Employers need to do more to communicate pay decisions

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But the ‘Employee attitudes to pay and pensions’ survey found that the typical pay rise has been just 2 per cent for two years running, leaving almost half unsatisfied with their employer’s pay decision. The majority expect the same level again in 2015 yet more than three-quarters of staff haven’t been told what they need to achieve to get a pay rise and just a quarter of workers agree that their employer is giving them the training they need to increase their earnings in the future.

The CIPD is therefore warning that unless employers start thinking more strategically about pay and improving communications about pay decisions, they’ll not only fail to meet rising expectations but are also unlikely to see their increased salary bills paying off in the form of much sought after productivity gains.

Charles Cotton, Performance and Reward Adviser at the CIPD, comments: “This month, many employers will be spending a lot of money on increasing their employees’ pay as part of their annual pay reviews. But to get a return on this investment our research suggests that employees are more likely to be satisfied with the outcome if the organisation takes the time to explain the reasons behind it. Businesses that are willing and able to have these discussions with workers could find that it pays off in terms of a greater employee understanding of what the organisation is trying to do and what it needs from its employees as well as a greater appreciation of how the business will reward and recognise employee success and achievement. These employers are likely to grow and prosper at the expense of firms that are unable or unwilling to communicate about staff pay.

The survey found that only 51 per cent of workers felt their organisation had explained to them the rationale behind its 2014 pay decisions. This is particularly concerning given that respondents were more likely to be satisfied with an employer who did communicate than those who didn’t openly discuss their pay decision rationale – regardless of whether or not they received a pay rise.

An increasing number of employees felt that their pay rises did not reflect their performance at work. The survey’s net satisfaction scores1 tool reveals that employees don’t rate their employer’s ability to assess their performance very highly, nor do they think that their organisation is particularly good at rewarding or recognising it.

Cotton continues: “Organisations could improve how they reward and praise individual and team achievements as well as how they manage and develop performance. The challenge for employers is to connect investments in increasing staff pay with what the business really needs. Without this direction, many will struggle to see a step-change in business performance and could face wider issues with recruitment and retention if employees think they can achieve a higher salary elsewhere.”

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