Why you need to get better at talking about pay

Our latest Reward Management report, which involved research with 2,031 employees and 465 HR professionals, looked at the issue of fair pay and explored the extent to which organisations are achieving this. The survey also provides a benchmarking and information resource on current and emerging practice in UK reward management.

We found that only half of permanent employees (51 percent) think they are paid fairly and even fewer (34 percent) think that everyone in their organisation is paid fairly. What’s more, only one in five workers (20 percent) think the pay of their chief executive (CEO) is “about right”.

These findings suggest there’s a good degree of unhappiness among people about their pay and that of their colleagues.

Are people right to feel hard done by?

There is certainly plenty of evidence which suggests so: wages have been squeezed year after year, gender pay gap reporting has highlighted the difference in earnings that persist between men and women and a strong link between high levels of executive pay and company performance has yet to be found.

However, without looking at this on a case by case basis it’s impossible to say - categorically - if people are being paid fairly or not. And to complicate matters further, we know that the definition of fair pay is subjective, both to individuals and companies.

What the report does make clear, though, is that companies can be better at communicating their pay policies and encouraging line managers to have conversations about it. Three in five people (60 percent) report that their line manager has never explained to them why they get paid what they do, while those that do are not rated highly. Furthermore only a third (30 percent) of employers have a definition of what fair pay means within their organisation.

If people aren’t paid fairly, whether that’s real or perceived, employers can reduce their chances of attracting and retaining the best talent. They also miss the opportunity to improve employee performance and wellbeing.

How you can help

To help organisations improve their pay practices, we would encourage them to have a clear definition of fairness which is developed with input from staff.

We also want to see organisations writing a narrative which explains to staff and other stakeholders what skills, behaviours, performance and values it wants from employees - and how in return it will reward and recognise these.

HR and reward teams can help to ensure that people managers are supported in their role as communicators and decision-makers, such as through training or toolkits.

As well as ensuring that people managers have the skills to talk about pay, we must also make sure that they are willing and have the opportunities to do so.

Finally, we would encourage medium and large employers to carry out an equal pay audit on a regular basis. This will help them to check that they are complying with the law and can be used to deal with staff queries about pay fairness.