New data recently published by the CIPD has shown that some employers could be relying on ill-equipped line management to speak to their teams about pay processes - resulting in a difference between their perception of pay in the organisation and that of the workforce.
The 2019 Reward Management survey reports that 75 per cent of HR professionals think that workers in their organisation are paid fairly - according to their experience and achievements. However, only 33 per cent of the workers agree and only 51 per cent think their own salary is fair.
Of the HR respondents, 86 per cent agree that their Chief Executive is paid about right - against only 20 per cent of the rest of the workforce.
Only a third of organisations were encouraging line managers to talk to their teams about pay fairness and of those who had, 60 per cent of the employees say their manager had done a poor or very poor job of communicating with them.
Charles Cotton - Senior Reward and Performance Adviser at the CIPD - said:
“Failure to be transparent about pay can make staff feel that they are being kept in the dark and feed a perception of unfairness. There’s a real opportunity for organisations to do a lot more around communicating their pay policies to staff, and encouraging line managers to talk to their teams about it, so staff understand how and why such decisions are made. But communication is only part of the story and won’t ensure people are paid fairly in the first place. Continued scrutiny over executive pay and gender pay gap reporting shows this is still an issue which many organisations are wrestling with, so businesses need to be on the front foot when it comes to understanding and assessing pay.”
Of the 60 per cent of HR respondents who state that their organisation talks about the fairness of pay processes and outcomes, only 30 per cent have a clear definition of fairness. Just 10 per cent of the workforce says that their line manager always or often speaks to them about fairness and it was found that only 23 per cent of employers survey their employees to check whether they think pay processes are fair, whilst only 39 per cent of employers have carried out an equal pay audit in the past three years to ensure they are complying with the law.
Just over half of HR teams inform staff about the factors they consider when deciding to increase employee salaries and around 50 per cent explain how their grade structures work - whilst 45 per cent tell employees what they need to do to increase their pay.
In 2020, new corporate reporting requirements will come into full force and are likely to reveal further opportunities to improve fairness in pay processes and outcomes.
Publicly listed companies with more than 250 employees are required to report the pay ratio between their CEOs and full-time workers - explaining how the pay-setting process for top executives compares with their pay policy for the wider workforce. In addition, they are also required to show how they take employee views and interests into account in business decision-making - to include views on how people are paid.
