Only half of the UK’s permanent employees believe they are paid ‘fairly’ and even fewer (34%) think that everyone else in their organisation is paid fairly, reveals the latest report from the Chartered Institute of Personnel Development (CIPD).
According to the professional body for HR and people development, keeping staff in the dark about pay only ‘feeds the perception of unfairness’, and so is calling for employers to be more ‘transparent’. The perception of unfair pay is being driven by employers’ lack of communication around pay, so organisations need to be more ‘transparent about both their pay processes and outcomes’, the CIPD report suggests. Its findings also show that too few organisations have appropriate checks and balances in place to ensure that pay is fair, which could result in unfair and inconsistent pay decisions slipping through the net more easily.
If staff don’t think they’re paid fairly, organisations reduce their chances of attracting and retaining the best talent, and also miss the opportunity to improve employee performance and well-being, notes CIPD. Charles Cotton, Senior Reward and Performance Adviser at the CIPD, believes that “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”.
PAY SCRUTINY
Communication, however, is only part of the story and won’t ensure people are paid fairly in the first place, points out Cotton: “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.”
The CIPD says it wants to see all organisations have a clear definition of fairness, which covers both pay processes and outcomes. “This should be developed with input from staff on what fair pay means to them,” adds Cotton. “Medium and large employers must carry out an equal pay audit on a regular basis to ensure that they are complying with the law, as well as putting in place 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.”
Picture credit: ijmaki from Pixabay
FURTHER FINDINGS
The CIPD’s Reward Management 2019 report, which surveyed 2,031 employees and 465 HR professionals, also found that:
• One in five workers (20%) think the pay of their CEO is ‘about right’.
• Three in five people (60%) report that their line manager has never explained to them why they get paid what they do.
• Less than a fifth (18%) of employers have a formal process to assess and manage pay risk.
• Only 39% of employers have carried out an equal pay audit in the past three years to ensure they are complying with the law.
• Only a third (30%) of employers have a definition of what fair pay means within their organisation.
Click here to download a copy of the CIPD report Reward Management: Focus on Pay.
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