Employees Feel Underpaid. 5 Tips to Ease their Worry!

I don’t think you will be surprised to learn that the majority of employees feel underpaid. Even if that’s not the case. But if we don’t explain why we pay what we pay employees will come up with their own explanation. One that’s not necessary right, but that will take time to correct. If you even know about it.

When you ask employees about their compensation, a significant portion of them will say they are underpaid. According to a 2023 survey by the ADP Research Institute, about 40% of workers believe they are underpaid for their job. Gartner reported more sobering numbers: only 32% of employees feel they are paid fairly. These perceptions are often influenced by comparisons with colleagues or pay ranges for similar jobs in ads. Even when employees are paid at or above market rates, many still feel undercompensated.

So, when you embark on a pay transparency initiative, employee expectations are high. Many of them will expect an upward adjustment, and when it turns out, that they receive exactly what they should, disbelief, disappointment and dissatisfaction will surface. You’ll need to prepare for that.

Addressing employee expectations upfront and clearly, in easy-to-understand language is key in any program. And especially in one that deals with pay transparency. In this newsletter, I’ll take you through the five common questions from employees, and provide my advice on how to address each of them.

How will the equal pay policy affect my current salary?

Employees want to know if their pay will increase, decrease, or remain the same under the new policy. They seek clarity on how the adjustments will be made and if there will be any retroactive compensation to correct past disparities.

Advice: Communicate clearly and transparently about how the new policy will impact individual salaries. Ensure that employees understand the criteria used for determining salary bandwidths, your approach to salary adjustments and the timeline for any changes. Emphasize your commitment to fairness and equity in the process. Provide detailed explanations with examples during town hall meetings or through written communications. Offer one-on-one discussions for employees who have specific concerns or need personalized information. And remember that pay transparency starts at the top, including the first communication!

What criteria do you use to determine equal pay?

Employees want to understand the specific factors that the company will use to evaluate and ensure equal pay. They want you to answer the question “Why do you pay what you pay?” clearly and concisely. This includes how job roles, responsibilities, experience, education, and performance are assessed and compared.

Advice: Develop and share a comprehensive guide that outlines the criteria for determining equal pay. This should include factors such as job responsibilities, experience, education, and performance metrics. Hold informational sessions to explain these criteria in detail and answer any questions. Make this information easily accessible to all employees through internal communication channels such as the company intranet or employee handbooks.

Will you be transparent in salary and pay adjustments?

Employees often ask about the level of transparency the employer will provide regarding salary ranges, pay scales, and the criteria for determining compensation. They want to know if they will have access to information that ensures fairness and accountability.

Advice: Commit to a high level of transparency by providing salary ranges and pay scales for different roles within the organization. Transparency should also include explaining how decisions are made and who is responsible for making them. Rest assured that most employees do not want to see every individual salary on the board. But they do want to know that pay ranges are fair and their compensation is exactly where it should be. Regularly update these ranges and ensure they are accessible to all employees. Communicate the rationale behind any pay adjustments clearly and provide opportunities for employees to ask questions and receive answers.

How will you address pay disparities identified in the audit?

Employees are concerned about the steps the employer will take to correct any pay disparities discovered during the pay audit. This includes timelines for adjustments and how the company plans to communicate these changes to the affected employees.

Advice: Create a detailed action plan to address pay disparities that you find, including specific steps and timelines. Communicate this plan to all employees, outlining how and when adjustments will be made. Will you do it all at once or over a longer period? Will you provide backpay? Ensure that affected employees are informed individually and provide support such as meetings with HR to discuss their concerns. Regularly update the workforce on the progress of the action plan and celebrate milestones to demonstrate ongoing commitment to equity.

What measures will you put in place to prevent future pay disparities?

Employees want assurance that you will implement ongoing strategies to maintain equal pay. They want to see regular pay audits, training programs, and policies that ensure continued compliance with equal pay principles and prevent future disparities.

Advice: Establish and communicate which ongoing measures you will put in place to maintain equal pay. These should include regular pay audits, continuous monitoring, and training programs on unconscious bias and equitable pay practices. Create policies that support transparency and accountability, and make these policies known to all employees. Foster a culture of continuous improvement where feedback is encouraged, and employees feel comfortable raising concerns about pay equity.

By preparing yourself to address these questions thoughtfully and transparently, you can build trust with their employees and demonstrate a genuine commitment to fair and equitable pay practices. And keep in mind that trust is earned: a simple mistake can erode all that hard work in an instance, so be very focused on clear and timely communication.