who felt they are paid below the market rate.
  • Appreciation is key: An employee feeling appreciated moves the needle on satisfaction more than any other variable; company outlook is second-most important.
  • Employees want to stay at a rising company: Company outlook is the most important driver of satisfaction for reducing planned attrition, while feeling appreciated was second most important.

“This is provocative research that comes at a time when more and more companies are looking for ways to increase satisfaction with employees so they can get the biggest return from their talent investments,” said Pete DeBellis, Research Leader at the analyst firm Bersin by Deloitte. “The results are surprising and show us just how crucial it is for employers to make the leap and start talking more openly about pay in order to build more trusting relationships with their employees.”

“Aptitude’s own research has shown that compensation is a top consideration when joining a company, and plays the largest role in engagement and retention,” said Mollie Lombardi, CEO of the analyst firm Aptitude Research Partners. “This study not only reinforces that, but helps shine a light on the fact that perception is reality when it comes to pay. As a result, organizations and managers will need to be much more transparent, and have access to the right data to provide context for pay decisions.”

To view the entire Employee Engagement whitepaper and learn more about the methodology behind the research, please visit: https://www.payscale.com/data/employee-engagement

 

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About PayScale:

PayScale offers modern compensation software and real-time, data driven insights for employees and employers alike. More than 6,500 customers, from small businesses to Fortune 500 companies, use PayScale to power pay decisions for more than 16 million employees. These companies include Dish Network, Getty Images, Skullcandy, Bloomberg BNA and Time Warner. For more information, please visit: https://www.payscale.com or follow PayScale on Twitter: https://twitter.com/payscale.

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