According to PayScale’s 2015 Compensation Best Practices Report, the number one reason why people choose to leave companies is because they feel as though they are being paid unfairly. The key word here is “feel.” While compensation is the number one reason people leave, a separate PayScale study reveals that only 45% of employees who believe they are being paid unfairly are actually underpaid.
Salary Transparency: It’s a Communication Issue, not a Compensation Issue
The issue comes down to the lack of transparency around discussing salary and compensation. Sometimes employees are wrong about salary expectations, but when they try to address the situation, they are not given honest or straightforward answers. Compensation, specifically salary, always seems to be a hard topic to talk about openly and honestly. In fact, according to the PayScale Compensation Best Practices report, 27% of employers were “not confident” about their managers ability to talk to employees about pay.
This lack of salary transparency has a direct impact on employee engagement and subsequently, employee retention. In so many cases, employees find their value in what they are paid so when they are told “no” for a raise, they feel their perceived value as an employee is lower than it should be.Without a truly transparent, data-driven explanation, the employee feels slighted and begins to look for other jobs.
In many cases, when someone is turned down for a raise, it has to do with far more than that specific employees value. Most employers don’t have the ability to hand out raises every time they are asked and there are countless potential factors that can contribute to any one situation. If you refuse to talk salary , you could potentially lose good talent because they aren’t getting the truth from you. It is important then to be honest with employees. Be able and willing to rationalize their pay and explain why a raise may not be feasible. Again, honesty is the best policy. If their performance doesn’t warrant a raise, just tell them! In the log run, your honesty will pay off.
Download Payscale’s free whitepaper, “2015 Compensation Best Practices Report,” and learn more about the trends affecting compensation.