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CIPD: How to manage perceptions about fair pay

Over-reliance on line managers to communicate about pay could be leaving HR teams out of touch with workforce perceptions of fair pay, according to the CIPD.

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Three-fifths of employees say they’ve never had an explanation about why they’re paid what they are
Three-fifths of employees say they’ve never had an explanation about why they’re paid what they are

The CIPD has published new data that highlights the need for people professionals to pay closer attention to both real and perceived fairness when it comes to what people in their organisation are paid.

 

The Reward Management survey suggests some employers may be over-relying on ill-equipped line managers to talk to their teams about pay processes and outcomes, resulting in a disconnect between people professionals’ perceptions of pay in their organisation and what the rest of the workforce experiences.

 

The report found that 75 percent of HR respondents think all, or the majority, of people in their organisation are paid fairly, but only 33 percent of all workers agree.

 

It also found that half of HR respondents say line managers have full or moderate involvement in communicating with staff about pay, but more than three-fifths of employees say they’ve never had an explanation from their manager about why they’re paid what they are.

 

Off the back of the new report, the CIPD has proposed the following tips for the people profession, to help improve real and perceived fairness around pay processes and outcomes.

 

Ensuring pay really is fair:

  • Evaluate pay fairness by auditing actual pay outcomes. This helps shed light on the fairness of decisions made around pay, as well as other employment decisions influencing pay progression (such as recruitment practices or flexible working policies).
  • Ensure you’re paying your staff a liveable wage. This will not only help reduce money worries (a key driver of employee stress that can have a detrimental impact on well-being and productivity), but it will also help improve perceptions of fairness as the survey revealed – perhaps unsurprisingly – that those earning less than £20,000 are significantly less likely to think their pay is fair.
  • Ensure staff know what they need to do to get a pay rise (less than half of employers currently do this) and explore ways to boost productivity that will enable your organisation to sustain wage increases – for example, by reviewing organisational design and job roles, and looking for opportunities for improvement.


Managing perceptions about fair pay

  • Seek input from key stakeholders, including employees and investors, to develop a clear definition of fairness. Share this definition with managers and employees to foster an agreed understanding about what ‘being fair’ looks like.
  • Make sure staff understand what the organisation expects from them, why it wants it, and how it will reward and recognise their efforts – less than half of employers surveyed currently explain to employees what they need to do to increase their pay.
  • Support line managers to have meaningful conversations with their teams about the fairness of pay processes and outcomes.
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