Pay practices impact employee experience

Frequency, transparency, communication important considerations: Survey
By Sarah Dobson
|hrreporter.com|Last Updated: 08/13/2019
compensation
63 per cent of employees say they are comfortable discussing their pay with managers, according to a survey. Shutterstock

While many employers focus on issues such as professional development, corporate culture, flexible benefits or office perks when it comes to driving engagement and retention, they may be overlooking another important factor: pay practices.

An employee’s experience with pay directly impacts how they feel about working for a company, according to Ceridian, which recently conducted a survey on the topic.

“A lot of times, as leaders, we just focus on the ‘Well, how much does somebody make? And how much are we going to give them in terms of a merit increase?’ versus ‘What is the experience in totality?’” says Lisa Sterling, executive vice-president, chief people and culture officer at Ceridian in Minneapolis.

And when it comes to people’s financial stress, it's not necessarily about increasing compensation, she says.

“The more you're open to helping them become educated about financial wellness, giving them more flexibility in the frequency of their pay, and having more direct conversations about the pay experience, the greater the drop we are seeing in those stress levels.”

Frequency

Two-thirds of full- and part-time employees are paid every two weeks, while 20 per cent are paid weekly, found Ceridian. However, 40 per cent say they would prefer to be paid weekly.

On-demand pay is also growing in appeal: 35 per cent of respondents say they are somewhat or very likely to participate in that kind of program, including 56 per cent of 18- to 24-year-olds and 45 per cent of those aged 25 to 34, found the survey of 1,891 workers in the United States (982) and Canada (909).

Why? Fifty-one per cent say it would help with unexpected expenses, while 45 per cent say it would reduce the stress of living paycheque to paycheque.

The hourly workforce is largely made up of people who are used to greater immediacy and frequency in the way they access information, such as ordering from Amazon, says Sterling.

“People's expectations in their work experience are now becoming equal and equivalent to what they expect in their consumer experiences. And so people want access to the money as it's earned… It actually is, in my opinion, a strong part of building a really significant wellness program.”

It’s a way for people to gain more control of their own wellness, she says.

“For organizations, if they really want to start considering the frequency of pay, they really should think about, especially with their younger employee base, ‘Is once or twice a month enough for people to have accessibility to the funding that they've earned?’” says Sterling.

“We're starting to see an uptick in organizations that are personalizing the pay experience based upon different categorization of employee types.”

And when it comes to the war for talent, paying people when they want, based on when they've earned the money, “that's going to become a competitive differentiator in the marketplace,” she says.

While Susan Power, founder of Power HR in Halifax, has not yet seen employers using on-demand pay, there are more flexible compensation models available, “where the employee has more input as to their total compensation package,” she says.

“They might have a higher base salary, if they choose, and a lower health benefits spending account. So (it’s) almost like a menu item, where they can select what’s most important them.”

Transparency

Also impacting the pay experience is the amount of transparency given to employees, whether it’s related to their role and contribution within their organization, or to pay scales for similar positions at other organizations.

Fifty-seven per cent of respondents say they’re at least somewhat satisfied when it comes to the transparency of information around issues like industry average and coworkers’ pay.

Just 10 years ago, people didn’t discuss their pay with colleagues, but now with sites such as Glassdoor or PayScale, people have that data at their fingertips, says Sterling.

“Organizations absolutely have to be transparent, because if they're not, their employees (are) getting information from other sources. Right or wrong, it's what they're doing,” she says.

“If people understand their overall pay experience, and they understand that transparency related to what their role is in the organization, what they do in terms of influence and contribution, and even pay scales that are similar to other organization, you're going to see much greater levels of satisfaction, because that's when people start to understand that they are paid fairly and competitively for what they do.”

And it has to be an ongoing conversation,

“You don't want to talk about this once a year, because (then) people are questioning, becoming disengaged, becoming unsatisfied. If this becomes a more frequent topic of conversation… people are going to be far more productive, they're going to feel far more supportive and invested.”

Part of the challenge is larger employers often have different pay models, says Power.

“So even if they were transparent, they know that it's probably not equitable. And it's not a quick fix too, so they resist being transparent,” she says. “But people… talk, and they can compare their salary online to Glassdoor or whatever. And if they know that they're not being paid fairly, they will leave. And some people will address that one-on-one with their manager, bring it up and ask for an increase, and some people won't, they'll just feel disrespected or devalued. And they'll just leave.”

Communications

Another challenge crops up around communication. While 63 per cent of employees say they are comfortable discussing their pay with managers, according to Ceridian, only 36 per cent “strongly agree” they’re comfortable with these discussions.

One shortcoming may be that many organizations do not conduct pay reviews regularly. One-quarter of respondents say they never have pay reviews, while 24 per cent are unsure, and a further 10 per cent said they receive them less often than once a year.

Employers have to be more thoughtful and methodical about how they conduct compensation reviews, says Sterling, meaning: How frequently are they conducting salary range evaluations? What type of market data are they using? Are they being specific and looking at other companies where they're out recruiting and attracting top talent?

“Those things become so much more prevalent in the discussion if you're more transparent about it,” she says.

“As HR leaders, we have to be much more thoughtful about what we're doing in terms of our process, our procedures, the data that we're leveraging, to help us make informed decisions, because when we start sharing, obviously, people are going to ask more questions.”

Managers often fall short in the communication piece, says Power.

“If there was no communication as to the rationale, then it doesn't have an impact, and an employee assumes the worst-case scenario (so) that even if they were being paid over market rate, they probably would assume that they're being underpaid.”

Sometimes managers are not trained on how to have compensation discussions, she says.

“They might not have all the information or gather it themselves, so they might not feel equipped to have those conversations with their employees. And I think often they don't realize, or really think about, the impact that not having the conversations has, that people will fill in the blanks, and usually on the negative side, if information is not shared with them.”

Add Comment

  • *
  • *
  • *
  • *